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The Quantum Leap Company Limited building value in energy & efficiency The Quantum Leap Company Limited building value in energy & efficiency.

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Presentation on theme: "The Quantum Leap Company Limited building value in energy & efficiency The Quantum Leap Company Limited building value in energy & efficiency."— Presentation transcript:

1 The Quantum Leap Company Limited building value in energy & efficiency The Quantum Leap Company Limited building value in energy & efficiency

2 The Quantum Leap Company Limited building value in energy & efficiency CANADIAN ELECTRICITY ASSOCIATION and NATURAL RESOURCES CANADA Diversifying the Mix: A Workshop on Alternatives to Conventional Generation Technology 25 November 2002 Approaches to Advancing Alternative Technologies A Capital Markets Approach Financing Non Conventional Generation Technology The Quantum Leap Company Limited building value in energy & efficiency

3 The Quantum Leap Company Limited building value in energy & efficiency Shell estimates that 10 to 15 new sources of energy supply will command up to 50% of the primary energy markets by The surge in alternative energy demand will be driven by regulatory change in the $350 billion North American energy industry and the resulting growth in distributed generation. TECHNOLOGIES Active Fuel Cells Dual Fuel Micro Turbines Clean Coal Passive Water Wind Sun Earth Energy FUELS Active Hydrogen Ethanol Methanol Biomass Coal Natural Gas Propane Passive Micro Hydro Wind Turbines Solar Thermal PhotoVoltaic Cells Geothermal GeoExchange CONVERGENCE Communications & Networking Customer Premise Products & Services Aggregation of Services & Products Metering & monitoring Performance INTERFACING APPLICATIONS & SYSTEMS INTEGRATION - Information Technology- Universal Power Supply and Systems Integration- Asset Utilization and Efficiency - Cogeneration- Storage and Load Management C U S T O M E R S E N E R O G S Y U C R E S L E A D I N G e d g e a l t e r n a t I v e p o w e r the alternative energy sector

4 The Quantum Leap Company Limited building value in energy & efficiency the alternative energy drivers  energy demand  energy depletion  emission regulation  industry deregulation favourable market conditions + increasingly favourable government legislation innovation = L E A D I N G e d g e a l t e r n a t I v e p o w e r

5 The Quantum Leap Company Limited building value in energy & efficiency L E A D I N G e d g e a l t e r n a t I v e p o w e r Construction Risk Savings Shortfall Performance Risk The reality of the business opportunity is that the viability of each alternative is a function of electrical efficiency, economics and competition from existing upgradeable infrastructure. financing the economics basic theme – AE/DG must pay for itself Payback or Contract Term Construction Phase

6 The Quantum Leap Company Limited building value in energy & efficiency L E A D I N G e d g e a l t e r n a t I v e p o w e r Micro Generation PEM Fuel Cells Conventional Generator Diesel GenSet SOFC Tubular 22% 32% 34% 36% 47% financing the science electrical efficiencies of various technologies The reality of the business opportunity is that the viability of each alternative is a function of electrical efficiency, economics and competition from existing upgradeable infrastructure. Source  The Quantum Leap Company Limited, Nov  Fuel Cell Technology, Kingston, Nov 2002 TECHNOLOGIES Active Fuel Cells Dual Fuel Micro Turbines Clean Coal Passive Micro Hydro Wind Turbines Solar Thermal PhotoVoltaic Cells Geothermal GeoExchange

7 The Quantum Leap Company Limited building value in energy & efficiency L E A D I N G e d g e a l t e r n a t I v e p o w e r financing the economics : an example - SOFC basic SOFC economics very compelling … Source  The Quantum Leap Company Limited, Nov  Fuel Cell Technology, Kingston, Nov 2002 SOFC VS Grid operating Cost Comparison Electricity unit cost ($/kWh):$011 Natural gas unit cost ($/m3):$033 MONTHLY COSTS Cost of grid provided electricity:$185$ 0 Cost of Natural Gas: For heat:$ 69$ 29 for electricity:$ 0$109 Total Monthly Cost:$254$138 MONTHLY Savings $116 % savings using SOFC 46% Home w/ Furnace & Grid Connect Home w/ Tubular SOFC SAMPLE U.S. New England Home

8 The Quantum Leap Company Limited building value in energy & efficiency 1 yr payback 2 yr payback 3 yr payback L E A D I N G e d g e a l t e r n a t I v e p o w e r financing the science : an example - SOFC equity investment will drive cost down An estimated 600,000 unit SOFC “niche market” exists in Canada at $20,000/unit with a one year payback. That won’t exist until 2006 and mass market penetration remains elusive for the next 10+ years at > $1,500/unit. Research & Remote Application High Electricity Costs Areas & Early Adopters Units Sold 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Residential & Small Commercial Application $/5kw Unit - 140k - 120k - 100k - 80k - 60k - 40k - 20k Source  The Quantum Leap Company Limited, Nov  Fuel Cell Technology, Kingston, Nov 2002

9 The Quantum Leap Company Limited building value in energy & efficiency Stages of Technology Development Source  Sustainable Development Technology Canada, Nov L E A D I N G e d g e a l t e r n a t I v e p o w e r Risk Profile Development Financial Development Market Financial Development Market Financial Market Financial Market Financial Fundamental Research Fundamental Research Prototype Development (Bench Scale) Prototype Development (Bench Scale) Product Demonstration (Full Scale) Product Demonstration (Full Scale) Product Commercialization & Market Development Product Commercialization & Market Development Market Ready Product Market Ready Product Market Entry financing the innovation chain

10 The Quantum Leap Company Limited building value in energy & efficiency Source  Sustainable Development Technology Canada, Nov  MacDonald & Associates, Oct., 2002 L E A D I N G e d g e a l t e r n a t I v e p o w e r Fundamental Research Prototype Development (Bench Scale) Product Demonstration (Full Scale) Product Commercialization & Market Development Market Entry Market Ready Product Governments Venture Capital Industry Angel Investors Funding Intensity Banks Pre – VC Gap Pre – IPO Gap # of Energy and Environment Deals by Stage* financing current funding gaps

11 The Quantum Leap Company Limited building value in energy & efficiency Source  The Quantum Leap Company Limited, Nov  Sustainable Development Technology Canada, Nov  MacDonald & Associates, Oct., 2002 L E A D I N G e d g e a l t e r n a t I v e p o w e r Fundamental Research Prototype Development (Bench Scale) Product Demonstration (Full Scale) Product Commercialization & Market Development Market Entry Market Ready Product Governments……………………..…… Venture Capital Traditional …………………………….………………………………………………………………………………………………. Specialty (Strategics) ………………..……………………………………………………………………………………… Tax Driven (LSIF – 30%) ………………..……………………………………………………………………………….. Specialty Tax Driven (ROIF – 35%) …………………………………………….….. Industry (non VC) …………………………………………………………………………………………………………………………… Angel Investors …………………………………………………………………………………………………………. Funding Intensity Banks ………………………………………….…………………………………………………………………………………………………………………… SDTC ……………………..…… ……………………..…… ……………………..…… ……………………..…… US Angels Tax driven VC is > 50% of the Canadian market and 4-5% in the US. financing players actually in the funding gaps

12 The Quantum Leap Company Limited building value in energy & efficiency  BCHydro…………………  TransAlta………………….  EPCOR……………………….  CU……………………………….  SaskPower………………..  Manitoba Hydro…………….  OPG……………………….  Hydro Quebec……………  Nova Scotia Power……..  Fortis…………………….. Yes Yes - tbd No Yes No Yes No Yes tbd Yes No SAM, Nth SAM, Nth, EnE EnT No tbd na No na Yes na Yes na Yes na Yes $5-10mln - Soft $10mln – Soft* us$10mln hard - $60mln soft na $100mln hard $340mln hard (++) $1mln hard na In-House “Commitment” To Venture Investing Fund of Funds Investment Strategy Full Funded Venture Capital Subsidiary (Round 1) Full Funded Venture Capital Subsidiary (Round ) Estimate of Commitment financing utility players addressing the funding gaps

13 The Quantum Leap Company Limited building value in energy & efficiency Penetration of Market Alternative Energy Early Stage The Internet Computers Alternative Energy Value L E A D I N G e d g e a l t e r n a t I v e p o w e r Total present value market potential of energy technology estimated at $1 trillion Volatility in the sector is resulting in opportunity Many market leaders are Canadian: Recent Private, Primary & Secondary Activity in North America Ballard Power US$345, C Global ThermoElectric US$45,000,000C Stuart Energy US$120,000,000C Next Phase US$45,000,000C H ydrogenics US$50,000,000C Xantrex US$58,000,000C Fuelcell EnergyUS$60,000,000US H-PowerUS$100,000,000US MillenniumUS$45,000,000US US$868,000,000 C= Canadian US=United States Source: Warburgs Europe alternative energy Canadian advantage

14 The Quantum Leap Company Limited building value in energy & efficiency our approach LEAP invests in private alternative energy companies for aggressive capital appreciation LEAP capitalizes on disparities between economic value and market opportunity LEAP focuses on financing steps prior to the public market financing stage, targeting a higher reward profile for maximum equity leverage Successful investing in early-stage ventures is our area of expertise Quantum Leap L E A D I N G e d g e a l t e r n a t I v e p o w e r First Mover advantage Dedicated industry focus Experienced management Favourable market conditions Active involvement with investee companies Strong network and deal flow our benefits

15 The Quantum Leap Company Limited building value in energy & efficiency Quantum Leap a model portfolio L E A D I N G e d g e a l t e r n a t I v e p o w e r Weighting Selected by Investor Appetite A Model LEAP Portfolio (10 yrs +) balance in partners balance in portfolio

16 The Quantum Leap Company Limited building value in energy & efficiency Quantum Leap current portfolio L E A D I N G e d g e a l t e r n a t I v e p o w e r Portfolio Energy Conversion Fuel Power Control Electronics Energy Convergence OtherEmissionsWater Waste RemediationRecyclingOther The Telemetry Company ] amr ] Oxegen Corp. ]] Rtica Inc. ] [EnerWorks Inc.] ] solar ] [Adventus Remediation Corp.] ]] [Fuel Cell Technologies] ] sofc ] BofP ] X vs elec ] 73 Companies Visited EnergyEfficiency 180 Ontario Based Companies Reviewed in 9 Months [6] investment closed by December 1 st, 2002 Up to 2 more by year end... The same for 2003

17 The Quantum Leap Company Limited building value in energy & efficiency Drivers that will advance the market, if enabled properly: Industry Formal commitment of capital Corporate Leadership with demonstrable projects Commercial successes for existing generators Progressive partnerships More support for Motivated Entrepreneurs Government Positive tax drivers Reconstituted 43.1 Broadened definition for flow through Enable Government to benefit from equity interests – with proceeds used for re-investment moving DG forward L E A D I N G e d g e a l t e r n a t I v e p o w e r

18 The Quantum Leap Company Limited building value in energy & efficiency The Quantum Leap Company Limited The Canadian Pacific Building Suite 711, 69 Yonge Street Toronto, Ontario Canada for information

19 The Quantum Leap Company Limited building value in energy & efficiency The Quantum Leap Company Limited building value in energy & efficiency


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