For internal use only / Copyright © Siemens AG 2012. All rights reserved. Financial Services For internal use only / Copyright © Siemens AG 2012. All rights

For internal use only / Copyright © Siemens AG 2012. All rights reserved.

Financial Services For internal use only / Copyright © Siemens AG 2012. All rights reserved.

Green Financing

Ten Take-aways

Andy SwadloSiemens Financial Services

Page 2 Feb 2012 Andy Swadlo


Financial Services

National Trends

January 2007 European Commission proposes European Energy Policy:

Greenhouse gas reduction by at least 20% by 2020 (v1990)

Energy Efficiency increase by 20%

Renewable energy share at least 20%

Biofuels at least 10%



Financial Services

Take Away 1

Governments increasingly want action : they are setting tough targets



Financial Services

Target v Results

Take Away 2: Targets are not being met

OECD: “…if current trends continue unabated, global emission would by 2020 reach levels that are more than 30% above 2005 levels” OECD, May 2010



Financial Services

Energy costs

May 2011: China increases electricity costs in 14 provinces and rations consumption

March 2011: Russian electricity prices rise / hydro charge capped at 15%

BRIC is substantially increasing consumption of energy causing rising world pricesTake Away 3: energy prices increasing over th

e long term



Financial Services

World Going Green

OECD Member countries:

(includes France, Spain, India, USA, Russia, Poland, UK, Germany)

96% of (large) businesses

indicated they have started

energy saving measures



Financial Services

World Going Green

Take Away 4: Reducing energy costs is the prime business driver to go ‘green’

Their motivations:

“improve image”

“expected legislation”

Number 1 driver:

“reduce energy costs”



Financial Services

Cost of not changing

Take Away 5: Financial benefits to new equipment are more than energy efficiency

Total Cost of Ownership

The older the technology

The greater the maintenance costs

the higher the mean time between

equipment failures

All pushes up the cost of service

and parts and increases

unproductive downtime.



Financial Services

Access to Capital

USA: “Cash, the lifeblood of business, has been scarce for middle market companies since the recession began in 2007” KPMG May 2011

Eurozone: “…the perception of risks worked in the direction of higher net tightening of credit standards” ECB, July 2011

TRIC: “…our problem is slowing down the pace of lending” CB Governor, Turkey 2011

“Beijing would look to curtail borrowing by local governments” Premier Wenn



Financial Services

Access to Capital

Take Away 6: The world is awash with money yet money is increasingly scarce!



Financial Services

Affording energy efficient investment: Leasing

Take Away 7: Leasing industry is well positioned to provide solutions that (many) banks don’t want to

‘Offset’ equipment financing: where payments flex to match energy savings

Sometimes Government sponsored support

E.g. Carbon Trust UK: Energy Efficiency Financing Scheme with SFS

Carbon Trust assess energy savings

SFS provides financing

One package: energy efficiency assessment, equipment, installation, maintenance and service, all via a loan, lease or hire purchase.

Payments equal to, or lower than, the energy savings



Financial Services

Affording energy efficient investment: Performance Contracting

Take Away: Leasing industry is perfectly positioned to provide solutions

Guarantee that energy savings will cover costs of equipment and service



Financial Services

Affording energy efficient investment: Performance Contracting

Take Away 8: Captive Leasing industry is perfectly positioned to provide solutions

Guarantee that energy savings will cover costs of equipment and service

Phases:

Preliminary energy analysis

Investment Grade Audit

Construction and Installation

Regular measurement and verification of savings



Financial Services

Siemens ‘Top Ten’ energy savingsopportunities

Take Away 9: Energy saving covers a huge range of equipment



Financial Services

Fastest returns – outright purchase paybacks:

Take Away 10: Financing can change the whole payback equation!

1. Monitoring and Targeting Systems 1-3 months

2. Low Energy Lamps 1-12 months

3. Variable Speed Drives 3-12 months

4. High Efficiency Motors 3-12 months

5. Building Controls 3 months – 4 years

6. Intelligent Lighting Controls 1-4 years

7. Increased Factory or Process Automation 1-4 years

8. Power Management Solutions 1-4 years

9. Supply Voltage Optimisations 2-5 years

10. Combined Heat & Power 2-7 years



Financial Services

More than theory

Astrom Steel Works

Loan of £400,000 for new compressors

Annual cost savings £80,000

Annual CO2 savings 600 tonnes

“When we sat down with the loan figures I didn’t believe it,”

“Effectively the replacement is cost neutral for the first four years, and after that we’ll be saving 50% on electricity costs.” Mike Hutchinson, Operations Director



Financial Services

But…..



Financial Services

But the proof of the pudding is in the eating……



Financial Services

Andy Swadlo

Andy SwadloSiemens Financial Services

Phone +44 (0)7929 207717E-Mail [email protected] www.siemens.com

Final Thought (take-away 11: OK, I lied, there are 11):

In a world where the image of financing has never

been worse, we can make the most positive difference to the world

Documents

For internal use only / Copyright © Siemens AG 2012. All rights reserved. Financial Services For internal use only / Copyright © Siemens AG 2012. All rights