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Presentation to: 2012 Green Energy Summit – Plenary Session D, Ballroom AB, 2pm March 7th, 2012 Milwaukee, Wisconsin PowerPoint Presentation
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Presentation to: 2012 Green Energy Summit – Plenary Session D, Ballroom AB, 2pm March 7th, 2012 Milwaukee, Wisconsin. About Us. Global Infrastructure Asset Management LLC (GIAM) is an investment management firm with offices in Chicago and Madison

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Presentation Transcript
slide1

Presentation to:

2012 Green Energy Summit – Plenary Session D, Ballroom AB, 2pm

March 7th, 2012

Milwaukee, Wisconsin

slide2

About Us

  • Global Infrastructure Asset Management LLC (GIAM) is an investment management firm with offices in Chicago and Madison
  • GIAM is a dedicated team with proven expertise in infrastructure credit that has recently lifted out of larger asset management firms and banks to raise and manage specialized private investment funds
  • GIAM’s first focus is on the current opportunities that exist in renewable energy infrastructure and manages the Geo Investors Renewable Infrastructure Fund I LP
  • The Geo Investors Fund is focused on providing project level financing for projects that generate renewable energy
slide3

What Do Investors Want?

  • High Absolute Returns
  • High Risk-adjusted Returns
  • Low Risk
  • Liquidity
  • Proven Technologies
  • Proven Asset Classes
  • Larger Projects
  • Investments that Fit Existing Asset Allocations
  • Proven Teams and Track Records
  • Something to Talk to Their Friends About
  • Uncorrelated to other Assets
  • Inflation Protection

In Other Words…… Everything!

slide4

Why Invest in Biogas Projects? – The Context

  • Return on Risk
  • Predictable Cash flows
  • Diversification to Other Investments

Infrastructure

  • Area of Growth and Demand
  • Variety of Project Sizes and Opportunities

Renewable Energy Projects

Biogas Projects

  • Multiple Drivers of Revenue and Value
  • Need to Fit Within the Context Above
slide5

Biogas Within the Renewable Energy Project Universe

  • Challenges:
  • Project siting
  • Grid Connection
  • Intermittence of power to grid
  • Other environmental impacts

Utility Scale Wind

Utility Scale Solar

Large scale Ethanol

Large Hydroelectric (Reservoir systems)

Large Geothermal

Community Wind (multiple turbines >500kW)

  • Opportunities withinDistributed Generation
  • Can Benefit from:
  • Efficiencies of utility scale
  • Easier grid interconnection
  • Less complex project siting
  • Long-term PPAs with regulated utilities

Commercial and Industrial Solar Installations

Commercial, Industrial, Municipal Energy Efficiency

Waste to Biofuels

Midsize Geothermal

Methane Waste to Energy

Small Hydro (Run of river)

Small Methane Digesters

  • Challenges:
  • Inefficient scale
  • Lack of professional operation
  • Credit worthiness of off- take counterparty

Small Wind (single turbine <500kW )

Retail and Small Commercial Energy Efficiency Projects

Residential Geothermal Heat Pumps

Residential Rooftop Solar

slide6

Biogas Project Financing: Financial Market Constraints

  • Small project sizes compared to customary project finance market
  • Doesn’t offer the return expectations of typical Angel or VC investors

$5 - $20

$5 - $100

$20 - $100

$100

Company

Stage

Technology

Development

Pilot Plant

Demo Plant

Build-out of

Commercial

Plants

Business

Strategy

Project

Portfolio

Finance

Company

Expansion

Investment

Style

Venture Capital

Infrastructure

Equity/ Debt

Private Equity

Infrastructure

Equity/ Debt

Buyout/

Growth

Angel/

A Round

B & C Round

D Round/

Exit-IPO

Investment

Attribute

Technology expertise, sector knowledge,

Management building

Project

Finance

Sector knowledge,

Company

building,

Financial engineering

Material knowledge

Market

Knowledge

Project

Finance

Project Financing Gap

Source: DB Advisors; Hudson Clean Energy

slide7

Biogas Investment Proposition

  • Maximize Cash Flow
  • Minimize Risk
  • Who is the developer/owner/operator?
    • Internal or Third Party
    • Track Record of Experience
  • How will the project make money?
    • Revenues from: Gas, Electricity, Thermal Energy, Tipping Fees, Co-Products
    • Availability of Long-term Contracts with Creditworthy Parties
  • Is there sufficient Feedstock?
    • Single or Multi Source ; Creditworthiness
    • Supply of Higher Energy Supplements
  • How, who, and what will be built?
    • Engineers, Technology Providers, Construction Contractors

Key Questions to Ask:

slide8

Current Observations on the Project Finance Market

Estimated Breakdown of $134 Billion of Capital Investment from 2010

Deployment

Capital Investment

Banks, Finance Companies, Insurance, Specialized Funds

Solar

Senior Debt

$60B

Debt

55%

Wind

Developers, Contractors, Tax Equity, PEFunds Infrastructure Funds

Subordinated

Debt $14B

Equity

15%

Geothermal

Equity

$20B

Gov’t

Grant

$40B

Gov’t

Grant

30%

US Government

Bioenergy

  • General supply of debt financing still constrained by macro economic factors and the ongoing repair and repricing of bank balance sheets
    • Some signs of improvement, especially for larger projects and where equipment finance is involved
  • Significant uncertainty around the future of federal support through ITC and PTC tax credits
  • Tax credit uncertainty and reduction of participants in the tax equity market has driven up the cost of tax equity