Ll Energy Savings for Industrials, Municipalities and Universities Version 23

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Energy Savings for Industrials, Municipalities and Universities

Version 23

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Executive Summary

• District heating, combined with energy savings, can significantly improve energy costs, reliability and local economic development• Conversion to low cost fuels like waste wood is key for cost

benefits to developer and customers

• Thermal Ventures, Inc. (TVI) and Carl Avers have over 30 years of experience in successfully developing district heating systems, thereby reducing new development risk

• Current and historical operations• Youngstown Thermal – various ownership positions since 1980• Akron Thermal – lease part and own part of system since 1995• Detroit Thermal – acquired steam system in 2003

• New projects: Carmeuse, V&M Star and Finlandia/Hancock, the deal and investor returns

Confidential, Thermal Ventures, Inc. All rights reserved. 2

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Overview of Thermal Ventures, Inc.


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Carl E. Avers, Chairman and CEO

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• BS ME Michigan Technological Univ., Utility Finance - Stanford University• Director of Advanced Energy Systems Division at Ellers, Fanning, Oakley,

Chester & Rike, an engineering firm in Memphis• Formed district steam and co-generation systems for San Diego Gas and

Electric Company, resulting in over 100MW of co-generation units, managed Nashville Thermal DHC

• From 1980 to 1989, Chairman/President/Founder of Catalyst Thermal Energy, acquired and grew 6 of the larger district energy systems in the US, and grew revenues from under $3M to $125M within five years

• Co-founded Thermal Ventures, Inc.™ in 1989 with Lewis Mahoney, has been in the district energy business for more than 30 years

• Board member and former President of the International District Energy Assoc. (IDEA) and received the highest honor, the Norman Taylor Award

• Published numerous articles and presented many technical papers on energy and environmental issues; PE Licenses in California, Tennessee, and Florida

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James A. Mullen, Jr., P.E., Vice Chairman

• Vice Chairman of Thermal Ventures, Inc.• Former president and general manager of TVI’s Youngstown and

Akron steam utility operations• Former director of the steel industry’s PECOR, Lectromelt and

Central Engineering divisions that designed, manufactured and installed BOF, AOD, EAF and LMF steel-making processes

• Past president of Metacon Systems Company that pioneered automatic start and thin slab casting slidegate systems

• Former chief engineer of Alliance Machine Company that designed and manufactured coke oven equipment

• BE EE Youngstown State University, registered professional engineer, and member of the National Society of Professional Engineers, the Institute of Electrical and Electronics Engineers, the Association of Energy Engineers, and the International District Energy Association

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Carl Avers History of Success

• Mr. Avers has 30 years of experience in developing district energy and energy savings projects

• Currently co-owns Thermal Ventures II as passive investor• Revenue: $65 million• Earnings: $8 million

• The average return realized by investors has been very high:• From 1980 to 1986, investors netted $17 million with no equity

investment• The 6 steam systems assembled from 1986 to 1990 by Catalyst

Thermal were sold at a profit of $50 million• From 1990 to 1999, TVI grew zero equity into $17 million equity

for only two of its four systems

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History

Carl Aver’s co-Founded Catalyst Thermal, acquiring Youngstwon Steam System

1980

• Boston• Cleveland• Youngstown• Philadelphia• St. Louis• Baltimore

Grew Catalyst Thermal to 6 steam generating plants with 122 miles of distribution, 2000 steam customers / 500 employees

1986 1989

Sold Catalyst Thermal to Trigen Energy except for Youngstown system, which went to TVI.

Co-founded Thermal Ventures.

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History

Carl Avers co-Founded Thermal Ventures and began managing Pittsburgh and San Francisco steam systems

Acquired San Francisco and Pittsburgh Steam for total of $16.4 million

1993 1995 1999

Sold 50% of company to NRG Energy for $7.4M, leased Akron Thermal

Sold remaining 50% of SF and Pitt to NRG Energy for $9.7M, kept Young. and Akron

In sum, NRG Energy assumed the debt, and the $17.1M was profit to the equity investors, providing infinite return

1989

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History

Formed Thermal Ventures II, transferred in Youngstown Thermal from TVI

Acquired Detroit Thermal

Transferred Akron Thermal from TVI to TV II

2007

Started Kingsville Thermal

2005

Started V&M Star and built Oberlin

2008

Started Carmeuse

2002 20042000

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Today

• Came out of retirement in 1989 to form Thermal Ventures, Inc., a developer of energy-savings/district energy systems with major energy users as the hub, employing the Denmark Energy Model

• Owns, operates and manages the Youngstown, Akron and Detroit district heating systems through an affiliate company, Thermal Ventures II, where TVI is a passive owner of 17% interest of TV II

• Business model: shared energy savings and third party investors along with district heating system development

• Currently involved in developing energy savings systems and managing over $1 billion/year of industrial energy usage:• Industrial systems – three steel mills and several greenhouses• University systems – currently working with seven • Municipalities – beginning to work with Calumet and Oberlin• Agricultural systems – waste wood boiler systems that serve

greenhouses

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Financial Structure


Carl Avers

Thermal Ventures II

Detroit Thermal

Akron Thermal

Youngstown Thermal

Thermal Ventures

River Rouge Energy

Youngstown Energy / V&M Star Project

Thermal Ventures

17% owner

$65M Revenue$8M EBITDA

100% owner

22.5% owner

100% owner

+18 other projects

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Current and Historical Success

• Akron Thermal, LP – TVI has leased two Akron Thermal plants from the City of Akron, OH since 1995 – $ 13 million revenue business

• Akron Thermal Cooling Works, LLC – The City’s district cooling system began in 1997 – serves stadium, buildings, industrial park

• Virginia Commonwealth University/Richmond Steam Plant – In 1998, awarded contract to manage the 375,000-pound-per-hour steam boiler plant – serves college, government, and others

• Current managers of Thermal Ventures have led the acquisition and growth of district energy systems in several major U.S. Metropolitan areas:• San Francisco, CA, Boston, MA, Baltimore, MD, St. Louis, MO,

Philadelphia and Pittsburgh, PA, Cleveland, OH, Youngstown, OH, Akron, OH, and Detroit, MI


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Notable Customers

Customers of TVI and Mr. Avers projects include:• Agmet Metals – Oakwood Village, OH

• Canton Drop Forge – Canton, OH

• Cargil – Akron, OH

• Denman - Leavittsburg, OH

• District Energy St. Paul – St. Paul, MN

• Forum Health – Youngstown, OH

• Gleason Works – Rochester, NY

• Green Circle Growers – Oberlin, Ohio

• Hoover Co. – North Canton, Ohio

• H.J. Heinz World Headquarters – Pittsburgh, PA

• University of Colorado – Boulder, CO

• University of Rochester & Strong Memorial Hospital – Rochester, NY

• V&M Star - Youngstown, Ohio

• Virginia Commonwealth University Medical Center – Richmond, VA

• Longwood University – Farmville, VA


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Strategic Relationships


• TVI and Mr. Avers have the following key relationships:

• Joint marketing and development with Conestoga Rovers, a 3,000 person environmental engineering company

• Thermal Engineering Group (Nashville), supports engineering for all of TVI projects functioning as its Chief Engineer

• Co-developers on energy projects for United States steel companies where TVI offer no risk energy services to customers, while creating 50% annual energy savings

• V&M Star Steel Company in Youngstown was the first in a series of customers

• Co-Marketing agreement with Worley Parsons, a 30,000 person engineering company, to install EAF Energy Efficiency Management Systems

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New Project Structure


University and School

Project Stage

Oakland1 Funded

Williams1 Funded

Aquanous1 Funded

Oberlin1 Funded

Stanford1 Funded

Stanford1 Funded

Finlandia1, 3 MOU

Calumet1, 3 Discussions

Michigan Tech1, 3 Discussions

Miscellaneous Industry

Project Stage

Carmeuse1, 3 MOU

Kingsville Thermal1 Self-funded

Kingsville Energy II1, 3 MOU

Kingsville Energy III2, 3 MOU

Stoney Field1 Discussions

Smart Paper1 Discussions

Steel Industry

V&M Star2 Self-funded

Severstal1, 4 Discussions

Ameristeel1 Self-fundedFootnotes:1.TVI Developer2.Youngstown Energy Developer3.Blue Harbor Co-developer4.$5.0M of the $80.0M is shovel ready and needed immediately

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Overview of District Energy and Energy Savings Systems


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Development Phases

• Phase One, Energy Audit• Paid for by Thermal Ventures, returns 300% of investments• Takes several months to complete, 3 year contracts

• Phase Two, Energy Savings/Utility Services• Water Service Utility Agreements• Electrical Service Utility Agreements• Heating Service Utility Agreements• Compressed Air Service Utility Agreements

• Phase Three, District heating• Provide waste heat recovery to surrounding area with district

heating model, where appropriate• Convert to more efficient form of combustion, lower cost energy

source (have been using wood as fuel, saving customers fuel dollars while building profitable district energy systems using the Denmark formula)


Long-Term Agreements

10-20 yrs

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Energy Savings

• Building envelope• Windows, doors, insulation

• Electrical• Hi-efficiency lighting, motor controls and motors, load balancing

• Air handling systems• Eliminate leaks, load balancing

• Water systems• Eliminate leaks, pressure control

• Heat• Boiler controls, temperature control, operational enhancements,

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District Energy & Energy Savings

• Typically save 30% to 50% on energy costs, in addition to supplying steam, hot water, or chilled water to customers• Services provided under long-term contracts or tariff schedules

• Numerous benefits, including: lower utility expenses, greater reliability, reduced capital costs, and reduced maintenance costs

Confidential, Thermal Ventures, Inc. All rights reserved.1919

Source: International District Energy Association

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Confidential, Thermal Ventures, Inc. All rights reserved.20

District Energy Advantages

A few centralized large boilers are more efficient than hundreds of small boilers.

Large central plants are better equipped to meet air quality regulations than smaller plants, primary way to become green.

District energy‘s centralized purchasing negotiates lower fuel prices based on larger volume discounts of as much as 80%.

More flexibility as most have two or more fuel options with wood waste being a possibility as well.

District plants typically have standby energy capacity available in emergencies, fostering greater reliability.

More rentable space offered by eliminating the space dedicated to boiler rooms, chiller areas, etc.

Buying energy from a community system eliminates labor, maintenance, capital, regulatory and chemical-disposal costs.

Efficiency

Air Quality

Fuel Purchasing

Multiple Fuels

Reliability

Building Design

Hassle-free Operations

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Examples of District Heating and Energy Savings Projects


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Youngstown Thermal

• In 1980, Youngstown Thermal acquired the then fuel oil burning North Avenue Steam Plant from Ohio Edison

• Thermal Ventures, Inc. reactivated coal use with a clean coal burning technology using state-of-the-art pollution control systems


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Youngstown Customers

• Customers include: • Youngstown State University• City and County Buildings• YMCA and most of downtown’s CBD


Chase Bank First National Bank

Industrial Museum Youngstown State University

The combustion/control technology at Youngstown Thermal was recently adopted as best available technology for the State of Pennsylvania.

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Youngstown Savings and Returns

• Since 1980, Youngstown Thermal has saved the Central Business District (CBD) approximately $140,000,000 in energy savings

• It would cost $5,000,000 more each year if the CBD buildings used natural gas for their fuel source for heating instead of clean coal

• Part of the acquisition group of steam companies that netted investors $17 million with no equity investment


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Akron Thermal

• Thermal Ventures, Inc. has operated the Akron Thermal system under a lease with the City of Akron, Ohio, since 1995• TVI built and owns the district cooling system

• Two plants operated: one on natural gas, tire derived fuel, wood waste, or wood chips; other on natural gas and coal

• The project cost $10 million of new investment to complete, reducing operating expenses by $8.5 million per year initially


Akron Steam Plant Akron Skyline

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Akron Customers

• 20 miles of distribution piping and serves more than 200 businesses and residences in and around downtown, including:• Children’s Hospital• Akron General Hospital• Akron City Hospital (3 miles away from steam plant)• The University of Akron


John Knight Center Main Street Akron High School Akron State University

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Akron Thermal Savings

• Since 1995, the Akron Thermal system has saved the Central Business District approximately $221,000,000 in fuel savings

• In Akron, it would cost $20,000,000 more each year if the CBD buildings used natural gas for their fuel source for heating instead of clean wood and/or coal


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Proposed Oberlin Energy Project


Replacing natural gas with wood waste fuels produces large annual savings for the community. Wood is carbon neutral along with land fill gas.

Green Circle Growers

Wal-Mart

Vo-Tech School

Municipal Electric Power Plant

Industrial ParkLand Fill Gas

SourceHospital

Oberlin College

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Concord, NH Steam

• Concord Steam is a small town example of an independently owned district heating and energy savings system

• Cogeneration facility uses biomass to produce steam to heat downtown Concord, NH and also to produce electricity for sale to utilities

• One of a few wood-fired district-heating plants in the world


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Concord Customers

• 8 miles of distribution piping supplying steam to approximately 110 customers, with 200 commercial and institutional buildings including government agencies:• City of Concord• State of New Hampshire• Federal Government• State and federal office buildings• The Concord Hospital• The New Hampshire Hospital


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Concord Benefits

• Benefits are many and include:• Lower capital costs, lower energy costs, operating and

maintenance costs, stable energy rates, local jobs and increased tax base

• State of the art pollution control and monitoring systems• Burning wood rather than oil prevented the emissions of more

than 6,000 tons of sulfur oxides to the atmosphere• 800,000 tons of woodchips burned, replacing 36 million gallons of

imported oil, and sending $12 million back to the local forest industry rather than overseas

• Concord employs 15 people, and each year pays $125,000 in city taxes and $187,000 in city water and sewer fees


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Denmark: Most Energy Efficient Country

• Employed energy efficiency initiatives and cut energy usage by 50% among University and Industrial campuses

• Natural part of infrastructure in almost every city

• Built Pipeline Utilities that transport waste heat from industrials to buildings that need heat


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Denmark Efficiency

• Built Cogeneration systems that are 80% efficient in producing electricity versus 30%• Cogeneration is possible only with district steam / hot water

utility systems

• Denmark recognized that:• Simple payback periods for power plants are 25 years• Whereas simple payback periods for energy efficient

technologies are 1 to 3 years• Furthermore, energy efficient technologies eliminate the need for

more power plants

• CFL light bulbs use 75% less energy – other like new technologies were installed to reduce energy consumption at colleges and factories by 50%


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District Heating with Many Fuels

• Copenhagen and other communities installed district steam utilities so alternative fuels such as wood waste can be used as fuel


Map of the heat transmission network supplying Greater Copenhagen (www.dbdh.dk)

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New Projects: Carmeuse Lime Kiln


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Carmeuse/ River Rouge Energy

• Carmeuse Lime and Kiln, a $1.5B+ international lime and kiln operation, is the host and base tenant• Belgium HQ’s with 35 plants in North America, of which Thermal

Ventures is managing energy for the first plant with the goal of becoming 100% green

• Provides land, water, waste heat, and fuel for the project• Will buy electricity

• The first project – River Rouge Energy• Install energy savings, waste heat power and steam generation

systems

• Neighbors• US Steel, Severstal Steel, Ford Motor company, Shell Oil,

Chevron Oil, Marathon Oil, City of River Rouge, City of Detroit WWTF

• Additional waste heat available from them


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River Rouge Energy Investment

• $250,000 development financing for engineering• Investors receive 40% interest per annum• One year term• Option to takeout at project finance of $26 million (6 to 9 months)

or ride in the project finance investment• Non-recourse loan• Subject to satisfactory completion of due diligence


Source of Funds Uses of Funds

Convertible loan

Total

250,000

$250,000

Thermal Engineering GroupPSIConestoga RoversTVI and Blue Harbor EnergyFundraising expensesContingencyTotal

40,00040,00090,00040,00011,25018,750

$250,000

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River Rouge Energy Project

• $26,000,000 in first phase (install gasifier)• Potential steam customers have already been contacted and have

expressed interest in purchasing all of the steam

• $22,000,000 in second phase (expansion project to additional customers)• Reclaim heat from steel mills, continue and expand district heating

system• Immediate neighborhood needs 3x the energy as Carmeuse

• BOO Utility District steam model, long-term contracts• $11.2 million in steam and $0.8 million in electricity revenue• Structured on a “project finance” basis• Investors realize the benefit of:

• Investment tax/green credits• MACRs depreciation over five years• Cash distributions from income stream from energy sales


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Item Description

Initial Phase Cost $26 million

Total Project Cost $48 million

Payback Period 3.5 years

Completion Time 11 months after development phase

Steam Produced from Waste Heat 70 MLB sold @ $20/mmbtuh

Electricity Produced from Waste Heat

1.4 MW @ 7.5c/kwh

Steam Revenue $11,172,000 annually

Electricity Revenue $837,900 annually

Fuel Cost Less than $.001/kw

River Rouge Energy Project Details

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Summary of Tax Incentives


Description of Award Estimated Award Term Category Federal Waste Energy Recovery Incentive Grant

$1,530,000 - $2,700,000 3-yrs Grant

Next Energy Business Activity Tax Credit

$1,850,000 - $2,000,000 1-yr Nonrefundable MBT Tax Credit

Brownfield MBT Credit $2,300,000 - $2,500,000 10-yrs MBT Tax Credit Real Property Tax Abatement

$15,200 12-yrs Tax Abatement

Personal Property Tax Abatement

$1,700,000 - $3,500,000 10-yrs Tax Abatement

MBT Investment Tax Credit $530,000 - $580,000 1-yr Nonrefundable MBT Tax Credit Renaissance Zone $11,700,000 Up to 15-

yrs Tax Abatement

The estimated total potential award, excluding renewable energy credits, for this project is $2,250,000 - $4,100,000.

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River Rouge Energy Carbon Credits

• Electricity offset• 1.4MW of electricity offsets about 7,800 tons of carbon per year

• Steam offset• Equivalent of 7 MW of electricity• 70,000 lbs/hour of steam offsets about 30,000 tons of carbon per

year assuming the offset is against natural gas


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• Steam Revenue• Calculated by multiplying 70MLB by the hours of operation by

the steam value ($20/mmbtuh)

• Electricity Revenue• Calculated by multiplying 1.4MW by the hours of operation by

the cost to purchase (7.5 cents per kwh)

• Debt Service• Calculated by taking a $26M capital investment and annualizing

the payments over 3 years with a 8% interest rate


River Rouge Financials

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River Rouge Financials (Years 1-4)


Years 1 2 3 4Annual RevenueSteam Sales 11,172,000$ 11,172,000$ 11,172,000$ 11,172,000$ Electricity Sales 837,900$ 837,900$ 837,900$ 837,900$ Performance Contract Costs

Debt Service 2,623,925$ 2,623,925$ 2,623,925$ 2,623,925$ M&V -$ -$ -$ -$ Other (identify) -$ -$ -$ -$ Other (identify) -$ -$ -$ -$ Total Contract Cost 2,623,925$ 2,623,925$ 2,623,925$ 2,623,925$

Proposed Cash Flow 9,385,975$ 9,385,975$ 9,385,975$ 9,385,975$ Other O&M ExpensesMaintenance 242,000$ 242,000$ 242,000$ 242,000$ Operating Labor 230,000$ 230,000$ 230,000$ 230,000$ Other 522,000$ 522,000$ 522,000$ 522,000$ Subtotal: Cash Expenses 994,000$ 994,000$ 994,000$ 994,000$

Net Annual Cash Flow 8,391,975$ 8,391,975$ 8,391,975$ 8,391,975$

Memo: Cum Net to Plant 8,391,975$ 16,783,950$ 25,175,925$ 33,567,900$

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Years 5 6 7 8Annual RevenueSteam Sales 11,172,000$ 11,172,000$ 11,172,000$ 11,172,000$ Electricity Sales 837,900$ 837,900$ 837,900$ 837,900$ Performance Contract Costs

Debt Service 2,623,925$ 2,623,925$ 2,623,925$ 2,623,925$ M&V -$ -$ -$ -$ Other (identify) -$ -$ -$ -$ Other (identify) -$ -$ -$ -$ Total Contract Cost 2,623,925$ 2,623,925$ 2,623,925$ 2,623,925$

Proposed Cash Flow 9,385,975$ 9,385,975$ 9,385,975$ 9,385,975$ Other O&M ExpensesMaintenance 242,000$ 242,000$ 242,000$ 242,000$ Operating Labor 230,000$ 230,000$ 230,000$ 230,000$ Other 522,000$ 522,000$ 522,000$ 522,000$ Subtotal: Cash Expenses 994,000$ 994,000$ 994,000$ 994,000$

Net Annual Cash Flow 8,391,975$ 8,391,975$ 8,391,975$ 8,391,975$

Memo: Cum Net to Plant 41,959,875$ 50,351,850$ 58,743,825$ 67,135,800$

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Total forYears 9 10 Year 15Annual RevenueSteam Sales 11,172,000$ 11,172,000$ 167,580,000$ Electricity Sales 837,900$ 837,900$ 12,568,500$ Performance Contract Costs

Debt Service 2,623,925$ 2,623,925$ 26,239,250$ M&V -$ -$ -$ Other (identify) -$ -$ -$ Other (identify) -$ -$ -$ Total Contract Cost 2,623,925$ 2,623,925$ 26,239,250$

Proposed Cash Flow 9,385,975$ 9,385,975$ 153,909,250$ Other O&M ExpensesMaintenance 242,000$ 242,000$ 3,630,000$ Operating Labor 230,000$ 230,000$ 3,450,000$ Other 522,000$ 522,000$ 7,830,000$ Subtotal: Cash Expenses 994,000$ 994,000$ 14,910,000$

Net Annual Cash Flow 8,391,975$ 8,391,975$

Memo: Cum Net to Plant 75,527,775$ 83,919,750$ 138,999,250.50

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Financial Assumptions


Technical AssumptionsAmounts

Steam Value ($/mmbtuh) 20.00$ Electric Cost to sell($/kwh) 0.040$ Electric Cost to purchase ($/kwh) 0.075$ Labor Rates (US$/hour) -$

Concept 2 Scope

Heat Recovery from lime kilnGenerate Elect MW 1.40Generate Steam MLB 70.00Generate Steam Lbs/Hr 62,500

Hours per year of operation 7,980

Other O&M ExpensesMaintenance 242,000.00$

Operating Labor 230,000.00

Other 522,000.00

Subtotal: Cash Expenses 994,000.00$

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Financial AssumptionsCapital Investment

Amounts(pct.)

Feasibility & Design Services $30,000 0.12%Intrest During Construction $250,000 0.99%Detail Engineering $1,100,000 4.37%

Legal Fees $500,000 1.99%

0.00%0.00%

Total Eng./Const. Services $1,880,000 7.47%

Total Installation Costs $21,750,000 86.47%Direct Costs - $0 0.00%Direct Costs - $0 0.00%Direct Costs - $0 0.00%Direct Costs - $0 0.00%Subtotal Materials $21,750,000 86.47%

Taxes 7.00% $1,522,500 6.05%

Total Capital Investment 25,152,500$ 100.00%

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Financial AssumptionsFinancial RequirementsTotal Capital Investment 25,152,500$ Debt 70% 17,606,750$ Equity 30% 7,545,750$ Term (years) 10Financing Rate 8.00%

Debt Service $2,623,925

Contract Termination Discount Rate 6%

Performance Contract CostsDebt Service 2,623,924.95$ M&V -$ Other (identify) - Other (identify) - Total Contract Cost $2,623,924.95

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Financial Assumptions

Annual Revenue

Utility GenerationElectricity $837,900Steam $11,172,000

Total Annual Revenue $12,009,900

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River Rouge Investment Considerations

• Experienced management team with track record of developing successful energy savings and district heating projects

• Mr. Avers has 30 years of experience in managing or developing over 10 district heating systems

• Realized investor returns have consistently been very high

• Strong relationships with numerous engineering companies and industrial companies that seek Mr. Avers’ and TVI’s expertise

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• Attractive investment return and rapid payback

• 40% interest per annum on development financing

• Payback period for the project is estimated to be 3.5 years or less

• Estimated tax credits, excluding renewable energy credits, for this project are $2,250,000 - $4,100,000

• Assumes only the most likely awards, although these awards are not guaranteed: real property tax abatement, personal property tax abatement, and MBT investment tax credit

• Estimated electricity offset of 7,800 tons of carbon per year

• Estimated steam offset of 30,000 tons of carbon per year (natural gas)


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• Well-established base tenant for the energy savings model and surrounding companies

• Carmeuse Group has operations in 13 countries, with 70 lime production plants, 3,700 employees, and production of more than 23 million tons of lime and limestone products annually

• Detroit Water and Sewerage Department has expressed strong interest in receiving 200,000 lbs/hr of steam

• Further industrials in the immediate area include U.S. Steel, U.S. Gypsum, Shell Oil, Chevron Oil, Ford Motor Company, Severstal Steel, and Marathon Oil


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New Project: V&M Star

Installation of a New High-Efficiency Energy Systemand Distributed Energy System


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Project Highlights

• Significantly reduces energy costs at V&M Star, neighboring hospitals, and the University, thereby making the manufacturing and business base in Ohio more competitive

• “Green” Project for energy efficiency and the environment• Sizable reduction in the emissions of CO2, CO, NOX, particulate,

and SO2• Utilization of 35MW of currently wasted energy and biomass

• Uses Ohio fuel sources such as coal, tire derived fuel, and biomass as a substitute for natural gas

• Projected to create 210 permanent and 1100 temporary jobs in Ohio

• Projected to create $5.0 million in Ohio state and $1.6 million in Youngstown local taxes


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V&M Star / Youngstown Energy, LLC

• V&M Star, a $500 million steel company, is the host and base tenant• Owned by the French company Vallourec Group, which has $8.9

billion in revenue• Provides land and waste heat for the project• Will buy electricity, manufactured gas, and water

• Some energy efficiency projects have already been completed• Furnace project complete and in trial runs; compressed air

reduction project engineering is complete and implementation will soon be under way

• Steam and cooling potential customers• Forum Health Hospital, St. Elizabeth Hospital, Youngstown State

University, Youngstown Thermal55Confidential, Thermal Ventures, Inc. All rights reserved.

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V&M Star Project

• Three main sub-projects with multiple revenue streams:

• Recover 35MW of waste heat• Heat and cool neighboring customers (90 million BTU/hr) in a

distributed energy system• Produce electricity for sale to V&M Star (335 million BTU/hr)

• Install 350 million BTU/hr Circulating Fluidized Bed Gasifier fueled by coal, wood, and Tire Derived Fuel (TDF)• Produce 995 Btu/CF of manufactured gas to sell to V&M Star

• Pump, process and filter water from the Mahoning River• Pipe and sell to V&M Star cooling towers


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Job and Tax Creation

• Significant job creation:• On-site Operational and Maintenance (O&M) personnel will be

approximately 35 permanent people

• Off-site fuel production and supply personnel will be approximately 175 permanent people

• On-site construction personnel will be approximately 1100 people, short-term, over a 24 month period

• Tax revenue projection• Approximately $5.0 million in state taxes and $1.6 million in local

taxes projected over the first 6 years of the project


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New Steam Distribution System


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Project Site at V&M Star


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V&M Star Project

• $6,200,000 in first phase• Install several projects, including river water supply, smart gas, and slag

analysis system

• $77,000,000 in second phase• Install gasification, cogeneration, and district energy systems

• BOO Utility District steam model, long-term contracts• $6.4 million in steam and cooling sales, $10.5 million in electricity sales,

$14.9 million in manufactured gas sales, and $1.1 million in water sales• Structured on a “project finance” basis• Investors realize the benefit of:

• Investment tax/green credits• MACRs depreciation over five years• Cash distributions from income stream from energy sales


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Item Description

Initial Phase Cost $6.2 million

Total Project Cost $77 million

Payback Period 3.5 years

Completion Time 12-18 months after development phase

Steam and Cooling Revenue $6,400,000 per year

Electricity Revenue $10,500,000 per year

Manufactured Gas Revenue $14,900,000 per year

Water Revenue $1,100,000 per year

Fuel Cost Less than $0.001/kw

V&M Star Project Details

Confidential, Thermal Ventures, Inc. All rights reserved.

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V&M Star Carbon Credits

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372,000 tons per year of CO2 offsetConfidential, Thermal Ventures, Inc. All rights reserved.

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Emission Reductions

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Near 100% reduction in NOX, particulate, CO, and SO2 emissionsConfidential, Thermal Ventures, Inc. All rights reserved.

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V&M Star FinancialsYear 1 Profit & Loss Statement

RevenueSteam Sales 3,920,614$ Cooling Sales 2,512,973$ Manufactured Gas Sales 14,881,000$ Electricity Sales 10,515,000$ Water Sewer Sales 1,056,000$

Total 32,885,587$

ExpensesLabor 900,000$ Coal 3,277,000$ Tire Derived Fuel 446,000$ Maintenance 1,400,000$ General & Administrative 300,000$ Water & Sewer 20,000$ Electricity 50,000$ Cooling Expenses 1,500,000$

Total 7,893,000$

EBITDA 24,992,587$

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V&M Star Financials

Capital ExpendituresWater Plant 800 GPM 1,000,000$ Gasifier 350 million btu/hour 15,000,000$ Power Plant (Cogeneration System) 45,000,000$ Steam Lines 8,000,000$ Steam Line to Youngstown Thermal 1,400,000$ Contingency 3,600,000$

Total 74,000,000$

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V&M Star Financial Assumptions

AssumptionsSteam Price 11.0$ per million btuCooling Price 0.168$ per ton hourManufactured Gas Price 6.70$ per million btuElectricity Price 0.0426$ per kwhSteam Price to Youngstown Thermal 2.76$ per million btuCoal Price 46.0$ per tonTire Derived Fuel 22.0$ per ton

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Contact Information

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Thermal Ventures, Inc.142 Poland Boardman

Road Suite #2 Boardman, Ohio 44513Mr. Carl Avers, Chairman

(330) [email protected]

www.thermalventures.com

Documents

Ll Energy Savings for Industrials, Municipalities and Universities Version 23