World Bank Energy Week 2006

Clean Energy Finance and Private Equity Funds

Econergy International Corporation and the Cleantech Fund

March 7, 2006

John NorthrupExecutive Vice President Business Developmentnorthrup@econergy.com +1 303-473-9007

1

Introduction

•Econergy International is an established clean energy investment, management, and consulting group, and world leader in Carbon Credit origination and sale.

•Econergy raised more than $100m on the London Stock Exchange which the company will use to invest in clean energy projects.

•Econergy’s strategy is to generate dual income streams from clean energy revenues and Carbon Credit sales.

Recent Milestones

• In October 2004 closed the commitments of the CleanTech Fund (CTF), a $20m private equity fund focused on investment in clean energy projects in Latin America. The limited partners in the fund include Econergy, MIF, CAF, FMO, and Banobras.

• In September 2005, executed a $4 million credit facility with Trading Emissions PLC (TEP) against future delivery of carbon credits.

• In February 2006, successfully accomplished an initial public offering on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE) with proceeds of approximately $100m.

2

Project Investment & Development Group

8

• Technology focus: wind, hydro, biomass and alternative fuels

• Specific size focus: up to 150 MW

• Ownership: focus on majority controlling stakes, but also consider minority investments depending on investment partners

• Goal: Own and co-invest in 10-12 projects by end 2008

• Current pipeline approximately 26 projects of which 4 are under periods of exclusivity and 18 are under various stages of development

3

CleanTech Fund• A Capital Appreciation & Structured Finance Fund

• Invests in promising medium sized projects/companies in Latin America.– Projects and companies with contracted long-term

revenues and fixed cost investments– Project Investment - Up to 15% of the CTF

capitalization per transaction ($3.0 MM)

• Carbon Credits as a currency risk mitigation and improved IRR strategy, leveraging Econergy’s considerable experience and expertise in carbon credit origination and sales

• Econergy as general partner of the CTF manages two grant facilities for early stage project development

– $1 MM Grant facility from MIF – $1 MM Grant facility from GEF

• CTF strategy is to look to its partners, MIF, CAF, FMO, and Banobras as lenders to project.

5

NEOGás- First CTF deal

• Private equity expansion financing of an operating Compressed Natural Gas (CNG) sales & distribution company in Brazil

• $3m investment by CleanTech Fund, closed January 2006

• Investment will support expansion of company’s operations in its fast-growing, increasingly competitive market

7

Example Project Structure:Santa Catarina

Description 20 MW Wind Farm, Monterrey, MexicoLand 147 hectares of land to be used

under long-term leaseResource Wind capacity demonstrated by ABB feasibility

studyOwnership Group owns 99% of project company, nominal

ownership to be held by municipalities under Mexico’s self-generation law

PPA Municipalities intend to enter into PPA

Guarantees Possible Quasi-guarantee of payments by municipalities through Banobras

EPC Financeable contract including warranties from

turbine supplierDebt (70%) BanobrasCosts Expected capital costs of $1,400/kW (c.$28m)Output 50,000MWh/yr, 30,000Carbon Credits/yrEquity $3m CleanTech Fund, $5.4m Econergy for a 64%

controlling interest

Cooperation with Development Institutions

6

• Long history as advisor to the IADB, KfW, IBRD, IFC, IDA, CAF, EBRD, and others

• As consultants, supported the development of several innovative financial mechanisms to promote clean energy investment

• IADB’s Multilateral Investment Fund (MIF), The Netherlands (FMO), Mexico’s Banobras, and Corporación Andina de Fomento (CAF) are investors in the CleanTech Fund

Difficulties accessing development bank debt for the private sector

9

Problem: Some lending minimums at some development banks are too high for many clean energy investments.

Bundling transaction is difficult Possible solution: Reduce investment size

requirement

Problem: By their nature, typical RE projects are smaller then typical fossil fuel projects but tend to incur the same fixed transaction and financing costs.

Kyoto and related carbon credit financing help somewhat, in addition some countries (e.g. Brazil, Mexico, Chile, Ecuador) have launched initiatives that provide further assistance at reducing this inequity.

But, Can more be done and can it be done by the multilateral lending community ?• Extend the use of grant facilities to cover closing

costs?• Caps on third party (legal and technical) costs?

Is the goal of making the financing of a clean energy MW the same or cheaper than a fossil fuel MW obtainable?

15

Contacts

HEADQUARTERSEconergy- Boulder

3825 Iris Avenue, Suite 350Boulder, CO 80301

Tel: +1 (303) 473-9007Fax: +1 (303) 473-9060

Econergy- DC1925 K Street, NW, Suite 230

Washington, DC 20006Tel: +1 (202) 822-4980Fax: +1 (202) 822-4986

Econergy- BrasilRua Pará, 76 Suite 41

ConsolaçãoSão Paulo, SP 01243-020 Tel: +55 (11) 3219-0068Fax: +55 (11) 3219-0693

Econergy- Mexico CityIbsen 15-801

Colonia PolancoMexico DF 11560

MexicoTel/Fax: +52 (55) 5282-0940

Econergy-MonterreyAvenida Casa Blanca 1716

Colonia Villas de San CristóbalSan Nicolás de los Garza

Nuevo León 66478 Mexico

Tel: +52 (81) 8321-9230

www.econergy.com

Representative office-Argentina

 Italia 58 Piso 3 Oficina AAvellaneda - B1870COB

Buenos Aires Argentina

 Tel/Fax: +1 (54.11) 4201-7058