Performance Based Partnerships for Energy Efficiency

1. BUILDING EFFICIENCY – EUROPE & AFRICA Performance Based Partnerships for Energy Efficiency Agostino Renna Vice President, Sales & Marketing Europe & Africa

2. Topics • Johnson Controls – A Brief Overview • A Case for Change • Energy Performance Contracting • An Example in Germany • The Role of Associations • Conclusion

3. Johnson Controls Inc. - Three Global Businesses • Automotive Experience ($18.3 billion) • Seating and interiors • Components and system integration • Electronics • Power Solutions ($5.7 billion) • Lead acid (80 million per year) • Hybrid battery development (NiMH, Li-Ion) • Battery management and electronics • Building Efficiency ($14.1 billion) • Systems and equipment • Life-cycle services (500 locations in 125 countries) • Energy efficiency

4. Building Efficiency - Global • We provide solutions designed to minimize the environmental footprint of buildings • Full spectrum of capability – design, build, operate, maintain, optimize, replace • Full spectrum of solutions - HVAC, control systems, refrigeration, fire and security systems, and services for commercial, industrial and residential buildings.. $14.1 billion 56,000 employees 125 countries

5. A Case for Change ... Fighting Climate Change Research indicates that we are about 8 years away from getting to the point where we will reach a concentration of greenhouse gases that will cause an irreversible 2 degree C increase in the Earth’s temperature Some good questions: • Why is this important ? • What can we do ? • How do we act concretely to deliver on our environmental and legislative obligations (20/20/20) ? • What should be the leading role of public bodies ? • How do we prioritize what should be done ? • How do we fund it ? • How do we execute in a simple way ? • How can we make sure results are measured and impact guaranteed ?

6. Energy Performance Contracting: A Proven Model • Hundreds of performance contracts have been signed over the last 20 years • Energy reduction obtained through performance contracts can be between 10% to as much as 50% of a site’s energy consumption • Our organization alone has executed projects that have generated over $3.8 billion in savings and contributed to avoiding over 12 million tons of CO2 emissions since 2000 • Types of improvements we can include under performance contracts: • Building Lighting Systems • Building Envelope • Mechanical, Building Management Systems & Controls • Renewable Energy Solutions • Life Safety • Facility Management Systems • Training Support Programs • Automated Meter Reading (2-way data collections) • Water and Wastewater Treatment Plant Upgrades • Street and Traffic Lighting • Energy Supply and Demand Management

7. Typical Drivers • Reduce energy consumption and greenhouse gas emissions • Optimize operations and maintenance • Respond to legislation • Strengthen image • Improve business and financial performance • Avoid the use of capital • Modernize assets with a total life cycle approach • Access world class technologies and expertise • Reduce risk • Performance and reliability • Operating budget

8. Performance Contracting A proven global model for financing large-scale energy efficiency retrofit projects based on guaranteed energy savings 8

9. Performance Contracting: The Model Utility Gas, Electricity Payment Design, Construction, Financing Maintenance Energy savings and uptime guarantee Customer Contractor Payment equal to or less than savings 9 A more comfortable, safe and sustainable world.

10. The Process PDA* Contract Energy savings Baseline Data Detailed Analysis Planning and Execution Monitoring and Controlling Preliminary Analysis Cooperation as partnership 10

11. An Example – Energy Performance Contract Initial Situation • More than 100 buildings on the site (different usage - residential, garages, warehouses and kitchen). • All are provided with heat by the on-site heat grid • The heating is supplied by 3 gas/oil boilers with 1,150kW, 2,000 kW and 1,000 kW capacities • There was a Building Management System (BMS) installed in the early 1990’s which needed to be modernized • There was no metering system in place • Lighting systems were antiquated and inefficient • The overall energy costs in 2008 were approx. 1,050 kEUR per year • The CO2 emissions for the site estimated at 4,500 tons per year

12. The Solution • Energy Performance Contract: Solution design, project financing, installation, project management, service agreement and guaranteed savings • Re-designed heat generation system - the 3,150 kW and 1,000 kW gas/ oil boilers preserved, the 2,000 kW boiler replaced • Installation of a biomass-boiler (wood chips) with 700 kW capacity • Installation of a biomass Combined Heat and Power unit (CHP) 250 kW electric/ 525 kW thermal • The biomass boiler and the biomass CHP feed a hot water buffer tank to build thermal inertia and create a more stable workload • Heat base load is covered by biomass-CHP • Peak load only is covered by gas heat boiler (most expensive conversion option) • Modernization of Building Management System (BMS) • State of the art metering system installed and integrated into BMS • The lighting installations replaced with high efficiency lighting systems • Heating plant operation more tightly connected with true heating load (biomass boiler has wide modulation capability – 30% to 100%) • Supply temperature controlled as a function of outdoor temperature

13. Heat supply solution with a CHP unit and a biomass boiler The design of the biomass CHP and the biomass boiler was conducted according to the heat load distribution per year Power (kW) Biomass CHP Operating hours/year

14. Benefits • State of the art technology designed and installed with total life cycle cost and environmental impact in mind • Solution financed by the contractor • Reduction in overall energy costs by 69% (to 328 kEUR per year) • The CO2 emissions for the site reduced by 76% to 1,100 tons per year • Service delivered by contractor for 10 years • Same contractor guarantees energy and operating performance

15. The Role of the Associations to stimulate Energy Efficiency The Clinton Climate Initiative (CCI) from the Bill Clinton Foundation is serving as the implementing partner of the “C40,” an association of 40 large cities around the world. CCI are assisting these cities implement large-scale projects that reduce energy consumption, use clean energy, and reduce greenhouse gas emissions. Johnson Controls is a partner of the CCI. The Covenant of Mayors is an initiative of the European Commission bringing together the mayors of Europe's most pioneering cities to improve energy efficiency significantly in the urban environment. The Covenant of Mayors is the response of the most active cities to global warming: a formal commitment by the cities to reduce their CO2 emissions even beyond the EU 20% objectives. Almost 100 cities throughout Europe, including 15 capitals, have expressed their willingness to join.

16. Conclusion • Buildings represent one of the largest addressable energy efficiency opportunities in the world • Energy Performance Contracting is a solution – it can provide financing and guaranteed results • Some large public institutions are very active today, others are not • Some large private sector companies are active, others are not • The most effective energy efficiency strategy is not to consume it at all ! • We need the world to act Efficiency Now... It's never been more important !

17. Agostino Renna • Vice-President • Sales & Marketing • Europe & Africa • Johnson Controls • De Kleetlaan • Diegem, 1831 • Belgium • Agostino.R.Renna@jci.com • www.johnsoncontrols.com Questions ?