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Introduction
FLU-ACE® for Boilers
FLU-ACE® for Dryers
DRY-REX™
Gem® Condensate Return System
Thermal-AUD™
ThermalOZOMAX™
Other Solutions
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Solutions
THERMAL-AUD™
Thermal Energy International’s (TEI) THERMAL-AUD™ Program is an innovative, off-balance sheet product that allows energy
managers to meet corporate energy cost and emission reduction mandates without investing internal capital funds.
Thermal-AUD™ conforms to current accounting standards allowing for off-balance sheet treatment (i.e. operating lease vs. capital lease) and provides
the breakthrough you need to:
- Lower operating costs using TEI’s proven technology solutions;
- Address lack of available capital funding for investment in energy reduction projects;
- Increase your bottom line by preserving internal funds for core business needs;
- Shift long term financial risks to TEI with guaranteed performance outcomes;
- Shield against high energy costs by leveraging TEI solutions;
- Benefit from accelerated program implementation;
- Avoid delays that hamper traditional capital projects;
- Monetize emission reduction efforts by assigning emission reduction credits through TEI’s participation in the Chicago Climate Exchange.
Traditional Capital Expenditure Project
- Energy Cost and Emission Reductions as a mandate
- Capital investment required
- 8 to 12 months to research and approve capital budgets AND 6 to 8 months procurement and negotiations
- Customer takes risks for equipment maintenance, repair, performance, downtime and financing costs
- All types of TEI and non TEI Technology Solutions
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THERMAL-AUD™ Program
- Energy Cost and Emission Reductions as a program
- No capital required, no balance sheet impact
- Program in place ready for review, faster implementation through elimination of capital budgeting process.
- Risks for equipment maintenance, repair, performance, downtime and financing costs transferred to TEI through THERMAL-AUD™ Program
- All types of TEI and non TEI Technology Solutions
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Making Smarter Solutions Work: Innovative Project Funding
Physical plant equipment at many facilities across the North America is depreciating more rapidly than it is being replaced. At the same time, it is
often difficult to meet energy cost reduction mandates – even though these types of investments offer attractive benefits and returns.
So why aren’t such projects implemented more often – especially when almost every facility manager in every industry cites high energy costs
as one of their top concerns?
In almost every case, the answer is that the projects can’t get capital budget funding. There is simply just too much competition for capital and
most core business projects have a higher priority.
Traditional Funding Approach
- Energy cost and emission reduction projects typically cost anywhere from
a few hundred thousand to several million dollars and often yield paybacks of less than three years.
- Energy reduction capital budgets at many companies end up taking a back seat to capital needs and priorities associated to core business activities
where maintenance and asset renewal are often critical for survival in an increasingly competitive market place.
- A competitive capital rationing process tends to eliminate non critical
yet very attractive capital investments.
- The result is delayed investments in energy and emission reduction projects often until energy costs enter periods of extreme volatility and accelerated
growth at which point in time the accumulated opportunity costs have also often exceeded the initial identified capital project funding requirements.
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The THERMAL-AUD™ Program
- An alternative to capital budget rationing yielding reduced energy reduction potential is to outsource the entire program to TEI.
- We conceptualize, design, install, finance, own and maintain technology solutions which provide your facility with financial and environmental benefits
in return for a service fee covering all aspects of project funding requirements.
- Additionally, long term operational and financing risks are transferred
to TEI through performance and uptime guarantees provided under the program agreement.
- The agreement can be structured as an operating lease funded from cost savings or some other form of output based agreement.
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How the THERMAL-AUD™ Program cuts your energy costs
The following example compares an actual TEI customer solution funded under the customer’s own internal capital funds versus a THERMAL-AUD™
Program funded solution using the customer specific financial parameters (Cost of debt, depreciation, taxes, and fuel rate escalation).
The capital project costs for the project are ~$17.2M with ~$7M in first year savings (~2.5 year payback). The analysis below shows that both projects
generate very attractive returns under either of the two funding options.
The capital project results in a $14.9M benefit however the same project structured under the THERMAL-AUD™ Program yields $17.2M in financial
benefits over the same period – AN ADDITIONAL $2.3M BENEFIT.
Traditional Capital Project vs. Thermal-AUD™ |
Gross Savings |
$6.9M/Yr |
TEI Proposed Capex Solution |
$17.2M |
CO2e Reductions |
105,000 Tons/Yr |
CO2e Reductions |
21,000 Vehicles |
Results |
Traditional |
THERMAL-AUD™ |
Customer Capital |
$17.2M |
$0 |
After Tax NPV (12% WACC) |
$14.95M |
$17.25M |
Advantage |
$0 |
$2.3M = 9.3% IRR |
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