ENERGY EFFICIENCY FINANCE

ENERGY EFFICIENCY FINANCE Energy Efficiency Indicator Survey and PACE 1 Copyright 2011 Johnson Controls, Inc.

JOHNSON CONTROLS 140,000 Employees Multi-industry Founded 1885 Building Efficiency Creating quality indoor environments that are comfortable, safe, energy efficient, and sustainable Power Solutions Providing the highest quality, lowest cost automotive batteries to power vehicles of today and tomorrow Automotive Experience Delivering world-class technologies that differentiate vehicle interiors and increase consumer demand 2 >200 million vehicles 1/3 of world s automotive batteries 1 million building efficiency customers

THE INSTITUTE FOR BUILDING EFFICIENCY The Institute for Building Efficiency is an initiative of Johnson Controls to provide information and analysis of Technologies Policies Practices for efficient, high performing buildings and smart energy systems around the world www.institutebe.com 3 3

1 ENERGY PERFORMANCE CONTRACTING 2 ENERGY EFFICIENCY INDICATOR SURVEY 3 PACE 4

PERFORMANCE CONTRACTING Johnson Controls is the largest ESCO in North America, with $4.7 billion active cost saving guarantees 5 Since 2000, the we ve delivered verified energy savings resulting in 13.3 million tons of avoided GHG emissions

AN EXAMPLE FROM THE COMMERCIAL REAL ESTATE SECTOR Reduce Loads Upgrade Systems Monitoring & Controls Widows Insulation Daylighting Green pre-builts Occupancy/photo sensors - lighting and plug loads Chiller plant retrofit VAV air handlers RESULTS 38% energy savings Simple payback under 3 years LEED Gold certification Energy Star Top 10% of U.S. office buildings 33% reduction in cooling load Savings of $4.4 million annually Direct digital controls Demand-controlled ventilation Tenant energy mgmt system 6

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ENERGY EFFICIENCY INDICATOR SURVEY Global survey of energy management decision makers 1,692 857 428 450 103 77 155 3,868 1,249 1,146 North America (English only) North America (English only) 2,567 North America India Brazil (2 languages) 2,882 North America Europe India China (7 languages) North America Europe India China Australia Brazil South Africa (8 languages) 8 2007 2008 2009 2010 2011

WHO ARE THE US RESPONDENTS? Criteria: 1. Must have budget responsibility for their organization s facilities. 2. Job responsibilities must include reviewing or monitoring energy usage, and/or proposing or approving initiatives to make organization s facilities more efficient Respondents by job title and sector Industrial 10% Institutional 38% Commercial 52% Owner/ Proprietors 18% Other 9% Facility Managers 29% C-level Executives 18% VPs 26% U.S. respondents identify responsibility for 3.5 billion square feet (more than 4% of existing building stock) 9

BARRIERS TO EFFICIENCY - GLOBAL Technical, organizational, and financial challenges What is the top barrier to pursuing energy efficiency at your company/organization? Lack of funding to pay for improvements 30% Insufficient payback/roi Uncertainty regarding savings/performance Lack of awareness about opportunities Lack of technical expertise to evaluate or execute projects Landlord/tenant split incentives No organizational ownership/dedicated attention to managing energy efficiency 19% 12% 9% 9% 8% 8% 0% 10% 20% 30% 40% 10

FINANCIAL BARRIERS IMPORTANT IN U.S. / CANADA Most respondents looking to internal budgets What is the top financial barrier to pursuing energy efficiency at your company/organization? Insufficient internal capital budget Insufficient government or utility incentives 6% 44% Globally organizations are looking to use internal capital first Balance sheet debt limitations Difficulty obtaining external financing at attractive rates and terms Inability to secure external financing Difficulty identifying appropriate financing options 3% 3% 2% 2% 69% have used internal budgets in the past 2 years 74% of those will use internal budgets in the next 2 years 0% 10% 20% 30% 40% 50% 11

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PROPERTY ASSESSED CLEAN ENERGY (PACE) 13 Source: Institute for Building Efficiency

EXISTING & EMERGING COMMERCIAL PACE PROGRAMS California PACE- Regional Milwaukee, WI Ann Arbor, MI Northampton, MA Bedford, NY Sonoma County, CA Northeastern OH San Francisco, CA Placer County, CA Boulder County, CO Kansas City, MO Washington, DC WRCOG, CA Los Angeles, CA Palm Desert, CA Santa Fe, NM FL-Regional 14 Emerging Commercial PACE Program Source: LBNL Existing Commercial PACE Program 17 programs may be operational in next 6-12 months. 5 programs are currently operating.

COMMERCIAL PACE PROGRAM BEST PRACTICE 1. Flexible Financing Model 2. Require performance guarantees and contractor certification 3. Target portfolios of properties initially 4. Create a credit enhancement utilizing public funds 5. Require ongoing measurement and verification 15 Source: JCI Institute for Building Efficiency

QUESTIONS AND DISCUSSION Contact Information: Katrina Managan Additional Resources katrina.managan@jci.com Energy Efficiency Indicator Global Results Institute for Building Efficiency Unlocking the Building Retrofit Market: Commercial PACE Financing Institute for Building Efficiency 16