INNOVATION: How will we finance?: TMB USE CASE

INNOVATION: How will we finance?: TMB USE CASE

INDEX - Why and what TMB want to do in electromobility (Josep Ma Armengol). - How TMB will finance the investments in electromobility (Ismael Uruen). 2

Basic Principles: BUS IS CLEAN TRANSPORT Alternative fuel technologies should be introduced in a way that not endanger the urban transport mission: Transport people from A to B, safely and efficient Urban Transport contributes less than 8% to transport pollution The real environmental benefit will come from a MODAL SHIFT: from private to public transport

THE LAST CITY COMMITMENTS Cities: Londres, París, Los Ángeles, Barcelona, Copenhague, Quito, Vancouver, Ciudad de México y Ciudad del Cabo November 2017 1.- ONLY purchase electric buses from 2025. 2.- Zero emisions for main areas of their cities in 2030. 4

NEW NETWORK 1975-2011 classical network Begining 2012 NEW network: Easy to understand Effective and efficient

Evolution of passengers/year

TWO Actions taken with the existing fleet TMB, decided in 2010 to install: 425 PARTICULATE filtres + NOx FILTERS (SCR) 70 DIESEL BUSES TRANFORMED TO HYBRID RETROFIT HYBRID PROJECT (2010) 13 CNG buses TRANSFORMED TO HYBRID 7

HYBRID FLEET TYPE SIZE UNITS DOBLE ARTICU 24 3 ARTICULATED 18 124 STANDARD 12 187 MIDI'S 9,75-11,5 19 DOBLE DECKE 12-14 13 TOTAL 346 Cost of hybrid bus: 30% more than a diesel bus 8

ELECTROMOBILITY

ELECTRIC BUSES ELECTRIFICATION IN EUROPE FIRST STEPS ZeEUS PROJECT 10

TWO MODES OF OPERATION 1.OVERNIGHT VEHICLE of 12 m BATTERY CAPACITY > 300 KWh More weight of the batteries Less passenger capacity 2.OPPORTUNITY CHARGING VEHICLE of 18 meters BATTERY CAPACITY 130 KWh Less weight of the batteries More passenger capacity It need some charging station on the street 11

LIFE CICLE COST (LCC/TCO) 12/18m) DIESEL ELECTRIC ADQUISITION PRICE MAINTENANCE COST (BATTERIES, GNC bottles, etc.) CNG CONSUMPTION (fuel, kwh in peak hour, etc..) Environmental cost (Directive 2009/33) ELECTRIC INFRASTRUCTURES (GRID, etc..) Cost of electric bus: 100% more than a diesel bus 12

FLEET CHARACTERISTICS BUS FLEET 2017 = 1085 13

TMB PLAN ELECTRIC TECNOLOGY TMB Contract Program: 4 years 2018-2021 14

TMB PLAN: FUTURE ELECTRIC STEPS in the city - 2 electric Horizontal bus lines (first one is H16) - 2 electric vertical bus lines - Minibuses and Touristic buses

TMB ESTRATEGY???? 2022: no more hybrid purchases

How will we finance our investments??

Barcelona first idea regarding ELENA EIB o BUS NETWORK (5%): NXB: how to change the bus network to be more efficient, fast and understandable. Implementing traffic engineering project. Constructive project: Implementation BRT. o New signals network and LED technology (37%) o Energy Technology in BUSES (58%): RETROFIT DIESEL and CNG buses to HYBRID ELECTRIC/HYBRID commercial buses * How to finance theses investments SAVINGS: In energy (tep) and Emissions (kg CO2) 2011-2014 MWh Total TOTAL Units Total teps Total t/co2 EFFICIENT BUS Bus Network - first 1 12 NETWORK level BRT CONSTRUCTIVE Segregated BUS Lane PROJECT 2 and others IMPLEMENTATION infrastructures 13.289,13 1.142,87 3.529,58 BRT IMPLEMENTATION TRAFFIC 3 coordination ENGINEERING PROJECT 4 LIGHTS Traffic Lights - New sign 36.000 12.096,00 1.040,26 4.717,44 Hybrid 180 12.917,03 1.110,86 3.411,72 Hybrid Retrofit DIESEL 100 5.847,22 502,86 1.544,40 Hybrid retrofit GNC 120 16.459,52 1.415,52 2.970,00 Electric 20 787,50 67,73 208,00 5 BUSES TOTAL 420 36.011,28 3.096,97 8.134,12 TOTAL ENERGETIC EFFICIENCY and EMISSIONS (CO2) 61.396,41 5.280,09 16.381,14

EIB - ELENA Facility 2009 Barcelona experience

TMB Bus fleet renewal arrangements 1.075 bus fleet average. 12 year depreciation. 90 buses a year renewal average. 332.000 purchase price average. 30.000.000 yearly financial need for the following years. A bid following UITP/UE procurement procedures is done almost every year. Nowadays Spanish Banks offer to TMB a 12 year financial leasing scheme. Assumption for 2018-2021 and beyond: If we transform the buses diesel fleet into a clean buses fleet with only hybrid & electric maintaining the size of the Natural Gas fleet-, there is an over cost of 85% weighted average * price per bus (226.580 ). If we bid for diesel buses fleet it would be a weighted average * price per bus (265.431 ). But if we bid for a clean buses fleet (hybrid & electric) it would be weighted average * price per bus (492.011 ). * We are considering all type of buses (minis, standard, articulated, and double decker). There is not VAT and not maintenance cost included.

Financial Leasing scheme: After the bid results, TMB Financial Services communicate its decision to the winning banks. Then, it is time to start working on contract clauses and design the amortization schedules. All banks sign the same contract using French depreciation method indexed in semi-annual instalments based on 6 month Euribor plus a margin. Once it is all ready, purchase and leasing contracts are signed on the agreed day between the manufacturers, banks (Lessors) and TMB. In the date of signing, TMB pays to banks 5% of the total amount of contract and at the same time, banks pay to manufacturers the same amount, TMB receives from manufacturers this 5% in a bank guarantee. Buses are delivered on the delivery dates agreed on the purchase contract and the manufacturer and TMB sign the Provisional Delivery Act. As agreed on the contract, TMB returns the 5% bank guarantee to manufacturers. Then, 90 days after the act s signature, TMB receives a 15% bank guarantee and gives order to the Lessor to pay to manufacturer the remaining 95%. This 15% bank guarantee is held until the Final Delivery Act is signed (approximately 3 years later). The 95% payment date is used to build the amortization schedule; it would be the first rent s payment day of the leasing and the day when interests would begin to

Financial Leasing offers several benefits against other forms of financing 1. - From the legal point of view, the Lessor (bank) is the owner of the buses, but TMB (Lessee) has the right to use them in its network. And from the accounting point of view, the buses are at TMB balance sheet as a fixed asset and as a financial lease liability. 2. - Its financial cost is cheaper because it is the lessee who bears all risks, depreciation and maintenance of the buses. 3. - It is an easy-doing transaction, no extra cost for maintenance or legal assessment is needed. 4. - Final maturity can be match with useful life (12-14 years) so it is possible to net all cash flows (rent payments and accounting depreciation). 5. - Ownership passes automatically from Lessor to Lessee at the maturity date by paying the purchase option, a symbolic amount of money. So, annually we pay the interests to the banks via P&L account and we match the financial depreciation with the accounting depreciation.

TMB Bus fleet 2017 vs 2021 commitment Type of Bus 2017 2021 Change 17/21 2021 TB weight 2021 ZeEUS weight Diesel 465 216-54% 20% 52% Natural Gas 392 385-2% 33% 15% Hybrid 246 356 +45% 36% 9% Electric 4 116 ++++% 11% 20% Total 1117 1073-4% This move to hybrid & electric instead of cheaper Euro 6 diesel will cost additional INVESTMENTS in these years of approximately: - 29.000.000 for buses & - 20.000.000 for infrastructures. That means: -astrong commitment from public administrations supporting this change for sustainability and clean buses fleets. - There is a new opportunity for European PT Operators to finance cleaner buses through the European Investing Bank loan facilities.

MANY THANKS FOR YOUR ATTENTION!!! Ismael Uruen Financial service director iuruen@tmb.cat Josep Ma Armengol Engineering and new developments director jmarmengol@tmb.cat