Best Practice Procurement Guide. Green Power for Mobile

Transcription

1 1 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Best Practice Prcurement Guide East Africa Green Pwer fr Mbile

2 2 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Cntents Figures:... 3 Glssary: Intrductin Sustainable Prcurement Prcess Prcess: Prepare Prcess: Prcure Prcess: Implement Operatins and Mnitring Prcurement Mdels In-huse CAPEX mdel Sample CAPEX Mdel Prcurement Prcess Flw: CAPEX Mdel OPEX Mdel r Outsurced Energy Mdel Energy Outsurcing Mdels Energy Outsurcing Mdels - Summary Prcurement Prcess Flw: Energy Outsurcing/OPEX mdel Cnclusin... 21

3 3 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Figures: Figure 1: Sustainable Prcurement Steps Figure 2: Hme Design Mdel Figure 3: Sample Investment schedule fr CAPEX Mdel Figure 4: Cash flw Cmparisn and OPEX savings Figure 5: Financial Summary f the sample design Figure 6: Prcess Flw: CAPEX Mdel Figure 7: Cash flw f an ESCO in Flat Fee Mdel Figure 8: Cash flw f an MNO in Flat Fee Mdel Figure 9: Cumulative Savings fr an MNO in Flat Fee Mdel Figure 10: Cash flw f an MNO in PPA Mdel Figure 11: Cumulative Savings fr an MNO in PPA Mdel Figure 12: Cash flw cmparisn and OPEX Savings in ESA mdel Figure 13: Year-n-year ESCO revenue in ESA mdel Figure 14: Preference-wise ranking f utsurcing mdels Figure 15: Prcess Flw: Energy Outsurcing/OPEX mdel Glssary: Ah: Ampere Hur CAPEX: Capital Expenditure DG: Diesel Generatr ESCO: Energy Service Cmpany TwerC: Twer Cmpany IRR: Internal Return Rate kva: Kil Vlt Ampere kw: Kil Watt kwh: Kil Watt Hur MNO: Mbile Netwrk Operatrs NOC: Netwrk Operatins Center NPV: Net Present Value O&M: Operatin and Maintenance OPEX: Operatinal Expenditure PV: Phtvltaic RFP: Request fr Prpsal ROI: Return f Investment IRR: Internal Rate f Return SLA: Service Level Agreement Wp: Watt Peak

4 4 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 1. Intrductin The mbile telecmmunicatins market in East Africa has grwn significantly and has seen stiff cmpetitin in the sectr. The peratrs in the regin are presented with many challenges in expanding their netwrk t cver the entire ppulatin in their respective cuntries. The limited reach f grid pwer infrastructure and dwindling pwer generatin capacities has put a tremendus pressure n the peratins and impacted the csts f running the netwrk. Three cuntries in the East African regin, Kenya, Tanzania and Uganda have recrded a subscriber base f 71 millin reaching a mbile penetratin level f 58% verall. Hwever, 20% f the ppulatin acrss these cuntries is still far frm access t mbile telecmmunicatins due t lack f mbile netwrk cverage. Over 96% f the uncvered ppulatin is rural and lack access t ther mdern infrastructure such as electricity and rads. Kenya, Tanzania and Uganda cmbined have a ttal netwrk size f 13,225 twer sites cvering a ppulatin f apprximately 80% acrss these cuntries. Due t the limited reach f grid pwer infrastructure, clse t 25% f the entire netwrk is lcated in ff-grid areas, i.e. withut access t electricity supply, and has led the MNOs and Twer Cmpanies t rely n diesel generatrs t pwer up thse ff-grid netwrk f twer sites. Even thugh the remaining 75% f the netwrk is cnnected t grid electricity supply, mre than 25% f this n-grid netwrk f twer sites lacks the reliability and quality f grid pwer supply. This implies that mre than 50% f the entire netwrk in these cuntries is depends primarily n diesel generatrs t pwer up. The reliance n diesel pwer has significantly increased the cst f running the netwrk fr MNOs and Twer Cmpanies in the regin. The pr utlk fr imprved grid infrastructure and electricity supply has led the MNOs and Twer Cmpanies t cnsider alternative pwer slutins, including the green pwer alternatives, t reduce r minimize the dependence n diesel pwer in rder t reduce the energy OPEX as well as cst f peratins and t create a psitive envirnmental impact by reducing the carbn ftprint f the netwrk. Hwever, the adptin f green pwer has nt reached its ptential scale due t varius factrs including technical knw-hw, lack f scalable deplyment practices, and capital. Despite the existent pprtunity f deplying green pwer at mre than 4,000 twer sites, nly less than 4% f these ptential sites are currently deplyed with green pwer slutins. This dcument aims at addressing the ne key aspect f deplyment the best prcurement practice, t assist the MNOs and ther stakehlders in adpting the best apprach t green pwer deplyment and scaling the adptin f green pwer. The dcument als lks at different business mdels t address the challenge f capital required fr investing in green slutins fr the MNOs and Twer Cmpanies.

5 5 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 2. Sustainable Prcurement Prcess Fr a successful deplyment, MNOs and Twer Cmpanies shuld fllw systematic prcurement methdlgy t analyse, plan and invest in green pwer fr telecm twer sites. The belw figure illustrates the critical steps invlved in prcuring green pwer fr telecm twer sites. Figure 1: Sustainable Prcurement Steps Prepare Preliminary survey and Netwrk analysis Detailed technical survey and analysis Technical design, evaluatin and site selectin Priritizatin and investment planning Prcure Analyse vendr landscape RFP preparatin RFP Circulatin Respnse evaluatin and vendr selectin Agreement and Award f Cntract Implement Prject plan and resurce allcatin Implementatin planning and cntract Prject Executin Testing and sign-ff Operate Operatins partner selectin Training and knwledge transfer t peratins team Operatinal hand-ver Mnitr Define mnitring framewrk Implement mnitring framewrk Mnitring and feedback 2.1. Prcess: Prepare Preparatin and planning are the key first step in the sustainable prcurement f green pwer fr telecm twer sites. The prcess invlves a detailed analysis f the netwrk, existing peratins, and current pwering apprach in rder t design and evaluate alternative pwer slutins including green pwer. The final utcme f this prcess is a list f feasible sites alng with dimensining f respective pwer slutins, and a phasewise investment plan with implementatin pririties. The detailed prcess and activities are presented belw. Prcess Activity Details f activity Outcme Prepare Preliminary survey and Netwrk analysis Detailed technical survey and analysis Technical design, evaluatin and site selectin Priritizatin and Investment planning Survey f the netwrk and analysis t identify prblematic sites with energy OPEX Detailed technical survey t gather technical site parameters and pwer system - Understand the site lads - Understand the site lcatin, layut, accessibility, peratinal challenges - Understand the current pwer system and csts assciated - Carry ut the renewable resurce analysis - Define slutin design criteria - Renewable slutin design based n resurces, lads, design inputs - Business case analysis and Cmparative evaluatin f available alternative slutins with base case (existing) scenari - Select feasible sites based n business case and cmparative analysis - Define priritizatin criteria fr alternative slutin deplyment - Priritize sites fr deplyment and plan phasewise investment required Target regins/sites identified Design inputs - technical, peratinal and financial Feasible sites, technical designs, business cases Implementatin Phases and Investment plan

6 6 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 2.2. Prcess: Prcure After a thrugh preparatin t understand the netwrk and the feasibility f alternative pwer slutins, the next step is t prepare, initiate and cmplete the prcurement prcess. The key activities f the prcess and their utcme are presented belw. Prcess Activity Details f activity Outcme Prcure Analyse the Vendr landscape RFP Preparatin RFP Circulatin Respnse Evaluatin and Vendr Selectin Agreement and Award f Cntract - Understand the vendr landscape fr the prpsed deplyments - Define RFP scpe - Define general requirements - Define technical and perfrmance requirements - Define scpe f wrk, deliverables and timelines - Define respnse schedule and guidelines - Define evaluatin criteria fr respnses including technical and financial Circulate the RFP amngst the vendrs seeking their respnse as per the guidelines in the RFP dcument - Evaluate respnses based n the criteria - Initiate vendr discussins - Select vendrs based n evaluatin and discussins - Define scpe f the cntract - Define cnditins f the cntract - Define service level agreements - Award f cntract A list f suitable vendrs Detailed RFP dcument - Selected vendr(s) Cntract Signed with Vendr(s) 2.3. Prcess: Implement The next step, after signing the prcurement cntract, is t implement. The implementatin prcess is the mst crucial prcess and invlves varius activities including resurce allcatin, implementatin planning, executin and mnitring f the prject. The MNO r Twer Cmpany might als have t g thrugh an additinal step f implementatin partner selectin, depending n whether the implementatin phase is included in the scpe f the prcurement cntract signed with the supply vendrs. The varius activities and their details are presented belw. Prcess Activity Details f activity Outcme Implement Prject planning Implementatin planning and cntract Prject Executin Prject mnitring Test and Sign-ff A detailed prject plan with resurce requirements need t be prepared - Select an implementatin partner (if nt in the scpe f prcurement cntract with vendrs) - Sign implementatin cntract - Prepare a detailed implementatin plan with timelines - Site access and handver - Design, cnstruct and deply pwer system - Mnitr the executin f the prject by regular status check and review f prgress - Test and sign-ff prject executin as per the agreement and cntract - Prject plan - Resurce allcatin - Implementatin plan with timelines Pwer system deplyed - Pwer system live 2.4. Operatins and Mnitring Thrughut the prcurement prcess, the MNO r Twer Cmpany needs t plan and implement peratinal and mnitring the framewrk in rder t successfully perate and mnitr the deplyed pwer slutin. The key aspects f the peratins and mnitring activities that need t be taken care f during the prcurement prcess are presented belw.

7 7 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Operatins and Mnitring Activity Details f activity Prcess invlved Outcme Operatins partner selectin Capacity building Define Mnitring framewrk Implement Mnitring framewrk Operatinal handver and Mnitring Selectin f an peratins partner t perate and maintain the pwer system Training and Knwledge transfer t the peratins team Define the key elements t mnitr Define the perfrmance metrics Define feedback and crrectins plan Implement the mnitring framewrk as per the defined terms Hand ver the pwer system fr peratins, maintenance and mnitring activities Prcure Prcure, Implement Prcure, Implement Implement - Implement - Reliable Operatins Partner Trained Operatins Team Mnitring Framewrk

8 8 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 3. Prcurement Mdels The prcurement apprach and prcess flw depends n the business mdel adpted by the MNO/Twer Cmpany fr green pwer deplyment. There are tw different prcurement mdels prevalent in the telecm industry fr deplying green pwer slutins: 1. In-huse r CAPEX Mdel 2. Outsurcing r OPEX Mdel The suitability and adptin f each mdel fr green pwer deplyment depends n the perating envirnment and availability f resurces fr an MNO/Twer Cmpany. In the in-huse CAPEX mdel, the wnership and respnsibility f prcurement lies with the MNO/Twer Cmpany whereas in the OPEX r utsurcing mdel, the wnership and respnsibility f prcurement and pwer supply lies with a 3rd party energy service prvider/cmpany (ESCO). The difference between the tw mdels can be understd frm the belw illustratin. Activity CAPEX mdel OPEX mdel Equipment purchase Operatr ESCO Additinal land acquisitin (If required) Operatr ESCO Rllut f equipment & prject management Operatr ESCO Risk related t rllut Operatr ESCO Site maintenance & peratin Operatr ESCO Re-fuelling f DG and risk related t fuel price hike Operatr ESCO Assurance f site up-time Operatr ESCO Site mnitring and Security Operatr ESCO Remte alarm and perfrmance data cllectin Operatr ESCO Risk f theft and vandalism Operatr ESCO Pay-ut t 3rd Party NA Operatr 3.1. In-huse CAPEX mdel The CAPEX mdel is the mst preferred and traditinal green pwer deplyment mdel fr telecms in the East African regin. By adpting the CAPEX mdel, the MNO/Twer Cmpany has flexibility and cntrl ver design and deplyment f green pwer slutin thereby maximizing the OPEX savings and return n investment. Hwever, the verall risk f investment including deplyment, peratins and security risks fall n the MNO/Twer Cmpany. Als, the scalability f this mdel depends n the available funding resurces within the MNO/Twer Cmpany Sample CAPEX Mdel A sample Slar-DG hybrid slutin is cnsidered t demnstrate the green pwer design and business case fr CAPEX mdel. Cnsider an existing ff-grid site with a DC lad f 1 kw and running n 10 KVA DG fr 16 hurs a day. Other key cmmercial parameters fr the design are assumed as belw. Diesel price (delivered): 1.5 US$/Ltr DG fuel cnsumptin: 2 L/hr PV Slar cst: 400 US$ fr 250W panel Figure 2: Hmer Design Mdel

9 US $ US $ 9 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa The Hmer design mdel suggests a slar slutin f 5.5 kw with 600 Ah battery, 6 kw cnverter and existing diesel generatr. The CAPEX investment schedule and OPEX schedule fr the abve slutin is presented belw. Figure 3: Sample Investment schedule fr CAPEX Mdel 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 OPEX CAPEX The year-n-year net cash flw fr the sample design is presented belw alng with the OPEX savings achieved in cmparisn t the base case f diesel based pwer slutin. Figure 4: Cash flw Cmparisn and OPEX savings 35,000 30,000 25,000 20,000 15,000 10,000 5, Renewable including repayment Diesel OPEX Savings Figure 5: Financial Summary f the sample design Payback perid (years) 1.70 ROI 59% IRR 57% NPV $51,215 Discunt Rate 18.0%

10 10 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Prcurement Prcess Flw: CAPEX Mdel The prcurement prcess flw fr the CAPEX mdel s key activities is illustrated belw. Figure 6: Prcess Flw: CAPEX Mdel Prcess MNO/TwerC Vendr Remarks Prepare Technical Survey and Analysis Design, Evaluatin and Site selectin The technical survey culd be carried ut in crdinatin with the vendrs r peratinal partners. A technical green pwer feasibility study by a 3rd party cnsultant wuld be advised t cme up with the utput. Priritizatin and Investment planning Prcure Analyse Vendr landscape, Prepare and Circulate RFP Respnse Evaluatin & Vendr selectin Agreement and Award f Cntract Analyse RFP and Respnd t RFP The MNO/TwerC needs t analyse the vendr landscape and identify relevant vendrs t participate in the RFP prcess. The Vendr need t understand and clarify the terms in the RFP and prvide a respnse as per the guidelines. The MNO/TwerC will evaluate the respnses and carry ut vendr discussins t identify and select suitable vendr partners. Bth parties agree t the terms and scpe f the prject and sign the cntract. Implement The MNO need t allcate prject resurces and bth Vendrs and MNOs Prject Planning and Implementatin planning need t agree n an implementatin plan with time lines. Prject Executin Prject Executin by Vendr as per the agreement. Test and Sign-ff Test the deplyed system including the mnitring framewrk and sign ff. Operatins Operatinal Partner Selectin Training and Capacity Building The MNO needs t select an O&M partner and the Vendr needs t train the O&M team. Mnitr & Feedback Define a mnitring framewrk Implement the mnitring framewrk alng with the pwer system MNO defines a mnitring framewrk and includes in the prject scpe in RFP phase. Vendr implements the mnitring framewrk as part f the pwer system. Mnitr & Cntrl peratins Operatinal Handver Mnitr and Cntrl by MNO

11 11 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Fr a successful deplyment f green pwer based n the CAPEX mdel, the MNO/TwerC needs t carefully plan each step and make sure nt t miss any imprtant technical and cntractual aspects f the prcurement. The critical elements f each step are explained in the fllwing sectins. I. Prepare In the preparatin phase, the MNO/TwerC needs t cmprehensively analyse the netwrk and understand the assciated OPEX f running each site in the netwrk in rder t validate the alternative ptins fr pwering the netwrk. The MNO/TwerC needs t undertake the fllwing brad activities t assist in setting realistic gals fr the green strategy. Analyse netwrk pwer requirements and the cst f pwering t prvide inputs fr design and business case analysis Analyse and validate the availability f renewable resurces t assist in slutin design Lk int energy efficiency t ptimize site energy requirement Design and ptimize the renewable pwer slutin Analyse the sites fr Grid Extensin pssibilities and the csts assciated Analyse and Cmpare the renewable slutins cash flw with existing pwer slutin and ther pssible chices such as the Grid Extensin scenari It is essential t carry ut the abve activities in rder t get clear understanding f the pssible alternatives and assciated business cases. This will prvide clear strategic inputs fr drafting a green investment plan and allcating resurces. The result f this phase will prvide clear directins fr the next phase f prcurement. II. Prcure In the prcurement phase, the peratr needs t clearly draft the requirements based n the utput in the preparatin phase and prvide a precise scpe fr prcurement and implementatin. The key elements t cver in the prcurement phase are as belw. RFP preparatin The RFP shuld define the scpe f the prject and expected deliverables: Supply scpe Implementatin scpe Services scpe The RFP shuld clearly mentin the prject timelines The RFP shuld prvide detailed technical requirements and shuld cver all the technical and perfrmance related expectatins The RFP shuld utline the cmpliance guidelines including technical cmpliance f equipment and materials in the supply scpe, and general cmpliance related t financial strength and experience The RFP shuld utline the evaluatin apprach and key aspects f the evaluatin metrics The RFP shuld prvide guidelines n preparing and submitting the respnse t the RFP The RFP shuld prvide the respnsibility matrix and escalatin matrix in line with the prject s scpe

12 12 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Sample f Respnsibility Matrix N Activity Purchaser Supplier 1 RFP Distributin R 2 Technical Survey/Clarificatins S R 3 RFP Respnse Submissin R 4 Supplier Selectin R 5 Cntract Finalizatin R S 6 Release Purchase Order R S 7 Installatin S R 8 Test and Cmmissining S R 9 Acceptance Test A R 10 Final Acceptance Certificate A R Nte: R: Respnsible, S: Supprt and A: Apprval Vendr landscaping and RFP Circulatin The MNO needs t understand the vendr landscape in rder t invite in the RFP prcess The MNO needs t circulate the RFP with all the suitable vendrs in seek respnse and clarificatins fr the RFP Respnse Submissin by Vendrs The vendrs need t analyse and understand the scpe and requirements f the RFP and prepare their respnse accrdingly. The vendrs may seek clarificatins fr better understanding f the technical and general requirements. Respnse Evaluatin and Vendr Selectin The evaluatin f the respnses shuld be dne at tw levels ne, the technical evaluatin and tw, the general vendr evaluatin. Technical Evaluatin Prpsed slutin dimensins and its perfrmance parameters such as DG run hurs, OPEX savings, energy generatin, life f equipment and warranty Financial evaluatin including CAPEX required, return n investment and payback perid General vendr evaluatin Financial strength and technical experience f the vendr Cmmercial terms including payment terms and delivery schedule Aftersales technical supprt and availability f spare parts Agreement and Award f Cntract Once the respnse evaluatin and vendr selectin is dne, the MNO and Vendr need t cmply with the terms and a sign cntract agreement t identify the scpe f the prject. The agreement shuld clearly mentin the terms f supply, implementatin, and assciated supprt services. The agreement shuld als prvide penalty clause fr deviatin frm the cntract terms. The MNO may separately sign an peratins and maintenance cntract with the managed services prviders which wuld include varius service level agreements in line with uptime requirements f the sites.

13 13 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa III. Implement In the implementatin phase, MNO and vendr need t agree n a prject implementatin schedule with clear milestnes. MNO needs t allcate resurces t mnitr and supprt prject executin. The implementatin must fcus n scpe, schedule and cst t achieve a scalable prject. Fr the smth executin f the prject, the MNO/TwerC needs t mnitr the verall prject prgress and: IV. A specific time line has t be agreed between bth parties. Regular prject meeting need t be cnducted t track the prgress. Site visit n regular basis has t be dne t ensure deliverable. An acceptance test has t be dne based n equipment specificatin, functinality and expected perfrmance Operatins and Mnitring After successfully implementing a green deplyment, the mst crucial part is peratins and mnitring f the deplyed pwer slutin. Fr guaranteed savings and expected perfrmance, the MNO/TwerC needs t put in place rbust peratinal practices and a mnitring framewrk in rder address t the challenges and mitigate the risks f theft, vandalism, and site security. The key aspects f peratins and mnitring are utlined belw. Operatins and Maintenance The MNO/TwerC needs t identify and partner with a credible peratins and maintenance partner fr reliable peratins f the deplyed system. An adequate training and knwledge transfer prgramme has t be crdinated with the equipment vendr partner t ensure capacity building fr in-huse and utsurced peratins teams. The MNO/TwerC needs t carefully implement the peratins and mnitring systems during the implementatin phase. An intelligent cntrller shuld be used at the site t autmate the deplyed pwer system and autmatic peratinal feedback The O&M partner shuld maintain a strict lg-bk f all their activities The MNO/TwerC needs t build rbust peratinal prcesses t address sme f the challenges f site security, equipment vandalism and fuel pilferage. Implement Access cntrl and Security systems The MNO/TwerC needs t implement multi-level site access prtcl and set strict guidelines and prcesses fr site access in rder t ensure site security and identify breach f site access prtcl Set a minimum number f times the O&M partner shuld visit the site Site security shuld be the respnsibility f the O&M partner. The site security guard shuld live within the security fence 24hrs/day A security supervisr shuld be appinted fr every cluster/area whse respnsibility will be supervising individual security guards In the event f fuel theft/pilferage, the primary investigatin shuld be dne by the security supervisr. The security guard shuld be

14 14 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa replaced immediately The security guard shuld nt be prvided with any keys ther than the frnt gate The MNO/TwerC needs t set clear perfrmance benchmarks and penalty clauses A SLA fr individual cmpnents (PV, Battery, DG, Cntrller, rectifier etc.) shuld be agreed upn. If any f these cmpnents are dwn r malfunctining, the O&M partner shuld be respnsible fr that and penalised Mnitring and Cntrl The MNO/TwerC needs t set strict mnitring and cntrl practices t regularly mnitr the perfrmance f the site and t assist in preventive and reactive maintenance f the site peratins. Mnitr and Cntrl site access Implement a central mnitring and cntrl system fr site access prviding multilevel access based n peratinal requirements Mnitr fuel refilling Mnitr site perfrmance Implement site perfrmance mnitring framewrk and system Integrate the mnitring system with the central mnitring systems such as NOC Mnitr equipment level perfrmance infrmatin t identify and address any discrepancies and mitigate peratinal risks Plan a regular maintenance schedule based n perfrmance and perating cnditins f the equipment Mnitr the system s level f perfrmance and cntrl OPEX csts

15 15 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 3.2. OPEX Mdel r Outsurced Energy Mdel The OPEX mdel r the energy utsurcing mdel in East African telecm industry is at pre-pilt stage. The peratrs are currently evaluating strategies t incrprate energy utsurcing in the verall netwrk peratins. The OPEX mdel enables the peratrs t reduce energy OPEX and dependence n diesel generatrs withut having t invest the capital fr the renewable energy slutin. And als, utsurcing pwer generatin will help the MNO/TwerC eliminate the challenges assciated with pwer management and increase the fcus n cre activities. The cncept f an energy service cmpany (ESCO) has been intrduced t the telecms industry t facilitate the utsurcing mdel Energy Outsurcing Mdels There are three different energy utsurcing mdels applicable in the telecm industry. Mnthly Flat Fee Mdel Pwer Purchase Agreement (PPA) mdel Energy Savings Agreement (ESA) mdel In the mnthly flat fixed fee mdel, the ESCO wuld wn, install, perate and maintain the renewable energy equipment and prvide pwer t the peratr s site fr a fixed mnthly cst. The MNO/TwerC will benefit frm zer CAPEX and a cnstant r predictable energy OPEX. In the PPA Mdel, the ESCO wns, installs and maintains the renewable energy pwer system and sells pwer t the MNO/TwerC at an agreed per kilwatt-hur (kwh) rate. The main benefits f a PPA t the MNO/TwerC are that the payments fr energy are an perating expense. The peratr is nly paying fr the pwer they use and the investment f the pwer equipment is the respnsibility f the ESCO. In this type f arrangement the MNO/TwerC must typically cmmit t a minimum cnsumptin f pwer r therwise assume the risks f energy lad levels. An ESA mdel is where an ESCO installs the renewable energy system and peratrs pay based n a prtin f verified energy cst savings. The key cmpnent t the ESA mdel is the payment frmula which will determine hw much f the savings will be passed thrugh t the peratr and hw much will g t the ESCO t recver the capital cst f the equipment. This frmula t split the saving will smetimes change at an agreed time during the term f the cntract. I. Mnthly Flat Fee Mdel In the Flat Fee Mdel, the ESCO bears the financial risk f OPEX increases fr any f the pwer surcing cmpnents. Fr any given pwer requirements, the ESCO is required t prvide uninterrupted pwer (99.95% pwer availability) fr the entire duratin f the cntract. While calculating the mnthly fee, the ESCO usually has an implied margin f 10% 15% n its cst. In additin, the ESCO has t be careful while cnsidering all pssible perating csts as sme can be unpredictable (i.e. diesel fuel cst etc.). As this mdel precisely triggers a specific pwer requirement f telecm equipment, the ESCO gets the mnthly fee regardless f whether r nt the telecm equipment cnsumes the pwer. Fr the sample ff-grid site f 1kW and design mdel cnsidered abve in the CAPEX mdel illustratin, the Flat Fee Mdel cash flw, savings and returns pprtunity fr bth the MNO/TwerC and the ESCO are illustrated bellw. Figure 7: Cash flw f an ESCO in Flat Fee Mdel ESCO year-n-year cash utflw/investment ESCO Cash (ut)flw 9,630 7,757 7,814 7,874 7,937 15,203 8,072 8,145 8,221 8,301 15,585

16 16 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Estimated mnthly flat fee payable by MNO t ESCO will be, Implied Margin 15% Annual Fee 12,022 Mnthly 1,002 Figure 8: Cash flw f an MNO in Flat Fee Mdel MNO year-n-year cash pay-ut/opex MNO Cash (ut)flw 12,022 12,022 12,022 12,022 12,022 12,022 12,022 12,022 12,022 12,022 Cumulative savings fr the MNO by adpting Flat Fee Mdel, cmpared t the diesel based pwer scenari Figure 9: Cumulative Savings fr an MNO in Flat Fee Mdel 250,000 Cumulative Savings fr MNO/TwerC 200, , ,000 Cumulative Savings fr MNO/TwerC 50, Nte: All the abve figure are in US $. Financial Summary fr an ESCO in the Flat Fee Mdel Payback t ESCO 2.23 years RI t ESCO 44.7% IRR 32.8% NPV $11,874 Discunt Rate 18% II. Pwer Purchase Agreement (PPA) Mdel The PPA is a mre cmplicated mdel. In this mdel, the MNO/TwerC pays fr pwer n a per kwh basis fr the exact usage f energy. The rate fr per kwh may becme mre difficult t calculate as the market scenari may change ver the 10 years f the business case. The key t implementing this mdel successfully is aligning the per-kwh priceexpectatins f MNO with the rate an ESCO is able t prvide. It shuld be remembered that the per-kwh rate may nt be as cmpetitive as cmmercial pwer as it s a distributed renewable energy mdel. Als, due t the distributed nature, the O&M and last mile peratin becmes quite cstly t maintain the required uptime demanded by the telecms industry. Fr illustratin f the PPA mdel, cnsider the same example abve keeping the year-nyear ESCO cash utflw as per the abve.

17 17 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Cnsidering a 10% n tp f the site lad, the yearly pwer requirement fr an MNO/TwerC wuld be as belw. Annual Pwer requirement f MNO/TwerC 9,636 kwh Fr an expected IRR f 20%, the PPA rate wuld $1.3 per kwh. Figure 10: Cash flw f an MNO in PPA Mdel MNO year-n-year cash pay-ut/opex MNO Cash (ut)flw 12,527 12,527 12,527 12,527 12,527 12,527 12,527 12,527 12,527 12,527 Figure 11: Cumulative Savings fr an MNO in PPA Mdel 200, , , , , ,000 80,000 60,000 40,000 20,000 0 Cumulative Savings fr MNO/TwerC Cumulative Savings fr MNO/TwerC Financial Summary fr an ESCO in the Flat Fee Mdel Payback t ESCO 2.16 years RI t ESCO 46.3% IRR 39.9% NPV $15,997 Discunt Rate 18% In the PPA mdel, the kwh rate and assciated cash flw may be different depending n the lad and pwer requirement f a site. III. Energy Savings Agreement (ESA) Mdel In this mdel, a 3rd Party ESCO invests CAPEX fr renewable energy slutin implementatin. After the implementatin, the ESCO measures hw much energy OPEX has been reduced by intrducing renewable energy. The difference between the earlier OPEX and current OPEX is calculated t determine the grss savings. The ESCO will receive a percentage f the OPEX savings value frm the IP/MNO. Sme f the difficulties f this mdel are: It is challenging t identify actual OPEX savings. In rder t d this, an ESCO must bserve the current diesel based OPEX, and then bserve the OPEX fr renewable Smetimes unavailability f the current energy OPEX can lead t delays in deplyment as

18 18 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa prgressin cannt be made until the ESCO has examined the current energy OPEX If the energy requirement at the site increases, it becmes very difficult fr the ESCO t measure the OPEX saving Figure 12: Cash flw cmparisn and OPEX Savings in ESA mdel Renewable (incl. repayment) Diesel Scenari OPEX Savings ,192 6,192 6,192 6,192 6,192 13,392 6,192 6,192 6,192 6,192 21,182 21,182 31,182 26,942 21,182 31,182 21,182 26,942 31,182 21,182 14,990 14,990 24,990 20,750 14,990 17,790 14,990 20,750 24,990 14,990 In the ESA mdel, the OPEX savings realized abve are prpsed t be shared amngst the ESCO and MNO/TwerC n mutually agreed sharing structure. The year-n-year ESCO revenues in this mdel fr 50% share in OPEX savings is presented belw. Figure 13: Year-n-year ESCO revenue in ESA mdel ESCO year-n-year revenue in ESA mdel ESCO revenue 7,495 7,495 12,495 10,375 7,495 8,895 7,495 10,375 12,495 7, Energy Outsurcing Mdels - Summary The suitability and adptin f a particular energy utsurcing mdel depends n varius factrs including the cmplexity assciated with the mdel, the expected differential change in current perating appraches, and the familiarity f the MNO/TwerCs abut each f these mdels. The belw figure illustrates the verall ranking in terms f preference t each f these mdels. Figure 14: Preference-wise ranking f utsurcing mdels Cmplexity Expected Differential Overall preference Change in Operatins Flat Fee Mdel Lw Lw High PPA mdel Medium Medium Medium ESA mdel High Medium Lw

19 19 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Prcurement Prcess Flw: Energy Outsurcing/OPEX mdel The prcurement prcess flw and the details f activities in each prcess step is presented in the figure belw. Figure 15: Prcess Flw: Energy Outsurcing/OPEX mdel Prcess MNO/TwerC ESCO Remarks Prepare Netwrk analysis t identify sites fr ESCO mdel The MNO/TwerC need t identify sites r regins fr energy utsurcing and cme up with technical and energy requirements fr the netwrk and the expected target price/csts r target savings. Analyse and draft pwer requirements and expectatins Prcure Select an utsurcing mdel and Prepare RFP Analyse ESCO landscape and Circulate RFP Evaluatin & ESCO Partner selectin Agreement and Award f Cntract Analyse RFP and Respnd t RFP The MNO/TwerC needs t select an energy utsurcing mdel based n the cst-benefit analysis and define an RFP arund the selected mdel. The MNO/TwerC then circulates the RFP amngst the available ESCOs. The ESCO needs t understand scpe and terms f the RFP and prepare and submit their prpsal. The MNO/TwerC evaluates the prpsals and selects an energy utsurcing partner and signs an energy utsurcing cntract with the ESCO. Implement Prject Planning and Phase-wise implementatin plan Technical Survey, validatin and pwer system dimensining Prject executin Test and Live Bth parties need t define and agree t a prject plan with timelines fr phased implementatin. The ESCO needs t carry ut detailed technical survey t understand the pwer requirements and dimensin the pwer systems based n current and expected pwer requirements. TheESCO will execute the prject, test and start supplying pwer t the sites n the agreed business mdel. Key elements t cnsider fr the success f energy utsurcing mdel are: Fr an MNO, Understanding f the current and future energy needs f the netwrk Right business mdel selectin based n cst-benefit analysis, perating cntext and readiness f ec-system Chsing the right ESCO partner fr energy utsurcing based n Backgrund and Financial strength Operatinal experience

20 20 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa Technical strengths and technlgy innvatins Operating prcedures and apprach Human resurces and partners RFP Definitin Define clear scpe f the prject including the deplyment size Define pwer requirements and technical requirements frm an ESCO Define expectatins frm an ESCO including financial, rganizatinal and peratinal strengths Define clear respnsibilities, cmmercial terms, SLAs and penalty clauses Fr an ESCO, Set up rbust peratinal prcesses t perate and maintain the energy systems. Implement site autmatin fr peratinal cntrl Deply prfessinal security services t prtect and secure the assets and cntrl vandalism and fuel theft at the site Perfrm scheduled and preventive maintenance f equipment and pwer system fr strict adherence t the uptime and pwer supply SLAs Deply rbust mnitring system fr perfrmance mnitring and peratins cntrl Fr bth parties, Agree n a win-win business mdel Agree and sign a win-win cntract with Suitable cntract tenure Minimum pwer usage fr PPA mdel SLAs and Penalty clause Penalty relaxatin cause and relaxatin items Asset wnership clause Clearly define cmmercial and peratinal terms in the cntract Clearly define asset wnership, exit clause and asset transfer guidelines Set Perfrmance SLAs and Penalty clause fr cvering any uptime lsses Minimum perating resurces frm ESCO t mitigate peratinal failures which will affect MNO revenues

21 21 GSMA Green Pwer fr Mbile Best Practice Prcurement Guide: East Africa 4. Cnclusin The MNOs and Twer Cmpanies in East Africa are faced with varius challenges in adpting green apprach fr pwering telecm infrastructure. The CAPEX required fr deplying green pwer is ne f the biggest challenges hindering the adptin in the industry. Despite a huge OPEX savings ptential, the green pwer deplyments are yet t reach the pssible scale f adptin. Innvatins in the energy prvisin business mdels, such as the utsurced energy mdel, are expected t address these challenges while prviding the MNOs and Twer Cmpanies with OPEX savings. Hwever, the adptin f these new business mdels in energy prvisin t the telecm infrastructure is yet t be established and require cllabratin acrss industry stakehlders in driving its adptin. Abut the GSM Assciatin The GSMA represents the interests f mbile peratrs wrldwide. Spanning mre than 220 cuntries, the GSMA unites nearly 800 f the wrld s mbile peratrs with mre than 230 cmpanies in the brader mbile ecsystem, including handset makers, sftware cmpanies, equipment prviders and Internet cmpanies, as well as rganisatins in industry sectrs such as financial services, healthcare, media, transprt and utilities. The GSMA als prduces industry-leading events such as the Mbile Wrld Cngress and Mbile Asia Exp. Abut Mbile fr Develpment: Serving the underserved thrugh mbile GSMA Mbile fr Develpment brings tgether ur mbile peratr members, the wider mbile industry and the develpment cmmunity t drive cmmercial mbile services fr underserved peple in emerging markets. We identify pprtunities fr scial, ecnmic impact and stimulate the develpment f scalable, life-enhancing mbile services. Fr mre infrmatin n the GSMA s Green Pwer fr Mbile, please greenpwer@gsma.cm GSMA Head Office Seventh Flr, 5 New Street Square, New Fetter Lane, Lndn EC4A 3BF UK