Drawing on Panasonic’s global competencies to create a new ESCO solution

Combining competencies in the lithium ion battery market and the in-flight entertainment sector might not jump out as an immediate fit for many, but Panasonic has taken their expertise in these diverse areas and created a new ESCO offering which aims to utilise sophisticated techniques to dramatically reduce power consumption for telecoms towers. Buoyed by a partnership with proven energy equipment and service provider PowerOasis and with a clear opex-based pricing model, Panasonic’s Phil Herman and Jason Scharfspitz feel their Green Tower solution offers something new to the market.

TowerXchange: What inspired your partnership with PowerOasis?

Panasonic Enterprise Solutions Company is an integrator of enterprise energy applications. We source internally and externally to provide best-in-class solutions for our clients.

When we started looking for tower power solutions, we identified PowerOasis as having high levels of expertise and service, making it a natural fit to join forces with them. As in any partnership, we have a working relationship where we look at projects and networks and determine the level of engagement from each party. However, Panasonic takes the lead and is the responsible party. Depending on the project, we’ll use different components from different places, so the technology requirements will drive the mix that we need. We’re also integrated at a product level – Panasonic lithium-ion batteries have been present within PowerOasis labs for many months.

TowerXchange: Tell us about the scope and footprint of your current offering.

Green Tower is a comprehensive management and control solution for energy and energy infrastructure on wireless sites – cellular, Wi-Fi hotspots, and two-way, land mobile radio. It integrates across various forms of energy from grid to battery, generator and renewable power, with integrated monitoring. It controls the infrastructure to optimise the amount of power it consumes and cycles equipment in a way that extends its lifecycle. The whole thing can be remotely controlled off site through a server-based software platform potentially accessible from any device with Internet connectivity.

TowerXchange: What inspired Panasonic to enter this space?

It leverages a number of our capabilities. For example, Panasonic is among the largest manufacturers of lithium-ion batteries in the world. Lithium-ion batteries are a far superior solution to lead acid in terms of size, weight and control. We’re also a large manufacturer of solar cells, and we manufacture security cameras which can be integrated into the Green Tower solution. In addition, we’re a major supplier of in-flight entertainment, meaning we subscribe to a large amount of satellite capacity, so Green Tower has access to satellite communication when the network is down for transmission of equipment status, as well as for cellular back-haul.

We’re also offering ‘energy as a service’ which enables operators to transform up front capex into stabilised opex. We offer both models of spend and sell the solution outright if requested, but our primary business model is to sell from opex.

TowerXchange: Tell us what geographies you’re targeting with the new solution.

With respect to the markets, our initial focus is North America as that’s our home ground, then we’ll quickly expand where customers need us and according to market demand. But as a global enterprise, we’re looking globally. Once we get farther down the road, we will determine which locations work well since many operators spread across several countries or even continents.

In developing countries, the needs are different and we would need to provide a different mix of assets. For example, more photovoltaics and batteries to reduce fuel consumption. We can actually reduce fuel usage by 80 percent or more and we aim to ultimately eliminate diesel entirely on site. On grid we can provide different services with the assets to maximise power use where available, not only to reduce opex costs for an asset on a month-to-month basis, but also to supply and sell power under the feed-in tariff or energy arbitrage – storing surplus energy to enable the site owner to reduce purchase costs when power is more expensive.

TowerXchange: Do you have any example of trials of Green Tower in the field yet?

Not yet. We’ve been developing these solutions for two years, making sure we understand how they perform so we can model service level agreements with the operators. It’s a work in progress as the industry grows and other parts of the value chain work to drive the power levels of these sites down. Today, the average telecom site consumes between two and 10 kW. As outdoor, energy efficient equipment drives site energy consumption down to one to three kW it becomes practical to reduce dependence on diesel.

Although the solution is just coming to market, all the components we employ have been proven in the market place for several years. What we’re doing is taking proven, proprietary components and capabilities and integrating them into a unique offering.

TowerXchange: Under what business model do you propose to provide energy as a service?

What’s generating significant interest in Green Tower are the performance enhancements and operational savings that can be achieved, providing the operators with net-net cost reductions without the need to invest capital. The intent is to save the operators between 10 to 20 percent on energy and operating costs annually. These new models are changing the way wireless carriers spend on energy, taking something that’s historically a capital expenditure and turning it into an operating expense with year-to-year predictability.

TowerXchange: When we ask TowerXchange members why no ESCO propositions have reached scale, two of the most common explanations are trust and capital. MNOs and towercos don’t want to trust partners unless they have substantial and proven O&M teams on the ground in their target countries; and they don’t believe most aspiring ESCOs have the balance sheet to invest in hundreds or indeed thousands of capitally intensive renewable and hybrid energy solutions. Who will provide the field services in your business model? And who provides the capital to enable an opex-only offering?

Panasonic is a stable, almost 100-year-old company that leverages its scale to secure favourably priced financing.  Within its related, solar development business, Panasonic provides a 20-year guarantee on the energy output of its installations, which enables the projects to obtain cost-effective debt.  The company expects to utilize these same affiliated banking relationships to provide Green Tower as an Energy-as-a-Service, opex model.  While Panasonic will provide engineering, project management, and construction management services, it will contract with its trusted partners to provide ongoing, local support services.

TowerXchange: What would you say is Green Towers’ main differentiator?

The buzz is all about enterprise energy management. Operators are thinking about it at the moment but they’re not prepared to address it themselves. What we offer is a robust, enterprise-level energy management system. Given the tower assets are small and distributed across large geographical areas, it’s traditionally hard to cover them with one efficient solution. Green Tower is designed to allow the operator to manage the network themselves. We’re not just managing sites, we’re actually controlling them. We can manage and optimise the assets.

The industry is still capital strapped in terms of willingness to spend on energy infrastructure but we’re here to change that. That’s the reason we’re doing this through an ‘energy as a service’ model.

If you look at existing solutions in the marketplace, they don’t cover the full range of energy infrastructure. We believe this is a more comprehensive solution. It lowers costs by reducing energy consumption and can reduce maintenance site visits as it cycles the equipment more efficiently. It also improves reliability of equipment and reduces time on site. In addition, we’ve improved communications with the satellite, freeing customers’ business assets to focus on what they do best – optimize wireless network coverage.

TowerXchange: Who do you see as your primary customer – towercos or operators?

In North America, the towercos act mostly as real estate companies and their models are leasing models where they sell space to operators. Those operators put their own equipment on the sites. They don’t share equipment and they have their own batteries, wire and antennas on each site. Telcos fully control their destinies in North America. In a very few cases, regulation means only one generator is allowed on each site in which case the towerco will step in, but otherwise it’s all individual. Energy management is not a core competency of the U.S. towercos. Our aim is to focus on the customer who controls the energy asset and in the U.S., that means MNOs.

In other regions there are all sorts of different models. Markets where MNOs have more control of energy than towercos will be an interesting market for us of course. When we get to Africa, we’ll look at the towercos as real strategic partners and look to layer our offering to help them do it better, but we’re not there yet.

TowerXhange: When do you see Green Tower rolling out globally?

It’s hard to say when we’ll look at Africa and beyond. 2015 is about establishing the North American market and creating some demos elsewhere in the world to understand the intricacies of those markets better than we do today. That being said, Panasonic is a global company with a presence in all major regions of the world, so we’re well prepared to expand our offering.