Urban Green Energy (UGE), based out of New York City, has raised a $20 million project finance fund with Tamra-Tacoma Capital Partners (TTCP) to deploy distributed renewable energy solutions for telecoms companies looking to reduce energy expenses at remote and grid-poor telecoms sites around the world.
Poor or non-existent grid at telecoms sites means energy is unreliable and expensive, leading to network downtime and increased cost for mobile network operators. Any amount of site downtime kills revenue, encourages customer defection, and strengthens competitors. At the same time, slow investment in new power infrastructure is limiting telecoms growth in new, underdeveloped markets and unpredictable operating expenses is leading to high risk exposure, decreased profitability, and limited scalability.
Quite simply, for operators, the risk of spending cash in the wrong place can be paralyzing. Operators are entrenched in the process of choosing the right technology, issuing technical bids, and purchasing products and services from system installers and maintainers. And with the price of crude oil rising more than previously projected, the industry is in need of answers sooner rather than later.
While UGE is already working with several leading telecoms firms across the globe, including Verizon, America Movil, and T-Mobile, the fund will provide added flexibility to work with additional telecom clients in some of the industry’s fastest growing markets in desperate need of energy.
UGE’s expertise in distributed energy solutions hopes to alleviate some of these stresses. And with their newly raised finance fund, mobile network operators no longer have to make the choice between up-front costs of renewable energy or continuing to pay the high costs of traditional fossil fuels. The model is similar to solar leases offered by companies such as SolarCity Corp.
Within the telecoms sector, there have been a number of financial models that have had varying degrees of success. A power purchase agreement, or PPA, refers to an agreement where the customer pays a fixed rate for every kWh of energy generated. A fixed fee agreement is like a lease; payment is fixed for a specific technology, such as the equipment delivered on site. UGE is offering something different.
Through their Levelized Energy Agreement (LEA), mobile operators are charged a flat monthly fee for a portfolio of sites and UGE manages the entire energy delivery, ensuring reliability, minimizing costs, and managing the transition to lower-cost energy. The LEA breaks the cost of adopting new technology into stages, providing a simple risk-free process for operators to easily outsource their energy. The first stage locks in current energy costs at operator’s most troubled sites to minimize energy inflation and increase reliability. The following stages expand the number of sites operated by UGE, increasing savings even further and improving reliability across the entire network.
UGE is at the forefront of making mobile networks ubiquitous in developing countries, providing power in the most challenging environments, increasing network reliability, and freeing operators to focus on the expansion and operation of their mobile networks.