friost & sullivan - eltek (hybrid power systems) award write up

2013

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2013 North American SSL Certificate

Product Leadership Award

2014

2014 Global Hybrid Power Systems

Customer Value Leadership Award

BEST PRACTICES RESEARCH

© Frost & Sullivan 2 “We Accelerate Growth”

Background and Company Performance

Industry Challenges

Alternative energy solutions seek to minimize fuel costs and greenhouse gas footprint by

generating power from renewable energy sources. A hybrid power system, which is a

power generator using at least one renewable source of energy, is one such alternative

solution deployed, especially in remote off-grid areas

This solution is utilized in order to address the following challenges:

Underdeveloped Grid Network:

Most developing countries and some parts of the developed world have underdeveloped

grid network, which renders millions of people around the world without electricity.

Economically emerging countries such as India and South Africa have only about 75% grid

connectivity, and considering the high population density, a large number of people do not

have access to this basic necessity. Even in developed regions of North America and

Europe, remote and faraway places have no access to grid electricity and have to generate

their own power through various means. Both households and industries in these areas

need power to function. The telecom industry is penetrating the most remote regions and

setting up towers and booster stations to provide people with better connectivity. Lack of

grid electricity in these areas acts as a deterrent for this, as the cost of generating

indigenous electricity could be quite high when using the traditional means of a diesel

gen-set.

Hybrid power systems can be set up in these remote areas to generate electricity to power

the households, the community, the villages, the telecom towers, or almost any other

application. Since most of these places traditionally use diesel gen-sets, hybrid power

systems serve as the best solution, as only the renewable component has to be added to

the existing system to generate power, while the diesel component can be used as a

backup.

High Operational Expenditure and Low Efficiency of Existing Technology:

The remote areas which do not have grid connectivity are often powered by diesel gen-

sets. This is certainly expensive due to high diesel costs, and the systems are often not

optimally efficient. Both of these factors are a burden on a household or a community

residing in remote areas. In addition, it increases operational costs significantly for a

company with an establishment in such an area. For example, a telecom company

installing a tower in remote areas will have to bear considerable operational expenses in

order to power its station and ensure continuous operation. A diesel generator has only

55-60% efficiency, which leads to high running costs.



Logistical Issues Associated With Diesel Gen-sets for Telecom Applications:

Telecom services have penetrated to remote parts of the world. As most of these areas

are not grid connected, telecom companies often have to rely on diesel gen-sets for power

generation to provide electricity to the towers. Even though the low capital cost may make

it seem like a suitable option for telecom companies, the operating expenses are

significantly high. Also, Frost & Sullivan notes that there are various logistical issues

related to the operation of the gen-set, the foremost challenge being procurement and

storage of fuel. Transporting diesel to the remote site of power generation can be a

daunting task, which has to be done at regular intervals to keep the system running. The

transportation and procurement increases the costs of running the gen-set considerably.

Maintenance and repair poses as another issue for gen-sets in remote regions. With the

gen-set running for continuously for 24 hours every day, the wear and tear is substantial

which can, after a period of time, hinder the power generation. The time taken to respond

to the problem can be long, considering the remote location, for which period the system

will have to remain shut, providing no power to the tower and leading to obvious losses

for telecom companies.

Employing a hybrid power system can bypass most of these logistical challenges. Since

the system runs primarily on renewable energy, fuel procurement issues and costs

effectively become negligible after the commissioning of the power system. Also, a hybrid

power system employs two or more sources of energy, one of which acts as a backup in

case the other encounters an issue. Hybrid power system ensures uninterrupted power

supply to the tower for continuous services with minimum downtime, which, for a telecom

company, is of prime importance.

Environmental Damage Caused by Diesel Generators:

While power generation from diesel gen-sets in remote areas is a necessity, it releases

harmful emissions, thus causing concern for the global climate. The polluted emissions

from the burnt fuel are released directly into the atmosphere, thereby polluting the

environment. Thousands of telecom towers are currently being run on diesel generators,

which emit millions of tonnes of carbon dioxide and sulfur and other harmful gases that

can significantly and irreversibly harm the environment. In addition, these remote areas

are mostly in ecologically rich and sensitive zones, and pollution from burning diesel for

power generation can lead to damaging effects to the flora and fauna of the area.

Since hybrid power systems do not use fossil fuels and are primarily run on renewable

energy, there are no harmful emissions. Abundant solar, wind, hydro or any other source

of energy is being used to generate clean and green energy. The diesel component in

many hybrid power systems is used only as a backup, for the rare instance when the

primary source isn’t able to provide enough energy to generate the power required. Frost

& Sullivan points out that using a hybrid power system can add value to the company and

the customer’s image and help cut costs - while also caring for the environment.



Customer Value and Implementation Excellence of Eltek

Turnkey Hybrid Power Solutions Provide Total Customer Experience

Eltek provides its customers with holistic hybrid power solutions. While its other

competitors provide hybrid power systems containing power generation equipment, Eltek

believes in providing a solution that not only includes power generation system, but also

highly efficient power conversion equipment. The company's indigenous technology helps

convert power without any considerable loss, at 96.5% efficiency, which is so far

unmatched in the hybrid power industry. Although its competitors may provide a

readymade system, Eltek specifically tailors its hybrid power solutions based on the

customer’s requirements, demonstrating the agility of the company’s process. The

company customizes the design of its hybrid power system especially for a specific

customer in order to provide them with optimum electricity from the system. Also, its

hybrid power solutions are so designed that the usage of the fossil fuel component is the

least, with almost all the power generated only from the renewable component.

Eltek's turnkey solutions include the following: site survey; planning and project

management; installation and commissioning; preventive maintenance; and on-site

services. Initially, Eltek sends its professionals to the client site for surveys, according to

which a plan and a design of the suitable hybrid power solution is developed. From this

point, Eltek is responsible for the complete management of the project with periodic

consultations with the customer. The installation and commissioning services start post

the design phase, where Eltek provides the customer with an appropriate size of the

system that will provide optimum power. After the go-ahead, it procures, installs and

commissions the hybrid power plant.

Eltek has a strong network of local partner companies that provide services to its

customers. These companies have highly skilled employees to match and maintain Eltek’s

service standards. While most other competitors provide reactive maintenance services,

Eltek believes in preventive maintenance, which helps prevent an issue in the power

system - instead of waiting for the incident to happen. This usually helps customers save

much time and money, as the downtime of the plant is considerably reduced. Lastly, in

the modern day when support services are being provided from off-site locations, Eltek

follows the traditional method of providing on-site services, which help it reach the source

of the problem and rectify it immediately.

Hybrid Power Solutions to Ensure Operational Efficiency

Diesel generators have only about 50-60% efficiency, while most hybrid power systems

are about 85% efficient, which means that nearly 20-30% of the energy in diesel

generators is wasted without being converted into power. This loss is often written off as

a limitation to the system by other hybrid power system companies, while the customers

ultimately bear the loss. Eltek provides a hybrid power solution which has an in-built high

efficiency converter that provides an unprecedented efficiency rate of 96.5%. This helps



minimize the power generation losses and delivers maximum value to the customers.

Eltek’s solution is designed to achieve maximum efficiency at all times. It also includes

advanced battery monitoring routines, gen-set optimization programs, fuel level, and

consumption pattern monitoring, as well as data logging.

Eltek caters primarily to the telecom applications in the industrial segment of the hybrid

power market. Since the telecommunications sector has expanded deeply into the remote

parts of the world with no electricity, telecom towers and boosters often have to run on

diesel generators. These are increasingly being replaced by hybrid power systems, with

Eltek being one of the largest solution providers in this market. Its expertise, gathered

through about four decades of experience in the industry, has been translated into high-

quality solutions and components, which have been continuously improved over a long

period of time in order to provide customers with optimum value for money.

Reduced Operational Expenditure Gives Optimum Product Value

A considerably big part of the world’s population still isn’t fully connected to the electricity

grid. People living in these regions rely on diesel generators for electricity, which, even

with lower capital costs, become considerably expensive in the long run due to the high

operational costs, especially with fossil fuel prices rising constantly. A hybrid power

system helps reduce the operational costs considerably. However, due to the low

efficiency of the systems, the cost reduction is not optimal.

Frost & Sullivan appreciates the fact that Eltek’s hybrid power solutions help reduce the

operational cost by up to 80%. While its competitors are able to reduce this cost by only

50% or so in varied cases, Eltek has been able to achieve higher cost-efficiency due to its

technologically advanced systems. The approach Eltek uses in its hybrid power systems

strives to accomplish minimum operational costs on diesel consumption and

transportation, through the combination of optimized gen-sets and efficient power

generated by renewable sources of energy. Even if the environmental conditions do not

permit the complete replacement of the fossil fuel component, the highly efficient solution

by Eltek will ensure optimum utilization of the system, thereby reducing operational costs

quite considerably for the customer.

Eltek has a robust research & development (R&D) team, through which its solutions are

constantly bettered, both technically and financially, and made more affordable for the

costumers. Rapid development of the product and its better versions help Eltek counter

the competition from other manufacturers and consistently stay ahead in the market.

Technological Sophistication Ensures Minimum Maintenance Required

Diesel generators require high amount of maintenance to function efficiently. Even though

the maintenance may be less for a typical hybrid power system when compared to a diesel

generator, it still depends on the kind of components used. Many customers face the issue

of maintenance in remote areas, ranging from the accessibility of technical assistance, to



repair requirements in challenging weather conditions (such as in case of high rise telecom

towers) and general wear and tear due to the location.

Eltek provides its customers with a highly advanced hybrid power solution, which requires

minimal maintenance services. These systems are specifically designed to withstand harsh

weather conditions and are built to endure high operational wear, which makes it

maintenance free. Also, for systems using diesel gen-sets as the secondary power source,

Eltek’s gen-set optimization mechanisms ensure that the generator runs at optimal loads

of about 80 to 90%, thereby reducing soot and the consequent maintenance. Eltek's other

competitors use traditional components, which require relatively higher and frequent

maintenance schedules, making the systems more expensive and troublesome for the

customer.

Eltek uses galvanic isolation in its equipment, which provides extended surge protection.

Surge protection is essentially required for telecom towers - especially in windy and rainy

areas, where lightning is frequent. The external surge protection, connected to the

converter, helps suppress the over-voltage pulse caused by lightning. This helps reduce

the need for maintenance and the resultant downtime quite significantly.

Strong Commitment to Customer’s Service Experience through Technologically

Customized Designs and Installations

A hybrid power system typically generates power from one or more renewable sources of

energy, a fossil fuel secondary power generator, or a battery bank that acts as a storage

system for low power generation requirements from the renewable component in case of

unfavorable weather conditions. All of these need to be monitored constantly to generate

power optimally at all times. While all the components are located in the same area, their

monitoring is typically done separately. Also, the controllers are traditionally used

separately for all of these components, which, further increases the workload for the

operator, as well as the customer.

Eltek’s hybrid power solution is fully integrated, i.e. all of the components are controlled

and monitored by a single controller. This helps the company and the project engineers to

get a complete overview of the installed power system with a single point of management

for all the power sources being used. While it immensely reduces the work for the

engineers, it also ensures that the customers get an integrated view of the power

performance delivered by the systems.

The hybrid power systems installed by Eltek can be monitored and controlled remotely

with the help of the company’s highly advanced software, known as the MultiSite Monitor.

The software provides constant view the system’s performance and helps analyse the data

for any errors or underperforming sites. Consolidated performance reports can be

generated easily, which provide a better insight into the system, not only to the

engineers, but also to the customers.



In addition, Eltek’s hybrid power system has an innovative modular design that can be

adapted to support various power input sources. This helps especially in harsh weather

conditions, when the power source can be switched to one that is more conducive to the

environment. The modularity also helps meet higher load requirements.

Through such highly innovative technological attributes, Eltek keeps up with its

commitment to address the needs of its customers constantly. Also, the company takes

annual feedback from all its customers on the services availed by them in the year. The

positive feedback encourages and strengthens the company’s resolve to deliver better to

its customers, while the suggestions are incorporated within its processes to ensure

constant customer satisfaction.

Increased Ownership Experience and Brand Value through Highly Efficient Hybrid

Power Systems

There are nearly half a million telecom installations all over the globe that are being

powered by diesel generators, producing greenhouse and other toxic gases. Such high

amounts of emissions could potentially be extremely harmful to the environment. Using

hybrid power systems helps the environment by reducing the power generation from fossil

fuels. However, in a system that uses a diesel power generator as the secondary source,

the reduced damage depends on the efficiency of the primary renewable energy system.

Eltek’s highly efficient converters ensure that the power produced by the renewable

energy component is always at an optimum level, reducing the need to utilize the diesel

power generator. Also, with technologically advanced components in the system, the wear

and tear is much less, which further increases the efficiency of the system. Converting to

Eltek’s hybrid power system can help reduce the carbon footprint of the customers and

enhance both their brand value and ownership experience.

Most of Eltek’s customers are telecom companies, so they contribute significantly to brand

value through Eltek's products and the achievements associated with them. Eltek has sold

more than 1 million of its flagship FlatPack2 High Efficiency (HE) modules, an

unprecedented accomplishment in the energy saving market. The cumulative effect of the

installation of these HE modules across the globe has helped save $149 million in

operational expenses over the years and cut carbon dioxide levels by nearly 900,000

tonnes. The number of these modules installed is a testimonial to Eltek’s performance in

the market and a witness to its unmatched technological capabilities.

Vision Alignment through Business Transformation for Better Customer

Satisfaction

Eltek has recently launched the One Eltek programme, aimed at improved internal

operational efficiency, better customer satisfaction, and consequently improved margins

for the company. The program is focused on aligning the company’s vision towards cutting

costs not only for the company, but also its customers. The program will be running



through 2014-17 in order to ensure harmonization of processes in various regions and

improved quality of its products and services, while increasing supply chain agility and

efficiency.

The company aspires to further intensify its competitiveness in the market by ensuring a

higher quality driven performance of its services and products through a streamlined and

more efficient process.

Conclusion

Eltek is one of the largest providers of hybrid power systems in the global telecom sector.

Its hybrid power system solutions are some of the most technologically advanced in the

market, delivering high value-for-money to its customers. The company offers the highest

efficiency in its power converters, which helps reduce operational expenses drastically. It

also utilizes galvanized components that require minimum maintenance. Moreover, Eltek’s

hybrid power systems are fully integrated, which allows remote monitoring and control,

consequently delivering optimum performance to the customers.

The company has recently announced the shipment of over 1 million high efficiency

modules, an unprecedented achievement in the industry. The One Eltek vision alignment

program is aimed at harmonizing the internal process to cut costs and provide better

customer satisfaction. In a highly fragmented hybrid power systems market, Eltek delivers

significant value to its customers through its high-quality solutions by providing effective

and efficient off-grid hybrid power generation systems. Based on the aforementioned

factors as benchmarked through Frost & Sullivan competitive analysis, Eltek is the

recipient of the 2014 Global Customer Value Leadership Award.



Significance of Customer Value Leadership Ultimately, growth in any organization depends upon customers purchasing from your

company, and then making the decision to return time and again. In a sense, then,

everything is truly about the customer—and making those customers happy is the

cornerstone of any long-term successful growth strategy. To achieve these dual goals

(customer engagement and growth), an organization must be best-in-class in three key

areas: understanding demand, nurturing the brand, differentiating from the competition.

This three-fold approach to delivering customer value is explored further below.



Understanding the Total Customer Experience Demand forecasting, branding, and differentiation all play a critical role in delivering

unique value to customers. This three-fold focus, however, is only the beginning of the

journey and must be complemented by an equally rigorous focus on the customer

experience. Best-practice organizations therefore commit to the customer at each stage

of the buying cycle and continue to nurture the relationship once the customer has made a

purchase.

During the buying cycle, successful companies identify prospects, engage them through

resonant communications, and manage to a successful close through superior service and

targeted incentives to buy. Once the purchase is complete, customer-focused

organizations continue to nurture relationships with ongoing service, transparency, and

integrity. In this way, they build a loyal customer base with low attrition rates and high

lifetime value. This ongoing, cyclical dynamic is further illustrated below.



Frost & Sullivan’s Global Research Platform Frost & Sullivan maintains more than 50 years in business and is a global research

organization of 1,800 analysts and consultants who monitor more than 300 industries and

250,000 companies. The Company’s research philosophy originates with the CEO’s 360

Degree Perspective, a holistic research methodology that encourages us to consider

growth challenges, and the solutions companies employ to solve them, from every angle.

This unique approach enables us to determine how best-in-class companies worldwide

manage growth, innovation and leadership. Based on the results of our research in

customer value leadership, Frost & Sullivan is proud to present the 2014 Global Customer

Value Leadership Award in Hybrid Power Systems to Eltek.

Key Benchmarking Criteria

For the Customer Value Leadership Award, Frost & Sullivan analysts evaluated the total

client experience and strategy implementation excellence according to the criteria detailed

below.

Customer Value Excellence

Criterion 1: Total Customer Experience

Criterion 2: Product/Service Value

Criterion 3: Purchase Experience

Criterion 4: Ownership Experience

Criterion 5: Service Experience

Implementation Excellence

Criterion 1: Vision Alignment

Criterion 2: Process Design

Criterion 3: Operational Efficiency

Criterion 4: Technological Sophistication

Criterion 5: Company Culture

The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research methodology represents the analytical rigor of our

research process. It offers a 360-degree-view of industry challenges, trends, and issues

by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies

make important growth decisions based on a narrow understanding of their environment,



leading to errors of both omission and commission. Successful growth strategies are

founded on a thorough understanding of market, technical, economic, financial, customer,

best practices, and demographic analyses. The integration of these research disciplines

into the 360-degree research methodology provides an evaluation platform for

benchmarking industry players and for identifying those performing at best-in-class levels.

Decision Support Scorecard and Matrix

To support its evaluation of best practices across multiple business performance

categories, Frost & Sullivan employs a customized Decision Support Scorecard and Matrix.

This analytical tool compares companies’ performance relative to each other. It features

criteria unique to each award category and ranks importance by assigning weights to each

criterion. The relative weighting reflects current market conditions and illustrates the

associated importance of each criterion according to Frost & Sullivan. This tool allows our

research and consulting teams to objectively analyze performance, according to each

criterion, and to assign ratings on that basis. The tool follows a 10-point scale that allows

for nuances in performance evaluation; ratings guidelines are illustrated below.

Best Practice Award Analysis for Eltek

Decision Support Scorecard: Customer Value Excellence

The Decision Support Scorecard the relative importance of each criterion and the ratings

for each company under evaluation for the Customer Value Leadership Award. The

research team confirms the veracity of the model by ensuring that small changes to the

ratings for a specific criterion do not lead to a significant change in the overall relative

rankings of the companies.

Finally, to remain unbiased and to protect the interests of all organizations reviewed, we

have chosen to refer to the other key players in as Company 2 and Company 3.



DECISION SUPPORT SCORECARD FOR CUSTOMER VALUE LEADERSHIP AWARD

(ILLUSTRATIVE): CUSTOMER VALUE EXCELLENCE

Measurement of 1–10 (1 = poor; 10 = excellent)

Award Criteria

Customer Value Excellence Total Customer

Experience

Product/Service

Value

Purchase

Experience

Ownership

Experience

Service Experience

Weighted Rating

Relative Weight (%) 20% 20% 20% 20% 20% 100%

Eltek 9.0 9.5 9.0 8.0 9.5 9.0

Company 2 7.5 8.0 8.0 8.0 7.5 7.8

Company 3 7.0 7.0 8.0 7.0 6.5 7.1

Criterion 1: Total Customer Experience

Requirement: Customers receive exceptional impression at every stage of the purchase

cycle

Criterion 2: Product/Service Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market

Criterion 3: Purchase Experience

Requirement: It is as simple for salespeople to sell the product or service as it is for the

customer to buy the product or service

Criterion 4: Ownership Experience

Requirement: Customers are proud to own and use the company’s product or service

Criterion 5: Service Experience

Requirement: Customer service is accessible, fast, and stress-free



Decision Support Scorecard: Implementation Excellence

DECISION SUPPORT SCORECARD FOR CUSTOMER VALUE LEADERSHIP AWARD (ILLUSTRATIVE): IMPLEMENTATION EXCELLENCE

Measurement of 1–10 (1 = poor; 10 = excellent)

Award Criteria

Implementation Excellence Vision Alignment

Process Design

Operational

Efficiency

Technological

Sophistication

Company Culture

Weighted Rating

Relative Weight (%) 20% 20% 20% 20% 20% 100%

Eltek 9.0 9.0 9.5 9.5 9.0 9.2

Company 2 8.5 8.0 8.0 8.5 8.5 8.3

Company 3 7.0 7.5 8.0 7.5 8.0 7.6

Criterion 1: Vision Alignment

Requirement: The executive team is aligned on the organization’s mission and vision

Criterion 2: Process Design

Requirement: Processes support the efficient and consistent implementation of tactics

designed to implement the strategy

Criterion 3: Operational Efficiency

Requirement: Staff performs assigned tactics seamlessly, quickly, and to a high quality

standard

Criterion 4: Technological Sophistication

Requirements: Systems enable companywide transparency, communication, and efficiency

Criterion 5: Company Culture

Requirement: The executive team sets the standard for commitment to customers,

quality, and staff, which translates directly into front-line performance excellence



Decision Support Matrix

Once all companies have been evaluated according to the Decision Support Scorecard,

analysts can then position the candidates on the matrix shown below, enabling them to

visualize which companies are truly breakthrough and which are not yet operating at best-

in-class levels.



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