New Page

# NFE Commercial RPM Finance & Energy Glossary

## Purpose
Working reference for the NFE team as we develop the Commercial Reliable Power Microgrid (RPM) model.

> **Commercial RPM proposition:** Reliable power as a service. Customers pay for electricity, not equipment.

## Core terms

### RPM — Reliable Power Microgrid
NFE's microgrid product for improving electricity reliability while progressively adding storage, solar generation, controls, and eventually customer ownership options.

### EaaS — Energy as a Service
A model in which the customer buys electricity/service instead of purchasing the underlying batteries, inverters, solar panels, and controls upfront.

### C&I — Commercial and Industrial
Commercial and industrial electricity customers such as offices, schools, churches, clinics, hotels, apartments, supermarkets, warehouses, and factories.

### SLA — Service Level Agreement
The contractual performance commitment NFE makes to a customer, potentially covering protected load, backup duration, availability, response time, maintenance, and exclusions.

### PPA — Power Purchase Agreement
A contract under which a customer buys electricity from a generator or energy supplier. RPM has some PPA-like characteristics but also includes reliability, storage, monitoring, controls, and lifecycle management.

### TOU — Time of Use
A tariff structure in which the price per kWh varies by period, such as peak, shoulder, and off-peak.

## Technical terms

### PV — Photovoltaic
Solar-electric generation using photovoltaic panels.

### BESS — Battery Energy Storage System
The complete battery-storage system, including battery modules, controls, protection, communications, and supporting equipment.

### LFP — Lithium Iron Phosphate
A lithium-ion chemistry commonly used for stationary storage because of its cycle life and thermal stability.

### EMS — Energy Management System
The software/control layer that decides how energy flows among solar, battery, utility grid, generator, and customer loads. For NFE, this is part of the Microgrid OS.

### EPC — Engineering, Procurement and Construction
The scope or contractor responsible for system design, equipment procurement, installation, and commissioning.

### kW — kilowatt
A measure of instantaneous power. Important for inverter and peak-load sizing.

### kWh — kilowatt-hour
A measure of energy consumed or stored over time. Important for billing and battery sizing.

### kWp — kilowatt-peak
The rated DC capacity of a solar PV array under standard test conditions.

### DoD — Depth of Discharge
The percentage of nominal battery capacity that is allowed to be used.

### RTE — Round-Trip Efficiency
The percentage of energy put into a battery that can later be recovered.

## Cost and operating terms

### CAPEX — Capital Expenditure
The upfront investment required to deploy the RPM: battery, inverter, PV, mounting, switchgear, controls, installation, commissioning, contingency, etc.

### OPEX — Operating Expenditure
Recurring costs required to run the RPM after installation.

### O&M — Operations and Maintenance
Monitoring, inspections, cleaning, fault response, repairs, warranty management, and component replacement activities.

### Lifecycle Reserve
Money set aside over time for major future equipment replacement, especially batteries and inverters.

### LCOE — Levelized Cost of Energy
Lifetime cost of electricity generation divided by lifetime electricity produced.

### LCOS — Levelized Cost of Storage
Lifetime cost of storing and delivering electricity from a battery.

## Investment and finance terms

### IRR — Internal Rate of Return
The annualized return implied by a project's projected cash flows. It accounts for both how much cash is generated and when it is generated.

**Project IRR** measures the return from the RPM asset before financing.

**Equity IRR** measures the return to NFE/investors after debt financing and debt service.

### NPV — Net Present Value
The present value of future project cash flows after discounting them at a required return.

### ROI — Return on Investment
A simpler return measure comparing profit with investment. Unlike IRR, basic ROI does not properly account for timing.

### WACC — Weighted Average Cost of Capital
The blended cost/required return of debt and equity financing.

### CFADS — Cash Flow Available for Debt Service
Project cash available to pay loan principal and interest after defined operating costs and reserves.

### DSCR — Debt Service Coverage Ratio
**DSCR = CFADS ÷ Debt Service**

Example: if CFADS is UGX 24.5m/year and annual debt service is UGX 13.9m/year, DSCR is about **1.76×**.

### DSRA — Debt Service Reserve Account
Cash held specifically to cover future debt payments if project cash flow temporarily falls short.

### LLCR — Loan Life Coverage Ratio
Present value of CFADS during the remaining loan term divided by outstanding debt.

### PLCR — Project Life Coverage Ratio
Similar to LLCR, but uses cash flows over the remaining project life.

### Debt Tenor
The length of time over which a loan is repaid.

### Leverage
The proportion of project cost financed with debt.

### SPV — Special Purpose Vehicle
A separate legal entity created to own and finance a project or portfolio of RPM assets.

## Risk and contract terms

### Bankability
The degree to which a project has predictable cash flows, enforceable contracts, acceptable risks, and returns sufficient for lenders or investors to finance it.

### Volume Risk
The risk that a customer consumes less electricity than forecast.

### Credit Risk
The risk that a customer cannot or does not pay its electricity bill.

### Minimum Energy Commitment
A contractual commitment by the customer to purchase at least a defined quantity of electricity over a period.

### Take-or-Pay
A stronger minimum commitment where the customer pays for a contracted minimum quantity whether or not it is consumed.

### Early Termination Payment
A predefined payment if the customer voluntarily ends the RPM agreement early, potentially covering outstanding debt, lender break costs, demobilization, and unrecovered NFE investment.

### Utility-Price Anchor
NFE's concept of linking the customer's electricity price to the applicable utility tariff.

### Critical Load
The electrical load that must remain powered during an outage.

### Phase 4 Buyout
The customer's contractual option to purchase the RPM infrastructure, subject to clearing outstanding financing obligations and agreed residual value.

## Solar forecasting terms

### P50
A generation forecast expected to be exceeded roughly 50% of the time; commonly treated as a central case.

### P90
A more conservative generation forecast expected to be exceeded roughly 90% of the time; often more relevant to lenders.

## Four financial numbers the team should know

1. **CAPEX** — How much must we invest upfront?
2. **CFADS** — How much cash does the RPM produce that can service debt?
3. **DSCR** — Can that cash comfortably cover the loan payment?
4. **IRR** — What return does the investment generate over its life?

A project can look strong on one measure and weak on another, so NFE should review them together.

## Current Worship Harvest working case
These are preliminary team-review assumptions, not final engineering or investment approvals:

- Annual consumption: ~82,940 kWh
- Monthly average: ~6,912 kWh
- Battery: ~120 kWh LFP
- Inverter: ~50 kW three-phase
- PV: ~36–40 kWp preferred
- 40 kWp working CAPEX estimate: ~UGX 143m
- Service horizon: ~15 years
- Customer equipment CAPEX: zero
- NFE owns and operates the equipment during the service term
- Phase 4 provides a predefined ownership pathway