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Swap Network Service (SNS) Business Model

Overview

The SNS-Swap-Network-Service (SN) model represents a real estate infrastructure operator (landlord model) that owns/controls physical locations and provides battery housing and charging services to the Battery Fleet operator.

Critical Modeling Methodology: Integer Unit Constraints

Physical Architecture

Rack = Slots + Chargers - 1 Rack = 15 slots (fixed physical constraint) - Default: 15 chargers per rack (1:1 slot:charger ratio) - Flexible: Can deploy fewer chargers if slots share charging capacity

Component Costs: - Slot hardware: $60/slot (20%) - rack structure, mounting - Charger hardware: $240/charger (80%) - power electronics, cables - Installation: $300/rack - wiring, commissioning

Two-Layer Economic Model

The model explicitly separates installed capacity (integer-constrained) from actual usage (demand-driven) to capture the economic impact of modular infrastructure:

Infrastructure Layer (Integer-Constrained)

Installed Racks = SNS_SCALE_FACTOR (integer: 1, 2, 3...)
Installed Slots = Installed Racks × 15
Installed Chargers = Installed Racks × chargers_per_rack
Total CapEx = Based on installed capacity
Fixed OpEx = Property + Labor + Security (on installed racks)

Operational Layer (Demand-Driven)

Active Slots = ds_total_slots (from demand-supply)
Slot Utilization = Active Slots / Installed Slots
Revenue = Only from active slots
Variable OpEx = Only on active usage (electricity)

Economic Impact

Example: Test Case A - Demand: 20 slots needed - Supply: Must build 2 racks = 30 slots (can't build 1.33 racks!) - Utilization: 20/30 = 67% - CapEx Burden: Pay for 30 slots - Fixed OpEx Penalty: Spread over 30 slots → higher per-slot cost - Revenue: Only from 20 active slots - Result: Longer payback period due to 33% overcapacity

This models the fundamental infrastructure investment challenge: You cannot build partial units, so demand-supply mismatches create unavoidable inefficiencies that directly impact ROI.

Terminology

  • Slot: Physical location where a battery sits (15 per rack, fixed)
  • Charger: Power electronics that charge batteries (default 15 per rack, can be <15)
  • Rack: Complete infrastructure unit containing slots + chargers
  • Installed Capacity: What you built (integer racks)
  • Active Capacity: What demand actually uses
  • Utilization Rate: Active / Installed (key economic metric)

Business Context

This model analyzes the investment opportunity for swap rack operators who provide charging infrastructure and electricity distribution services to battery fleet operators. The model uses unit economics based on a single charging slot to simplify scalability analysis.

Central Question: "Can I profitably operate a charging bay network?" (SNS-Swap-Network-Service Operator Perspective)

Integrated Workbook

📥 Download Full Ecosystem Model

This model is implemented in the SNS-Swap-Network-Service tab of the integrated workbook. All parameters are sourced from both the SNS-Swap-Network-Service tab (local parameters) and global settings, ensuring consistency across all ecosystem models.

Business Context

Design Principle: Bottom-Up Modeling - Unit economics constrained by battery asset profitability requirements.

Swap network operators need to evaluate: - Capital investment per charging bay (infrastructure + installation) - Daily operating costs (labor, property, electricity) - Revenue model (electricity markup to battery operators) - Network scalability and site-level economics - Return on investment and operational viability

Critical Constraint from Battery Asset Model: - Battery operators need daily net cash > $0.98/kWh to achieve profitability - Current overhead (labor + property) = $0.65/kWh/day represents 41% of battery OpEx - Swap network must deliver infrastructure services efficiently to enable battery asset viability - Target: Total allocated overhead < $0.40/kWh/day (38% reduction from current)

Model Inputs

Source: All input parameters are defined in the SNS-Swap-Network-Service tab of the Excel workbook and referenced using named ranges throughout the model.

CapEx (Capital Expenditure per Bay)

These represent the upfront investment required per charging bay:

Parameter Symbol Value Unit Description Excel Location
Rack cost per bay SNS_RACK_COST 300 USD/bay Hardware cost per charging slot (battery cradle, connectors, control electronics) SNS-Swap-Network-Service!C7
Installation cost SNS_INSTALL_COST 20 USD/bay Wiring, mounting, commissioning per bay SNS-Swap-Network-Service!C8
Total CapEx per bay sns_capex_per_bay 320 USD/bay Rack + Installation Calculated
Service life SNS_SERVICE_LIFE 1000 days Depreciation period (~3 years) SNS-Swap-Network-Service!C9
Residual value % SNS_RESIDUAL_PCT 0 ratio No scrap value (fully depreciated infrastructure) SNS-Swap-Network-Service!C10

CapEx Rationale: - Rack cost (\(300):** Includes battery cradle, charging connectors, control electronics, and safety systems - **Installation (\)20): Minimal cost assuming pre-wired facility; higher if electrical infrastructure upgrades needed - Service life (1000 days): Conservative estimate; actual hardware may last longer but technological obsolescence considered - Zero residual value: Infrastructure is site-specific and has limited resale value

Operational Parameters (Charging Capacity)

These define the charging throughput capacity of each bay:

Parameter Symbol Value Unit Description Excel Location
Charger power rating SNS_CHARGER_POWER 2.0 kW Installed power per bay (2kW slow charger) SNS-Swap-Network-Service!C13
Operating hours per day SNS_OPERATING_HOURS 12 hours/day Hours per day the bay is available for charging SNS-Swap-Network-Service!C14
Bay utilization rate SNS_BAY_UTILIZATION 0.50 ratio Percentage of operating time actually used for charging (50%) SNS-Swap-Network-Service!C15
Charging efficiency SNS_CHARGE_EFFICIENCY 0.93 ratio Energy retention during charging (7% loss from heat, conversion inefficiency) SNS-Swap-Network-Service!C16

Operational Parameters Rationale: - 2kW charger: Matches battery charging rate; slow charging extends battery life vs fast charging - 12 hours/day operating: Assumes daytime operations (6 AM - 6 PM); nighttime charging possible but adds labor costs - 50% utilization: Conservative estimate; actual utilization depends on battery/bay ratio (to be coupled in integrated model) - 93% efficiency: Industry-standard charging efficiency; 7% loss is unavoidable in DC charging systems

Throughput Calculation:

Actual throughput = Power × Operating hours × Utilization
                  = 2 kW × 12 hrs × 50%
                  = 12 kWh/bay/day

Grid consumption = Actual throughput ÷ Charging efficiency
                 = 12 kWh ÷ 0.93
                 = 12.90 kWh/bay/day (includes 7% loss)

Network Configuration

These define the scale and structure of the swap station network:

Parameter Symbol Value Unit Description Excel Location
Bays per station SNS_BAYS_PER_STATION 15 bays Charging slots per location (site-level infrastructure) SNS-Swap-Network-Service!C19
Stations managed SNS_STATION_COUNT 10 stations Total locations in network (network-level scale) SNS-Swap-Network-Service!C27
Total network bays sns_total_bays 150 bays Total charging capacity Calculated

Network Configuration Rationale: - 15 bays/station: Optimized for Activity-Based Costing; allows efficient labor and property cost allocation - 10 stations: Pilot network scale; provides geographic coverage while maintaining operational control - Total 150 bays: Sufficient to serve 100-300 battery fleet (depending on battery/bay ratio to be determined in coupling)

Activity-Based Cost Drivers (Site Operations)

These represent the fixed costs at the station level that must be allocated across bays:

Parameter Symbol Value Unit Description Excel Location
Property ownership cost SNS_PROPERTY_COST 50 USD/month Utilities, property tax, insurance for owned location SNS-Swap-Network-Service!C23
Labor: Attendant wage SNS_LABOR_RATE 100 USD/month Part-time site attendant salary SNS-Swap-Network-Service!C24
Labor: Hours per station SNS_LABOR_HRS_STATION 10 hours/month Cleaning, monitoring, troubleshooting SNS-Swap-Network-Service!C25
Security cost SNS_SECURITY_COST 20 USD/month Cameras, locks, insurance SNS-Swap-Network-Service!C26

ABC Cost Allocation:

Property cost per bay = $50 ÷ 15 bays = $3.33/bay/month = $0.11/bay/day
Labor cost per bay    = $100 ÷ 15 bays = $6.67/bay/month = $0.22/bay/day
Security cost per bay = $20 ÷ 15 bays = $1.33/bay/month = $0.04/bay/day

Total fixed OpEx = $0.11 + $0.22 + $0.04 = $0.37/bay/day

ABC Drivers Rationale: - Property (\(50/month):** Assumes owned property; includes utilities, property tax, insurance; rent would be higher - **Labor (\)100/month): Part-time attendant (~40 hrs/month × \(2.50/hr); assumes low-supervision automated bays - **Labor hours (10 hrs/month):** Minimal on-site time; majority of management is remote monitoring - **Security (\)20/month): Basic security (cameras, locks); assumes low-theft environment - Activity-Based Costing:** Fixed costs allocated per bay ensures accurate unit economics and scalability analysis

Revenue Model (Electricity Pricing)

The swap network's primary revenue is from selling electricity to battery operators:

Parameter Symbol Value Unit Description Excel Location
Electricity markup % SNS_ELEC_MARKUP 0.20 ratio Premium charged to BCS_ (20% above wholesale cost) SNS-Swap-Network-Service!C28
Grid electricity rate sns_eps_facility_rate 0.32 USD/kWh Wholesale electricity cost from power generator Referenced from EPS_ model

Revenue Calculation:

Grid energy consumed  = 12.90 kWh/bay/day
Wholesale cost       = 12.90 × $0.32 = $4.13/bay/day
Retail price to BF   = $0.32 × (1 + 20%) = $0.384/kWh
Revenue from BF      = 12.90 × $0.384 = $4.95/bay/day
Electricity margin   = $4.95 - $4.13 = $0.82/bay/day

Pricing Rationale: - 20% markup: Industry-standard margin for electricity resale; covers distribution overhead and infrastructure costs - Wholesale rate ($0.32/kWh): Togo's high electricity cost; significantly above typical $0.15/kWh in other markets - Margin preservation: 20% markup ensures consistent margin regardless of wholesale price fluctuations

Model Outputs

Source: All calculations are performed in the SNS-Swap-Network-Service tab using formulas that reference the named ranges.

Calculated Metrics

The following table shows the actual Excel implementation with multi-step formulas for clarity:

Metric Excel Formula Value Unit Description
CapEx Metrics
sns_capex_per_bay =sns_rack_cost+sns_install_cost 320.00 USD/bay Total capital per bay
sns_total_bays =sns_station_count*sns_bays_per_station 150 bays Network capacity
sns_residual_value =sns_capex_per_bay*sns_residual_pct 0.00 USD/bay No salvage value
Throughput Capacity
sns_actual_throughput =sns_charger_power*sns_operating_hours*sns_bay_utilization 12.00 kWh/bay/day 2kW × 12h × 50%
sns_grid_energy_consumed =sns_actual_throughput/sns_charge_efficiency 12.90 kWh/bay/day Includes 7% loss
ABC Allocation (Fixed Costs)
sns_property_per_bay =sns_property_cost/sns_bays_per_station 3.33 USD/bay/month Property overhead
sns_labor_per_bay =sns_labor_rate/sns_bays_per_station 6.67 USD/bay/month Labor overhead
sns_security_per_bay =sns_security_cost/sns_bays_per_station 1.33 USD/bay/month Security overhead
sns_fixed_opex_month =sns_property_per_bay+sns_labor_per_bay+sns_security_per_bay 11.33 USD/bay/month Total fixed costs
sns_fixed_opex_day =sns_fixed_opex_month/30 0.38 USD/bay/day Daily fixed costs
Electricity Economics
sns_elec_cost_per_bay =sns_grid_energy_consumed*sns_eps_facility_rate 4.13 USD/bay/day Wholesale cost
sns_elec_price_to_bf =sns_eps_facility_rate*(1+sns_elec_markup) 0.384 USD/kWh Retail price (20% markup)
sns_elec_revenue_per_bay =sns_grid_energy_consumed*sns_elec_price_to_bf 4.95 USD/bay/day Revenue from BF
sns_elec_margin_per_bay =sns_elec_revenue_per_bay-sns_elec_cost_per_bay 0.82 USD/bay/day Electricity profit
Total Metrics
sns_total_opex_per_bay =sns_fixed_opex_day+sns_elec_cost_per_bay 4.51 USD/bay/day Fixed + Variable OpEx
sns_total_revenue_per_bay =sns_elec_revenue_per_bay 4.95 USD/bay/day Only electricity revenue
sns_daily_net_cash =sns_total_revenue_per_bay-sns_total_opex_per_bay 0.44 USD/bay/day Net cash flow

Key Performance Indicators

The following KPIs reference pre-calculated metrics from the Calculated Metrics section:

KPI Excel Formula Value Unit Description
SNS_Daily_Net_Cash_KPI =sns_daily_net_cash 0.44 USD/bay/day Daily profitability per bay
SNS_Electricity_Margin_KPI =sns_elec_margin_per_bay 0.82 USD/bay/day Electricity markup profit
SNS_Actual_Throughput_KPI =sns_actual_throughput 12.00 kWh/bay/day Energy delivered to batteries
SNS_Payback_Period_KPI =sns_capex_per_bay/sns_daily_net_cash 727 days Time to recover CapEx (~2 years)
SNS_Network_Revenue_KPI =sns_total_revenue_per_bay*sns_total_bays 742.50 USD/day Total network revenue (150 bays)
SNS_Profit_Margin_KPI =(sns_daily_net_cash/sns_total_revenue_per_bay)*100 8.89 % Net margin percentage

Calculation Logic

Cost Structure Breakdown (Per Bay/Day)

Component Calculation Value % of Total OpEx USD/bay/day
Fixed Costs (ABC Allocation)
Labor $100÷15÷30 23% 0.22
Property $50÷15÷30 11% 0.11
Security $20÷15÷30 4% 0.04
Subtotal Fixed 38% 0.38 8% of OpEx
Variable Costs (Electricity)
Grid electricity 12.90 × $0.32 4.13 92% of OpEx
Total OpEx 100% 4.51 USD/bay/day

Revenue Structure Breakdown (Per Bay/Day)

Component Calculation Value % of Revenue USD/bay/day
Wholesale electricity cost 12.90 × $0.32 4.13 83%
Electricity markup (20%) 12.90 × $0.064 0.82 17%
Total Revenue 100% 4.95 USD/bay/day

Profitability Analysis

Metric Calculation Value Unit
Daily Revenue Electricity sales 4.95 USD/bay/day
Daily OpEx Fixed + Electricity 4.51 USD/bay/day
Daily Net Cash Revenue - OpEx 0.44 USD/bay/day
Net Margin (0.44 ÷ 4.95) × 100 8.89 %
Monthly Net Cash 0.44 × 30 13.20 USD/bay/month
CapEx per Bay Rack + Install 320.00 USD/bay
Payback Period 320 ÷ 0.44 727 days (~2 years)

Key Drivers Analysis

What determines swap network profitability?

1. Electricity Throughput (Biggest Driver)

Utilization Hours Throughput Grid Energy Revenue Net Cash Payback
30% 12 7.2 kWh 7.74 kWh $2.97 -$0.92 N/A (loss)
40% 12 9.6 kWh 10.32 kWh $3.96 -$0.24 N/A (loss)
50% 12 12.0 kWh 12.90 kWh $4.95 $0.44 727 days
60% 12 14.4 kWh 15.48 kWh $5.94 $1.12 286 days
80% 12 19.2 kWh 20.65 kWh $7.93 $2.55 125 days

Impact: Every 10% increase in utilization adds ~$0.17/day net cash and reduces payback by ~90 days.

2. Electricity Markup (Revenue Model)

Markup % Retail Price Revenue Margin Net Cash Payback
10% $0.352/kWh $4.54 $0.41 $0.03 10,667 days
15% $0.368/kWh $4.75 $0.62 $0.24 1,333 days
20% $0.384/kWh $4.95 $0.82 $0.44 727 days
25% $0.400/kWh $5.16 $1.03 $0.65 492 days
30% $0.416/kWh $5.37 $1.24 $0.86 372 days

Impact: Every 5% increase in markup adds ~$0.21/day net cash and reduces payback by ~235 days.

3. Activity-Based Cost Efficiency

Scenario A: Current (15 bays/station)

Fixed OpEx = ($50 + $100 + $20) ÷ 15 = $11.33/bay/month = $0.38/bay/day

Scenario B: Optimized (25 bays/station)

Fixed OpEx = ($50 + $100 + $20) ÷ 25 = $6.80/bay/month = $0.23/bay/day
Savings = $0.15/bay/day
New Net Cash = $0.44 + $0.15 = $0.59/bay/day
New Payback = 320 ÷ 0.59 = 542 days (185 days faster)

Impact: Increasing bays/station from 15 to 25 improves net cash by 34% and reduces payback by 25%.

4. Labor Cost Reduction

Labor Rate Cost/Bay/Day Net Cash Payback
$150/month $0.33 $0.33 970 days
$100/month $0.22 $0.44 727 days
$75/month $0.17 $0.50 640 days
$50/month $0.11 $0.55 582 days

Impact: Every \(25/month reduction in labor adds ~\)0.06/day net cash and reduces payback by ~87 days.

Decision Criteria

SNS-Swap-Network-Service Investment Viability:

Favorable Investment if: - SNS_Daily_Net_Cash_KPI > $0.50/bay/day (strong cash flow) - SNS_Payback_Period_KPI < 500 days (~1.4 years) - SNS_Profit_Margin_KPI > 10% (healthy margin) - Bay utilization > 60% (high throughput) - Bays per station ≥ 20 (efficient ABC allocation)

⚠️ Review Investment if: - SNS_Daily_Net_Cash_KPI: \(0.20-\)0.50/bay/day (marginal cash flow) - SNS_Payback_Period_KPI: 500-730 days (1.4-2 years) - SNS_Profit_Margin_KPI: 5-10% (thin margin) - Bay utilization: 50-60% (moderate throughput)

Unfavorable Investment if: - SNS_Daily_Net_Cash_KPI < $0.20/bay/day (insufficient cash flow) - SNS_Payback_Period_KPI > 730 days (> 2 years) - SNS_Profit_Margin_KPI < 5% (unsustainable margin) - Bay utilization < 50% (underutilized infrastructure)

Investment Optimization Strategies:

If profitability is marginal, improve by:

  1. Increase Throughput (highest impact)
  2. Increase bay utilization (couple to battery fleet demand)
  3. Extend operating hours (12h → 18h adds 50% capacity)
  4. Higher power chargers (2kW → 3kW adds 50% throughput)

  5. Optimize Activity-Based Costs (medium impact)

  6. Increase bays per station (15 → 25 improves ABC by 40%)
  7. Reduce labor rate (automation, remote monitoring)
  8. Negotiate lower property costs (owned vs rented)

  9. Improve Revenue Model (low-medium impact)

  10. Negotiate higher electricity markup (if market allows)
  11. Reduce wholesale electricity cost (negotiate with EPS_)
  12. Add ancillary revenue (battery storage fees, network access)

Interdependencies with Other Models

Dependencies FROM Other Models (Bottom-Up Flow)

Source Model Data Required Impact Constraint Type
bss.md Overhead allocation < $0.40/kWh/day Current $0.65 too high; requires 38% reduction Hard constraint
bss.md Battery fleet size & swap frequency Determines bay utilization rate Demand driver
bss.md Energy cost sensitivity Maximum electricity markup tolerance Revenue constraint
eps.md Wholesale electricity cost Determines sns_eps_facility_rate input Hard constraint

Dependencies TO Other Models (Requirements Flow)

Target Model Data Provided Impact Requirement
bss.md Electricity at $0.384/kWh Battery OpEx = $1.24/kWh/day Cost allocation
bss.md Infrastructure availability Battery deployment feasibility Service enabler
bss.md Network density & coverage Battery utilization potential Service level
eps.md Grid demand = 12.90 kWh/bay/day Power capacity requirements Load profile

Current Impact on Battery Asset Model

With Current SNS_ Parameters:

Metric Battery Asset Model Impact
Electricity cost $0.384/kWh × 2.0 swaps × 4.0 kWh = $3.07/kWh/day Primary battery OpEx
Allocated overhead Labor (\(0.22) + Property (\)0.11) = $0.33/kWh/day 21% of battery OpEx
Total SNS_ burden $3.40/kWh/day 74% of battery OpEx
Battery net cash Revenue (\(2.56) - OpEx (\)1.58) = $0.98/kWh/day Positive but constrained

Target: Reduce SNS_ overhead from $0.33 to $0.25/kWh/day (24% reduction)

Current Status & Next Steps

Current Model Status

Implemented: - ✅ Unit economics per charging bay - ✅ Activity-Based Costing (ABC) allocation - ✅ Electricity throughput and efficiency modeling - ✅ Revenue model with 20% electricity markup - ✅ KPI tracking with _KPI suffix convention

Assumptions (Placeholders): - ⏳ Bay utilization (50%) - Will be coupled to battery fleet demand - ⏳ Operating hours (12h/day) - Static assumption; nighttime operations not modeled - ⏳ Wholesale electricity rate ($0.32/kWh) - Referenced from EPS_ model (to be implemented)

Integration Requirements

When coupling with BCS_ (Battery Fleet) model: 1. Replace SNS_BAY_UTILIZATION with dynamic calculation:

Bay utilization = (Battery count × Swaps/day × Energy/swap) ÷ (Bay count × Max throughput)
2. Determine optimal battery/bay ratio for service level vs cost efficiency 3. Model queue time and service reliability impact on battery availability

When coupling with EPS_ (EPS-Electric-Power-Service) model: 1. Replace sns_eps_facility_rate hardcoded value with dynamic EPS_ output 2. Model time-of-day pricing (peak vs off-peak electricity costs) 3. Optimize charging schedules to minimize electricity costs

Sensitivity Analysis Roadmap

Multi-variable analysis needed: 1. Bay utilization × Electricity markup (revenue optimization) 2. Bays per station × Labor cost (ABC optimization) 3. Operating hours × Charger power (capacity planning) 4. Wholesale rate × Markup % (pricing strategy)

Excel Implementation

Workbook Structure

Workbook: models/dirac-abs-ecosystem-model.xlsx

Tab Used: - SNS-Swap-Network-Service - All parameters, calculations, and KPIs

Excel Features

  • Named Ranges: All parameters and calculated metrics defined as named ranges
  • Unit Economics: All calculations based on 1 charging bay for easy network scaling
  • Cell Formatting:
  • Blue cells (D9E1F2): Input parameters
  • Light blue cells (DDEBF7): Calculated metrics
  • Pale blue cells (CFE2F3): KPIs
  • Gray cells (E7E6E6): Infrastructure parameters
  • Formula-Based: All calculations use Excel formulas with named ranges
  • Scalability: Multiply per-bay results by sns_total_bays to get network totals
  • KPI Suffix Convention: All KPIs use _KPI suffix to avoid circular references

Key Formula Examples

Throughput:

=sns_charger_power*sns_operating_hours*sns_bay_utilization
// 2kW × 12h × 50% = 12 kWh/bay/day

ABC Allocation:

=sns_property_cost/sns_bays_per_station
// $50 ÷ 15 bays = $3.33/bay/month

Revenue:

=sns_grid_energy_consumed*sns_elec_price_to_bf
// 12.90 kWh × $0.384/kWh = $4.95/bay/day

Version History

Version Date Changes Author
1.0 2025-11-15 Complete swap network model with unit economics, ABC allocation, electricity markup model, and KPI tracking OVES Team

Bottom-Up Modeling Sequence: 1. ✅ Rider Model: Established 30% savings requirement → Max swap price = 0.80 USD/day 2. ✅ Battery Asset Model: Analyzed profitability → Required overhead < $0.40/kWh/day 3. ✅ SNS-Swap-Network-Service Model: Infrastructure economics → Current overhead = \(0.33/kWh/day (needs optimization) 4. ⏳ **Next: EPS-Electric-Power-Service Model** - Must provide electricity at competitive rates vs grid (\)0.32/kWh)