Distributed Power Africa unlocks solar hybrid efficiencies for Econet, Liquid and C&I customers

Carved out of MNO Econet, Distributed Power Africa is hybrid of a solar rooftop provider to commercial and industrial off-takers, and a broad-based telecom ESCO serving towers, switching centres, data centres and fibre points of presence. DPA’s CEO Norman Moyo has been a longtime friend of TowerXchange, having previously served as CEO of Helios Towers Tanzania – TowerXchange caught up with Norman to learn about his latest project.

TowerXchange: Please introduce our readers to Distributed Power Africa (DPA).

Given the continent’s energy deficit and unstable electricity grid, solar is the future in Africa. As an accident of history, African telcos, towercos, commercial and industrial companies have had to become providers as well as consumers of distributed generation. Power is not their core competency, so DPA has been created to provide a full-service energy solution, at competitive rates, with an emphasis on switching to renewable energy. We invest in the technology ourselves, and the customer pays through a Power Lease Agreement (PLA) or Power Purchase Agreement (PPA) on a per kWh or fixed price model.

Installations from 5KW to 5MW are currently our sweet spot, although a recent joint venture with EDF enables us to power projects up to and in excess of 20MW.

In terms of our value proposition for communications infrastructure, whether it’s a relatively small installation like a cell tower, a switching centre or data centre, we integrate with the existing generator, make it more effective and efficient by supplementing the battery bank and adding solar, and reduce DG runtime to the minimum possible.

DPA started by managing the power for Econet’s towers – we now run the power systems at all 1,800 Econet cell sites in Zimbabwe. To this footprint we have added a further 200 solar sites, including switching centres, Econet buildings, plus 600 points of presence for Liquid, another part of the Econet Group of Companies.

We leveraged the same expertise, resources and manpower to expand and offer a Commercial & Industrial (C&I) solar solution to AA investment grade customers such as Schweppes and Pepsi. We target all the big energy consumers from manufacturing to corporate offices and mines. In this category, DPA acts as an EPC (engineering, procurement and construction) partner, and we can provide up to 100% finance over a 15-20 year agreement. We have a combined installed capacity around 20MW, approximately two thirds of which is currently in Zimbabwe, but we are expanding fast across the continent. We have executed more than 50 projects in the last year, with a pipeline of more than 200MW.

DPA is part of the Econet Group of Companies, and has operations in Kenya, South Africa, Zimbabwe and most recently the DRC.

TowerXchange: Can you tell us more about DPA’s relationship with Econet?

We’re semi-autonomous. We have an arm’s length relationship and a managed service agreement with Econet Tower. DPA has 100% authority in terms of selecting suppliers, deployment of security, remote monitoring, battery changing et cetera.

Retaining an interest in their own ESCO gives Econet and Liquid more incentive to expand the relationship, and to work together to mitigate risks. That said, Econet Zimbabwe has no role in our governance, although our budget is still defined in partnership with our parent company, and we haven’t transferred assets onto the DPA balance sheet for regulatory reasons.

While DPA’s telecom business is held close, we have carved out our C&I business as DPA Mauritius and accessed external capital.

TowerXchange: DPA provides power to other communications infrastructure, not just towers. How do the power requirements differ for the switching centres, small data centres and various other points of presence (PoPs) for Liquid and Dark Fibre Africa?

While there are different loads and Service Level Agreements (SLAs), there is not as big a difference in requirements and solutions as one might imagine. Perhaps the biggest difference is the degree of trust the customer must have in their energy partner: a brief interruption in service at a single base station is quite different from a switching centre or a data centre going down, which might bring down a significant proportion of the network.

The criticality of resilience increases the business case to handover responsibility for power to specialists like DPA. Uptime is a function of energy storage capacity relative to load: whether you have a four hour or an 18 hour backup. Much of the equipment, and more importantly the required operational expertise and monitoring, is the same whether powering a cell tower with a 99.5% SLA or a data centre with five nines – in the latter case you might need five or six layers of redundancy to achieve a 99.999% SLA. These days lithium-ion energy storage is so robust that it can carry most of the load, while PV is a common denominator.

Critical cell sites have requirements that feel increasingly similar to data centres. Network topographies are changing: if we’re going to have more nodes closer to the edge, with more and more base stations talking to distributed nodes, then that will increase the impact of any failures.

A rural cell site may not generate the revenue to justify investment in multiple layers of redundancy, but if pure solar is not enough, we may deploy enough energy storage to cover a rainy day, a blackout or brownout. We try to deploy 10KW of PV to a cell tower to charge the battery bank: that is knowingly somewhat over specified because PV is so affordable. That said, there is a reasonable trade-off between redundancy and revenue on cell sites, whereas the situation is more binary for a switching centre or a data centre.

DPA recently signed more than 15MW worth of energy projects to deploy solar to Africa Data Centre (ADC), a subsidiary of Liquid Telecoms. Africa Data Centre is Africa’s first and largest network of interconnected, carrier and cloud neutral data centre facilities with facilities in Johannesburg, Cape Town, Harare, Nairobi and Kigali.

TowerXchange: Tell us about DPA’s work with Tesla.

Reliable energy storage solutions that are both long-lasting and more resilient to theft is a priority for all our MNOs, towercos and C&I customers and prospects.

DPA has partnered with Tesla, and started rolling out Tesla Power Packs at switching centres in Zimbabwe requiring 2-3MW. We have also put Tesla Power Wall 2 on more than 260 sites, typically placing two units with 13.5kWh each on each site.

TowerXchange: Why towercos should partner with ESCOs rather than provide power as a service themselves?

Even towercos have only had to become powercos through an accident of history.

The most valuable towercos in the world are primarily focused on building, acquiring and leasing up vertical real estate. Power is dilutive to their valuation. Companies like DPA specialise in power – let us be your power provider – let us manage distributed generation and grid power, so you can concentrate on your core business of buying, building and leasing up towers.

TowerXchange: How do you adapt the solution as the load on a site increases over time? And how do you avoid the need for the constant renegotiation of rates?

I ran Helios Towers in Tanzania for three years. We offered a standard price for 5-6KW of power, and we have built DPA’s model around a similar baseline. If the load increases as a function of next generation network overlays and/or co-location, then we may add more batteries or install more PV, space allowing.

From a contractual point of view, menu pricing is agreed according to the load on the tower. As more tenants are added, we are able to achieve a reduced cost per kWh, and share some benefits for the client.

It is critical to negotiate up front to deal with changes that may occur over a 15 year PLA and avoid endless renegotiations. The agreement must anticipate significant changes such as electricity grid extension, big shifts in the cost of grid power or availability of currency.

TowerXchange: What are the relative merits (and margins) of the telecom ESCO versus the C&I business?

Again these are very complimentary business models, leveraging the same resources. We keep our field operations team in-house – the same team will undertake telecom passive infrastructure and C&I solar installations, and the remote monitoring feeds are aggregated in the same NOC.

DPA’s telecom power and C&I businesses are growing at a similar pace, driven by the power crisis in the African continent – towers and commercial offices both need power. There is growth in demand for green power, which aligns with a significant amount of under-utilised real estate on rooftops. Meanwhile, the concept of energy as a service is becoming increasingly familiar and more widely adopted.

DPA’s proposition to C&I off-takers is simple: power is not your core competency, nor should power equipment be your investment priority. DPA will invest in your power infrastructure, and we can sell you more reliable, greener power at a better price than your current blended industry cost… even in a relatively good grid market like South Africa.

Both the telecom ESCO and C&I rooftop solar markets are not yet mature. DPA and our peers are still seeing which models will work and will be scalable. But I am pleased with the progress we have made to date. The cash flows generated by solar for C&I off-takers is quite different from the telecom ESCO business. With telecom you always have the potential for exponential growth as more subscribers requiring more data drive more equipment onto sites, compounded by the incremental power load of next generation technologies. In comparison, the cash flow from C&I is more constant: it’s one solar plant for one customer. But these are large corporate customers on guaranteed, long term contracts with a net income of 15-20%.

We’re helping Africa’s telcos and corporates go green – and that’s not just about environmental benefits. The cost of energy in Africa is going up – renewables offer price stability.

TowerXchange: How are DPA going to expand into power provision for larger sites such as mini-grids for mines and oil and gas installations?

In May 2019, DPA signed a pan-African partnership agreement with EDF (Électricité De France) wherein they come in as an investment, technology and procurement partner on any system beyond 5MW, for example a mini-grid for a mining installation might require 5-20MW.

DPA has identified the mining sector as a large consumer of power, with an urgent need for reliable supply.  In Zimbabwe in particular, mining operations have been affected by erratic power supply from the national grid.  With the government being in support of renewable energy adoption, and the recent removal of import duties on solar-equipment and accessories, DPA is seizing this as an opportunity to scale up solar installations in mining.

We are also exploring expand to larger opportunities such as State-owned utility companies needing 40MW of distributed generation. Recently, DPA and EDF signed an agreement specific to Togo where we will be rolling out solar in support of government initiatives.