Orun Energy: How ESCOS can reduce your energy opex by 30-35%

Orun Energy can demonstrate spectacular cost savings at a single outdoor and three indoor sites in the remote mountainous region of Rajasthan, India, where they’ve have been able to reduce diesel consumption by 86-92%. We asked Orun’s founder Kwabena Rangi Smith for his advice on how to achieve similar opex savings in Africa…

TowerXchange: Where do Orun Energy fit in the telecoms infrastructure ecosystem?

Orun Energy dedicated seven years to coming up with a best in class, end to end suite of solutions that will handle all the issues an operator or towerco faces, from power and cooling to remote monitoring systems. We’re a “go to” systems integrator for telecoms infrastructure, with solutions including proper site design, installation, management and even a financing company to help with capex.

Working with Orun Energy, the operator needn’t worry about power – we’ll provide daily, weekly and monthly reports on each cell site, enabling the operator to focus on new services and customer experience.

Orun Energy has set up an ESCO subsidiary to drive its business in India using the kW/hr pricing model. The India environment is actually suited to companies willing to take risks with the opex model. The environment in Africa is still evolving and would require more support from regulators and the government so as to better manage the perceived high operational and financial risks.

We have an open platform, and work with local partners to access vital local knowledge and skills. Orun Energy owns the system IP. We design the solution at the outset, and we own contract at the end, but in between we use supply chain partners, O&M, a sophisticated outsourced ERP system, and equipment partners to deliver the solution. We train the local O&M partner on our solution, then they handle the installation and day to day management of the system.

Orun Energy uses a robust ERP system. The system provides Orun Energy with the capability to plot sites on integrated Google maps and compare sites with site survey data. The system also enables us to track performance against SLAs through automated workflows and configurable milestones, such as forecast and target dates. The system gives us one-click access to secure data, custom reports and instant dashboards, while providing Orun Energy with an audit trail.

TowerXchange: What exactly is an ESCO?

An ESCO, or Energy Services Company, is a business that develops, installs and arranges financing for projects designed to improve the energy efficiency and maintenance costs for facilities over a seven to twenty year time period.

• Development, design and arrangement of financing for energy efficiency projects

• Installation and maintenance of the energy efficient equipment involved

• Measurement, monitoring and verification of energy savings

ESCOs might also assume the operational and financial risk of the project.

ESCO projects often include high efficiency power, heating and air conditioning, as well as centralised energy management systems.

As the telecom industry evolves models to outsource power generation for cell sites, ESCOs can help operators and towercos reduce dependency on diesel without having to invest capital in renewable energy solutions.

Outsourcing models have been developed on an operating lease or monthly flat fee basis. You can also use a Power Purchase Agreement (PPA) model, or an opex saving recovery or Energy Savings Agreement (ESA) model.

TowerXchange: What’s your view of the migration of Africa’s telecoms infrastructure assets from operator-captive to being managed by specialist, independent infrastructure companies?

African telcos are over-reaching themselves. With the skills shortage in Africa, it’s tough finding people to manage every issue from customer service to cell-sites, so it’s a good idea to outsource to specialist companies. I believe the tower industry is an increasingly distinct community, and power for cell sites is an industry in itself too. This is where Orun Energy fits: “from tower to power”.

If we’re not careful the African telecoms industry may be heading the same way as India, where regulation has impacted the market adversely, ultimately eroding value through excessive competition and high operational cost.

Another challenge in Africa is that low price, sometimes low quality passive and active equipment has been installed at many cell sites, which are running very inefficiently. This means high opex and a high failure rate, hence Africa’s QoS issues.

Outsourcing to specialist energy and tower management companies enables operators to impose SLAs that ensure a transparent and open process, while delivering significant opex savings.

TowerXchange: What’s the blend of your business between upgrading legacy sites and optimising the power consumption of new sites?

We have been engaged in both retrofitting legacy sites and building new sites, helping towercos create multiple operator solutions with capacity for up to four tenants.

TowerXchange: How do you optimise a site to reduce opex and add capacity for multiple tenants?

Optimising sites for multiple tenants depends greatly on the original site design. We’ve seen a lot of sites not designed optimally, and load capacity can suffer as a result, so we often have to address these design issues to make it easier to deliver our solution. For example, we often find generators are significantly larger than required – perhaps because the site owner over-estimated the prospective amount of equipment or prospective number of tenants. Installing a more suitable generator can significantly reduce opex, but of course there’s always a capex-opex tradeoff. However, generators in Africa are generally swapped out every 19-24 months.

Similarly, in our work in India we often found ourselves dealing with large shelters that put a greater burden on air conditioning, or separate mini-cabins for different operators as they didn’t want equipment tampered with. If operators are willing to share cabins it will drive down opex. You also need to ask if the equipment can allow for higher temperatures in the cabin. It might be fine at 29°C, so you might simply need better temperature sensors. We’ve found simply retrofitting air conditioning systems with sensors that switch to free cooling when it’s cooler at night can save considerable air conditioning power consumption.

When we have upgrade legacy indoor sites in India, we’ve often found opportunities to swap out indoor for outdoor as equipment, particularly as equipment nears end of a typical 10-year lifecycle. Indoor sites require efficient cooling, which can account for 58-63% of power consumption. 80% of green field sites in Africa are going to have predominantly outdoor equipment going forward, but the majority of legacy sites have indoor equipment, so there’s another upgrade that can reduce opex.

Finally, you need effective Remote Monitoring Systems, for example Orun’s RMS monitors sixteen parameters and enables predictive maintenance to avoid downtime.

You need a modular approach – we can help site owners stack up their requirements, and we can give you a capex you can afford. And we’ll often wait for proven tenants that need the site to be upgraded before making the investment.

TowerXchange: Talk to us about the capital costs of the kind of solutions Orun Energy provides.

For a typical outdoor legacy site, retrofit may cost in the ballpark of $38k - $45k, with payback in 18-22 months, and an eight year life. Payback on a new build site is significantly better: 4–7 months.

TowerXchange: Is the transfer of operator-captive infrastructure assets to specialist towercos with aggressive SLAs requiring opex reduction good news for companies like Orun Energy?

The towerco has got to create a profitable infrastructure business. So far, all you’ve done is transfer risk. Energy will still be the biggest cost. Energy costs are captured in the lease contracts with operators, so any improvement in energy opex savings would go straight to the bottom line, especially helpful where tenancy ratios do not meet expectations.

The jury is still out on whether the towerco business model will work in Africa; whether they’ll be able to achieve targeted tenancy ratios, and whether they can create the portfolios of 12-15,000 towers needed to really drive efficiencies.

TowerXchange: How can these opex savings accelerate rural connectivity?

Africa’s tower business model has to change. As networks expand, new towers will be in expensive locations, and we need partnerships to drive value and spread the service. We need regulators to invest Universal Access Funds. Developments like mobile number portability in Nigeria will put further pressure on QoS. Operators need to change their approach to towers and let specialist companies help.

The opex for a site could increase by 50-60% as you move from well connected urban areas to off-grid rural area where there might not be a decent road. The variable costs are all logistics – getting the diesel to the site, getting O&M to the site, the further you go, the more attractive diesel tends to become as a means of exchange, which means more theft. Your maintenance costs rise – engineering skills are scarce, and simply aren’t often found in rural areas. And you’ve got the cost of diesel itself which can be 70% higher in francophone than in anglophone countries, due to things like tax and the cost of trucking it in.

TowerXchange: Where next for Orun Energy?

Orun Esco is in advanced discussions with major operator in Australia for a contract of 40-75 sites (pilot phase) for Orun On Grid energy efficiency solutions using the opex model. The number of proposed sites for retrofit could exceed 4000. Our goal is to save them 25% in energy related opex.

• 90%+ savings in diesel costs with 35% monthly opex savings at an off grid outdoor site

• 86%+ savings in diesel costs with 30% monthly opex savings at an off grid indoor site

• 70% reductions in air-conditioning runtime

• Increasing uptime to 99.99%