How to minimise the number one source of opex: energy consumption

Selecting the right power solution to achieve the best possible energy opex reduction at each cell site is a critical decision. TowerXchange presents part one of our ongoing TowerPower series, profiling proven energy opex saving innovations and interviewing the senior executives behind them. We’re looking for on-grid, unreliable grid and off-grid innovations, sometimes blending renewable energy sources into hybrid solutions with a 8-24 month RoI, and sometimes simply looking for the “quick fixes” that yield the quickest and best opex reduction for the lowest possible capex.

“Infrastructure sharing in Africa has a unique dependency on generators due to the lack of a reliable grid in many countries,” commented Andres Millan-Drews, Principal Investment Officer at the IFC. “So infrastructure sharing becomes more of a logistics than a real estate play with Service Level Agreements (SLAs) around downtime critical.”

It’s axiomatic to say that Africa has a rural electrification challenge, while city centres suffer from an overloaded grid and resultant brownouts. The challenge of meeting SLAs targeting 99%+ uptime on intermittent grids delivering poor quality mains power (under or over voltage and/or under or over frequency) leaves Africa’s cell sites dependent on expensive diesel, and exposed to the risk of pilferage. The cost per delivered litre of diesel has risen as high as $2 in certain countries, particularly in West Africa, with some estimates suggesting fuel theft could be as high as 30-40% in some markets.

While line conditioning systems can be used to clean up poor quality power, could hybrid power solutions be the ultimate answer to reducing reliance on diesel?

An estimated 10% of Africa’s cell sites use hybrid power, with the majority using CDC (Charge Discharge) batteries to reduce DG runtime. Upgrading to CDC batteries is often the first step to integrating renewable energy sources, with the cost of solar panels having better than halved over the last four years, and wind turbines being trialed on several cell sites in Africa.

Not all cell sites are created equal of course. Some simply serve more customers, more ARPU, others handle important backhaul and transmission traffic. Or towers might be in locations more attractive to potential tenants. And of course if some sites go down, the majority of their subscribers can be picked up by over-lapping base stations.

Different energy solutions are needed according to the requirements of any given site. For example, it may be a priority to eliminate diesel consumption at remote sites that are difficult to refuel, or at sites where pilferage or watering down of diesel is a recurring problem. For guidance on how to evaluate of cell sites for hybrid energy, check out the advice of PowerOasis, Eltek, and CPS.

A modular approach is critical to futureproofing a site, for example installing only sufficient rectifiers required for the current tenant(s), while leaving shelf space for additional equipment. Once multiple tenants are using a tower, the use of a central power system, combined with distribution and metering systems to charge each tenant on consumption, can be the most energy efficient solution.

Space is at a premium at all cell sites, shared sites even more so, which means power equipment must have the minimum footprint. It’s also critical to have the right size generator for the number of tenants on a cell site. TowerXchange hears common complaints that inefficient, over-sized generators and shelters have been installed at many cell sites in Africa.

It’s not unusual for SLAs to transfer energy opex from mobile network operator to towerco, passing through to the towerco responsibility for energy efficiency and reducing diesel theft. A new class of power specialist subcontractor is emerging, Energy Service Companies (ESCOs). Towercos can back-to-back their energy risk exposure to ESCOs. Ultimately, every passive infrastructure sharing or outsourcing deal and every SLA will be structured according to the objectives of the parties involved, so it’s important to understand the structure of the deal in order to understand which party is responsible for which risk.

Fazal Hussain has a unique perspective on cell site energy. Fazal served as CEO of pioneering towerco Helios Towers Nigeria before becoming Managing Director for the Middle East and Africa at leading hybrid telecom power manufacturer Eltek. He’s now Managing Partner of Deka Global. TowerXchange met Fazal for a coffee and a chat about the evolution of the energy as a service business model.

Fazal spoke of a presentation he’d made at a telecoms infrastructure conference in 2009 back in his Helios Towers Nigeria days. “While the equipment manufacturers were pitching opex savings of 10%, I was saying we could make savings as high as 50%! Energy is the bulk of the cost, and that can be slashed using hybrid technologies and through economies of scale.”

Fazal felt that ESCOs would be the future of telecoms energy. “Most companies serving the energy management needs of telecommunications sell kit rather than solutions, hardware rather than service. There needs to be a new class of energy management service providers that have core competencies, can localise services, and can customise solutions for each site.”

So how do you make energy as a service work? “Keep your solution simple so you can achieve reductions in energy opex using local maintenance skills. At the same time, be aware of when you might need to bring in specialist skills – for example I needed to use an expert team to work in remote desert conditions,” concluded Fazal.

TowerXchange interviews the founder of Orun Energy, a ground-breaking ESCO that can reduce energy opex by 30-35%.

When MNOs agree deal structures with towercos that transfer power responsibility to the towerco, they are also transferring the responsibility to select and invest in the right energy equipment upgrades.

For a view from the bridge of a towerco, TowerXchange asked Chief Executive Chuck Green how Helios Towers Africa measures and manages power opex. “To understand opportunities to improve your power opex, you need common benchmarks such as the weighting of power costs relative to grid quality, reliability, and availability of other options.”

“Power costs have a significant impact on performance as they can be up to 50% of a towerco’s opex. Generator run time can vary tremendously from market to market. When making comparisons across markets you’ve got to take into account differences in tenancy ratios, generator efficiency and theft. And of course we’re exposed to diesel price volatility as well as currency changes,” concluded HTA’s Green.

IHS Africa agree that power scarcity and security is the number one challenge for towercos in Africa, and they are in the process of converting a significant proposrtion of towers in rural Nigeria to Solar hybrid.

Where do towercos start with their energy equipment investments? It varies on a case by case basis, but if the deal structure includes batteries, installing deep cycle batteries can be the quickest way to reduce reliance on diesel. If the most urgent issue is combating pilferage, installing Remote Monitoring Systems might be an early priority – certainly most towercos will want comprehensive dashboards of power consumption available at the NOC, enabling them to profile grid availability and energy consumption at each site in order to prioritise the capital investments that yield the best opex reductions.

Be sure to check out TowerXchange’s special feature on “How to leverage RMS to optimise preventative maintenance”.

Energy equipment upgrades, and upgrades to strengthen towers, add capacity for additional tenants on a tight timescale after those tenancies are sold, but typically not before the co-location sale. But towercos are very quick to bring newly acquired towers to market, so capacity investments will also be a “quick fix” in many cases. Another quick fix comes from cleaning the energy supply – replacing old copper wires with new voltage regulators.

Another towerco spoke of how the sale and leaseback of towers in Ghana provided a new impetus to invest millions of dollars in swapping out generators. If the tower sale and leaseback (or operational lease) is structured appropriately, then towercos have more flexibility to improve power efficiency using hybrid solutions.

Taking you to the front lines of the power problem, TowerXchange spoke to an experienced energy management practitioner at one of Africa’s leading MNOs. He complained that power availability was a challenge in pretty much every country in Africa, with demand outstripping supply, resulting in poor quality power, with regular total loss of power in cases where the energy utility tries to limit demand by rationing the supply to particular geographic areas.

MNOs and towercos alike are engaged in quest to reduce diesel consumption, and increase the interval between service visits. Of course, there’s a balance between up front capex and reduced opex, with expectations of RoI in 24 months or less.

According to our MNO energy management practitioner, limiting the energy requirement of active equipment is critical in designing and operating a truly green power solution with as small an opex requirement as possible. We’re starting to see MNOs evaluate and rollout power efficient base stations.

TowerXchange will explore power efficient base stations in our future articles.

Would you like to recommend an energy equipment manufacturer, ESCO or power efficient base station developer to be profiled in TowerXchange?

We’d love to hear from readers about solution providers with proven experience of reducing energy opex in Africa. If you founded, work for, or partner with an interesting solutions provider, please contact: kosmotherly@towerxchange.com

Please note that none of the companies profiled in TowerXchange have “paid for” their coverage, although we’re grateful for the support of those who chose to advertise as it helps keep TowerXchange free to over 1,800 African tower industry decision makers.