Power beyond the tower

Is provision of community power services a CSR exercise to generate brand warmth, or is there a commercially viable business model extension here for MNOs, tower operators and RESCO partners? TowerXchange reports from the Energy + Mobile for Development session at Mobile World Congress, where Bharti Infratel, Vodafone, OMC Power and Fenix International shared their experiences deploying community power solutions in rural India and Africa.

“The mobile industry has built three million towers worldwide – including one of the largest off-grid energy developments the world has even seen,” said Chris Locke, Managing Director of the GSMA’s Mobile for Development Group, opening the Energy + Mobile for Development session at Mobile World Congress, and inaugurating the GSMA’s new Mobile Enabled Community Services programme.

Locke continued: “The mobile industry enables over 500m off grid mobile connections. Many of those connections are in Africa, the biggest and fastest growing mobile market in the world. As we know when we travel to emerging markets, mobiles are charged chaotically and expensively. The Mobile Enabled Community Services programme has been started to look at how energy at base stations can be used to provide power to the communities around them,” concluded the GSMA’s Locke.

TowerXchange attended this packed seminar, which was moderated by José María Figueres, former President of Costa Rica and President of the Carbon War Room. Figueres challenged participants in the seminar to look beyond the horizon to engage with two fundemental challenges facing humanity – connecting and empowering the next two billion mobile subscribers, and winning the war on carbon emissions.

“Mobile is strategically situated to help us win both wars and move the envelope on both challenges – mobile is a tremendous enabler,” said Figueres. “We’ve got to take Mobile for Development out of Corporate Social Responsibility and into strategy departments, developing proper business models that make sense for the CFO because they enable medium to long-term growth and sustainability.”

DS Rawat, CEO of Bharti Infratel took up the dialogue, explaining that meeting exacting uptime targets in the service level agreements with tenants on Bharti Infratel’s 80,000 towers meant a dependence on backup diesel generators. Yet with diesel costs rising 10-15% per year and the cost of solar panels falling, there was an enthusiasm to explore renewable energy alternatives.

Rawat explained that Bharti Infratel had progressed from the early days of the tower business, when energy costs were passed through to operator tenants. Under their P7 Energy Program, Bharti Infratel have installed 1,200 solar powered sites, and are looking at a further 3,500 4kW solar sites. They have also invested in a further 6,000 sites with IPMS, free cooling systems and variable speed DC/DG.  The P7 Energy Program has reduced Bharti Infratel’s carbon footprint by tens of thousands of metric tonnes per year, and helped India’s operators with their efforts to achieve the regulator’s target of a 5% reduction in their carbon footprint.

Infratel see Renewable Energy Service Companies (RESCOs) as critical business partners. “Infratel’s core strength is bringing together more sharing operators, making the package cheaper and delivering economies of scale. RESCO’s core strength is energy; bringing the benefit of scale, lower costs, and the ability to attract better talent. So we scan the horizon for RESCO innovations with sustainable business models that make economic sense.”

Rawat talked of a process where Infratel trial RESCO innovations initially on five to ten sites then, if successful, scale up to fifty sites to test the ecosystem, before rolling out energy innovations on all sites that meet their criteria.

Rawat concluded by highlighting their work with partners OMC in sharing power with local communities, handing over to OMC Power CEO Anil Raj.

CEO Anil Raj described OMC Power as “a pureplay powerco with close links to telecom industry.” OMC’s business model is to build a power plant, with a preference for renewable energy sources, use two to four telecom towers as anchor tenants, and provide energy to the local community.

Raj enthused that there was a misconception about so-called ‘bottom of the pyramid’ markets, and explained that there is another pyramid at the bottom of the pyramid. “Rural societies are not homogenous societies, there are sustenance farmers living off US$2 per day but there are also successful land owners with hundreds of acres. Providing power in rural emerging markets is not scraping bottom of a barrel, it’s serving a prosperous segment of society deprived of energy and the huge opportunities that energy offers.”

Raj introduced the concept of “spend shifting;” shifting households from dependence on fossil fuel such as kerosene for lamps, to distributed energy. OMC started with charging cellphones, progressing to the provision of illumination and cooling, taking their customers on a journey of energy access that might culminate in provision of domestic televisions or industrial water pumps.

For Community Power initiatives like OMC’s to work, distribution is everything. OMC use a home delivery system to deliver lanterns to customers’ doorstep.

OMC have targeted using renewable microgeneration to power 3,500 telecom towers and two million homes in 2,000 communities by 2015.

Joe Griffin, Group Environmental Manager at Vodafone explained that the network generated 80% of Vodafone emissions, and that 16% of the energy that Vodafone buys came from green energy, hence the imperative to accelerate the deployment of low carbon technologies.

Griffin presented a case study of one of Vodafone’s pilot sites in Emfihlweni, a small community in Kwazulu Natal, South Africa, where an extensive community consultation was carried out in order to understand real needs. Vodafone found that if they wanted to provide energy to the local school, rather than increasing footprint of base station, it would be better if the school housed solar foil on their roof. This 14kW (100m2) solar foil replaced the diesel power source for the local base station, while excess energy was used by the school for lighting and power, and by a water pump which improved sanitation for the school and drove fresh drinking water to the community.

Diesel costs and CO2 emissions were reduced by 90%, and maintenance costs fell by 24%, cutting total opex at the site by 61.4%

Griffin emphasised that the model worked in this instance because it wasn’t a purely philanthropic exercise – the business case was sound. Diesel costs and CO2 emissions were reduced by 90%, and maintenance costs fell by 24%, cutting total opex at the site by 61.4%.

Mike Lin, CEO at Fenix International, was working on the US$100 laptop when he realised solving the dilemma off grid mobile phones being charged from diesel generators and car batteries might be a more immediate opportunity. One in fifty rural businesses in Africa are focused on mobile charging! This inspired Lin to create the “ReadySet” solar powered phone charger which for around US$150-200 can charge six to eight phones per day at around 25 to 50 USD cents per charge, generating income for a mobile charging entrepreneur of around US$40 per month.

Fenix leverages sales, marketing and distribution partnerships with MTN in Uganda and Rwanda and with Vodafone in Tanzania. Using Uganda as an example, Lin explained that with 90% of the 35 million population off grid, there were some 500,000 entrepreneurs who could become “microutilities” – rolling up to a US$70 million addressable market in Uganda alone. Fenix has sold 2,000 units to date.

Another battery box, Jesse Moore’s M-KOPA leverages the M-PESA payment infrastructure in Kenya to distribute and collect income from his US$200 solar system. Six million households in Kenya are reliant on kerosene, spending US$ cent 60-65 per day on kerosene lamps and mobile phone charging – that’s an annual bill of US$200-250, significantly more than those households spend on airtime! M-KOPA replaces kerosene lamps with modified “d.light” solar lanterns with embedded SIM cards, to remotely meter and collect credits.

Moore’s feeling is that the off-grid African consumer doesn’t want cheap solutions as much as they want high quality, risk-free, affordable systems with superior build quality. Those same qualities enable M-KOPA to partner with Safaricom, both for the same distribution network that Fenix craved, and for access to critical credit profiles, GIS and usage data that extend the longevity of the product. To date, M-KOPA has secured points of sale at 400 of the 50,000+ M-PESA agents.

M-KOPA and Fenix both demonstrate the unique alignment of mobile distribution networks and brands with the community power opportunity. Community power opens up another revenue stream for airtime and mobile money dealers, and leverages the trust consumers intrinsically built from that first digital good, airtime, and the trust they have in services like M-PESA.

“When energy needs are moderate and can be met with a battery box then I think we can work without microgrids,” suggested OMC’s Raj. “Microgrids are expensive, regulated, and require complicated rights of way. Using energy boxes, we can provide energy today. In the long term, when energy needs of rural households go beyond what battery power can provide, then we’ll provide microgrid solutions.”