Eltek: Is Latin America ready for hybrid and renewable energy?

As the Latin American telecom industry develops, the carriers’ energy requirements will keep rising. But how much conventional energy can the region supply? While new sources of power - from hybrid and renewable solutions - are being implemented widely in Africa, Latin America is just starting to take a closer look at its options.

In this interview, Allen Pitts, President for the Americas at ELTEK, shares his views on the future of energy consumption in the Latin American telecom industry.

TowerXchange: Tell us about your experience in Latin America and the services you currently offer.

ELTEK has been active in Latin America for 20 years. Our offering is focused on DC power systems, solutions and services for telecom and industrial applications. ELTEK operates worldwide and we have a long history of supporting OEMs and carriers and their power needs.

TowerXchange: In which countries are you active? And who are your main clients?

In Latin America, ELTEK operates through its offices in Mexico, Peru, Argentina, Colombia and Brazil. Moreover, we have a complete production facility in São Paulo, Brazil.

Our main clients are all the major carriers in the region and a selection of OEMs.

TowerXchange: Which countries don’t have reliable grid systems in the region?

Most countries have a reasonably reliable grid system, but as carriers reach out to serve new and remote areas, power might not always be available. That is where the main challenge for them lies in terms of power supply.

Moreover, carriers are adding extra equipment in some of their existing locations in major cities and in dense urban areas. In those instances, additional power may be required as the existing supply might not be enough to support the new technology.

In fact, as technology advances, the size of equipment shrinks and carriers are installing more services at each location than they used to. Therefore, very congested sites can often have issues with power availability and heat management.

TowerXchange: With the majority of towerco deals structured to pass through responsibility for power to the tenant, do tower sale and leaseback transactions in Latin America have much impact on the energy equipment and services supply chain?

So far, we have not seen tower companies in Latin America operating in the same way they do in other regions such as Africa. As you mentioned, the power supply component remains in the hands of the carriers in most instances.

We have dealt with a few tower companies in specific markets where the dynamics are different but in general, carriers remain our key customers.

TowerXchange: Is the market for energy solutions in Latin America primarily driven by backup power solutions? In which regions is the business case for hybrid and renewable energy strongest? Is there a stronger business case for your solutions in Central America and the Caribbean than in South America?

I believe there are two key drivers that are pushing for more hybrid and renewable energy in the region.

The first is new technology. Specifically, new applications for networks such as LTE / 4G are being added to mobile infrastructure at a feverish pace to keep up with the consumer’s thirst for bandwidth and additional services.

The second pertains to operations and maintenance. There is a constant need to replace, improve and maintain equipment to ensure their efficiency, reduce energy consumption and to be aligned with environmental guidelines.

These factors contribute to the growing need to improve the way we use available power and to reduce heat production within equipment and cabinets. High efficiency products are an answer to the problem.

Hybrid options are becoming increasingly popular in the entire region and we are seeing new business opportunities in most of the major areas in Latin America.

The number of new carriers entering the field is limited and in those areas, the opportunities are greater as existing carriers are installing more greenfield sites and need more power for new construction.

TowerXchange: What are the import costs and logistics challenges for international suppliers selling into Latin America? How do local taxes and duties affect your competitiveness with local suppliers? Do you manufacture locally or partner with local distributors to reduce time to market?

Logistics is a major factor for us, especially as we do business in several foreign countries. The real key is to be as competitive as possible at a landed cost basis. We have major production hubs in the USA, Brazil, China and Slovakia that we draw from to supply into the region. We combine the production of key components with partnerships with local companies to reduce shipping and import tax costs.

The advantage of being able to pull items from a variety of production hubs is that we can benefit from any tax partnership programme that exists between countries. Whether it’s a South American, European or U.S. treaty, we are able to take advantage of it and reduce the landed cost.

Moreover, our local partners help us to deliver DDP (Delivery Duty Paid) products throughout the region, even in those areas where ELTEK is not directly present.

TowerXchange: Can you give us a quick comparison between Americas and Africa in terms of how the two industries operate?

Being focused exclusively on the Americas, I can only summarise the main differences I am aware of through our African operations.

One of the key issues is the existing infrastructures which in the Americas is more developed than in Africa.  The market is at a different stage but quite a few new operators are entering the game in Africa and doing significant upgrades and new installations. Therefore, the new network investments are much higher in Africa than in the Americas. That aspect seems to put more pressure on all the complimentary infrastructure aspects such as power.

In South America there are a variety of established carriers in each country. That said, in almost every country you will find that América Móvil and Telefónica are part of the game and are among the three top carriers. That definitely offers some consistency and helps us streamline our work.

I’d say that while in the Americas we are very focused on upgrading existing networks, the African market is very busy adding new ones.

TowerXchange: How do you foresee the Latin American market changing in the next 3-5 years?

The region is growing exponentially, especially in terms of upgrades to LTE networks and core data infrastructure.

I believe we will see more growth in data traffic, hence an expansion of all the technologies that contribute to that.

Over the next few years, Brazil will be very busy with all the various events such as the World Cup and the Olympics, and the investments in infrastructure are definitely increasing in preparation.

On the carriers’ side, I think they will start deploying more and more hybrid solutions as energy becomes increasingly strained and companies have to start switching to alternative sources to supplement the traditional grid system.