Those who would advocate the energy as a service proposition to African MNOs and towercos run into two common objections; prove it works in Africa, and prove you have the balance sheet to ride through the capitally intensive early years. CPS’s alliance with CCE provides the robust balance sheet necessary. CCE had proved the Energy Management Solution as a Service (EMSaaS™) concept to scale in India, while CPS provided TowerXchange with an exclusive insight into their proof of concept site for Africa, developed in partnership with UTL.
TowerXchange: Please re-introduce the EMSaaS™ proposition for our readers who are not familiar with it.
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
Under an Energy Management Solution as a Service (EMSaaS™) model, CPS provides a full energy service on a fixed cost, guaranteed availability basis, complying with MNO and towerco SLAs requiring 99.9%+ uptime. The fixed price model typically provides a long-term discount as compared to the customers existing opex, and requires zero capex from the customer over the life of the ten-year contract.
TowerXchange: Before we move on to talk about your full implementation of EMSaaS™, tell us about the different model you’ve come up with for towercos, EMSaaS™ Light.
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
With the full EMSaaS™, CPS owns the renewable power assets by raising the necessary debt, and then takes control of all site management over the life of the contract and guarantees power availability according to the SLAs. Whereas with the EMSaaS™ Light the customer invests the capex for the renewable assets, while CPS only provides the management of power and SLAs according to performance guarantees. This model can be especially attractive for towercos as they already have the capex budget and can retain the assets on their balance sheets over the life of the contract.
EMSaaS™ Light is much more than a regular O&M service that maintains generators and refueling; EMSaaS™ Light is a guaranteed performance programme under an SLA. The only significant difference is who owns for the assets, CPS or the customer.
Often towercos build a business case for investment in energy efficiency, but struggle to deliver the full efficiency savings as promised by the technology. Under our EMSaaS™ Light model, CPS will guarantee the savings as projected – in order to provide that guarantee, we also take on the site management, including O&M, security, refueling, and most importantly power optimisation. So our engagement often includes analytical consultancy work to dimension the energy requirements and potential savings on a site-by-site basis, for example suggesting a spec to change AC air conditioning to a DC air conditioning.
TowerXchange: Let’s talk about your EMSaaS™ proof of concept site in Uganda. What were the drives for UTL to explore the EMSaaS™ proposition?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
UTL want to invest in their network to reduce opex but, like many African operators, struggle to raise the necessary capital budget. So UTL explored various models from vendor financing to a full Energy Services Company (ESCO) model. With the Ugandan market saturated from towercos’ perspectives – American Tower and Eaton Towers didn’t need to buy another set of assets – monetising UTL’s passive infrastructure was not an option. CPS viewed this as a perfect opportunity to introduce the EMSaaS™ model proof of concept and UTL have benefitted significantly on this site as a result.
TowerXchange: Tell us about the proof of concept site you have in Uganda.
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
Together, UTL and CPS selected a proof of concept site that would be remote enough to be representative of the typical challenges of rural cell sites, but close enough to Kampala to visit to easily study performance. So we chose Seeta Hill, located 70km from Kampala. The site is on top of a hill with a poor road so access is challenging, and our team had to carry the equipment up to the site during the rainy season.
Seeta Hill was originally powered 100% by diesel, with typical aging dual diesel gensets, one 12KVA the other 14KVA, with over 15,000 runtime hours on each (DGs are typically removed after 18-20,000 hours). The total site load was 2.85kWh, and the battery bank was on its last legs. Before we upgraded Seeta Hill, the O&M agreement required a site visit every 250 hours of runtime, so two to three visits per month.
Our site survey revealed that the location and size of the site made it very friendly to adding a solar system based on location and size of site.
TowerXchange: What equipment did you install at the proof of concept site?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
We installed an 8kW solar system with 1,200ah battery bank, consisting of 2V OPzV batteries, and retained the existing DG after a full service.
We also added a state of the art security system. The current security on the site consists of an individual guard, who is located in a nearby village 3-4km away. The site also has a camera and infrared beams – this solution serves as an example of alternative ways to secure a site, rather than simply constructing massive concrete perimeter walls. There have been no issues with theft or vandalism since installation.
We’ve also added a full Remote Monitoring System (RMS), managing access control, security systems and all the environmental monitoring and performance metrics. This is managed from our NOC in Uganda, from where we can dispatch O&M engineers through our tablet-based dispatching system.
This enables us to track where the O&M guys are in the field through sensors in their tablet and/or vehicle, so when a site goes down we locate nearest engineer, send them a work order, which they accept and feed back to us. So we know when they’ve accessed the site and completed the job, which they then report to the NOC clearing the alarm – everything is technology based. It’s a bit like an Uber taxi service! It was initially a third party system, but we’ve Africanised it, for example adding a dual SIM card to maximise connectivity, making it tamper proof, and have made it into our own proprietary system.
TowerXchange: Are you measuring the time each task takes to complete to establish KPIs for your O&M team?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
We’re starting to track the KPIs for individual task completion in Uganda – to get dialed in will take three to six months.
TowerXchange: What has been the performance of the site since?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
We have better than halved site visits to approximately once every two months. We have reduced DG runtime from 720 to 112 hours, a reduction of 84.5%. We have reduced monthly opex costs by 86.5%.
In a fully-fledged EMSaaS™ we would optimise the site to reduce the load, and continue to make manpower, SG&A more efficient, bringing our payback period down to a level where we know our investors will get the return they require. Reducing investment in each site required to optimise efficiency – this is the key parameter behind EMSaaS™, as it is a key parameter in our ability to raise the required debt to service these contracts. This is our core business, whereas it’s not the core business of MNOs and towercos and this is why we believe our value proposition is so appealing.
We have better than halved site visits to approximately once every two months. We have reduced DG runtime from 720 to 112 hours, a reduction of 84.5%
TowerXchange: If I don’t ask the CTOs among our readers will – what was the capital outlay to upgrade the proof of concept site?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
Inclusive of batteries, the security system and the all-important installation, the all-in cost was north of US$50,000. That is more than most towercos are prepared to spend per site, but EMSaaS™ is a different business model. We work on long-term contracts, with a high capital outlay for the first three to four years and a focus on reducing opex significantly enough to achieve the required economics as predicted in the business model. This is where the mechanics of the contract become so important as we need to ensure that the cash flows are predictable and sufficient to service the debt and provide the required return to our investors.
TowerXchange: How critical is the management people and skills are critical to making the EMSaaS™ proposition succeed?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
The scarcity of engineering skills in Africa is one of the biggest differences as compared to India. India has a manufacturing base from which to source a deep pool of qualified engineers, those skills are less readily available in SSA, and sometimes the individuals ‘in the know’ don’t want to share their knowledge as they feel it might make it more difficult for them to get another job. That culture is starting to change, but it’s not easy.
It will be critical for ESCOs to spend a lot of time and money training and maintaining good personnel – that’s where we believe CPS won’t have a problem. In two and a half years in Uganda we’ve had zero churn. This also contributes to keeping kWh cost down. I have to give credit to our system for employee on-boarding, training and career development as the key reason for our success in this regard. Our people are our greatest asset and we focus our efforts on their development and training as much as we do the performance of our systems in the field.
TowerXchange: What have been your key learning points at an individual site level, and in terms of the potential to scale EMSaaS™ to a much larger portfolio of sites?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
Our primary learning point has been that these large scale investments in solar do work, the security technology does work – we can make a good business case – if it’s installed and managed correctly. You can’t take any shortcuts in product quality, installation quality and quality management – if you get those three right, you can realise the required savings.
As one of the CEOs of the African towercos pointed out at the TowerXchange Meetup Africa in Johannesburg last month, the energy as a service business model looks great under desktop analyses, but with mismanagement and a failure to overhaul old processes, systems don’t achieve the performance suggested by that desktop business case, so the systems are perceived as a poor quality product. It needs a proper ESCO to investigate why the business case didn’t work and for what reasons, and how do we change? CPS have been doing this as long as anyone in Africa – we’ve completed real analyses, and we’ve learned how to correct the ESCO proposition and make it scalable. The proof of this is in our Indian operations and in our African PoC.
Our core business is to utilise every kWh of produced energy against the load required, to dial-in the design and operational parameters of sites to maximise the investment and to reduce the cost per kWh by any means possible. That’s where we find our margin and our investors find their return. It’s about optimising opex across the board; technology, process, personnel, and the management of the entire ecosystem, to achieve the most efficient generation of power. There are literally hundreds of different parameters that we analyse and implement to keep the kWh price as low as possible.
TowerXchange: What’s it going to take for the ESCO proposition to achieve scale in Africa?
Chris Luckhurst, Managing Director, Africa, Clean Power Systems, a CCE Company:
Another one of the takeaways from the TowerXchange Meetup Africa was that African towercos and MNOs aren’t interested in proofs of concept from the Indian market, so our focus is Africanising the EMSaaS™ proposition, taking on towers and contracts in Africa, building and leveraging a track record that proves it can be done in Africa. ESCOs have to have a track record of installing and managing renewables at scale in Africa.
Chuck Green, CEO of Helios Towers Africa, likened the ESCO proposition to the early days of towerco startups five years ago – it’s history repeating itself. Back then the MNOs told the towercos to prove they could manage their towers better than they could, and they asked them to show a balance sheet capable of handling the capital outlay. Now the towercos are asking the same questions of us. As soon as ESCOs can tick the same boxes the towercos did five years ago, you’ll see the adoption curve take off – and it could be as imminent as in the next six to twelve months.
Towerco CEOs and COOs realise that to maximise their valuation at IPO in the timeline they are aiming for, they can’t optimise energy efficiency themselves – they don’t have the time and personnel. CPS’s proof of concept site with UTL is already demonstrating the potential of EMSaaS™ to maximise energy efficiency at African cell sites.
