Distributed generation working group report

Kieron Osmotherly

January 04, 2017 06:28 PM

TowerXchange hosted our inaugural working groups at our recent TowerXchange Meetup Africa. These unique discussions help vendors understand the real operating conditions for leading buyers at MNOs, towercos and their subcontractors, identifying specific requirements and revealing much about procurement criteria. In our distributed generation working group, we focused on diesel, hybrid and renewable generation, drawing upon the experiences of two towercos, two MNOs, an ESCO and three of Africa’s leading managed service providers.

Working group members, buyers:

Airtel Nigeria, ANTOSC, Econet Power, Helios Towers Africa, Vodafone

Working group members, managed service providers:

Camusat, Likusasa, Mer Group

Working group members, suppliers:

Ascot, Ausonia, Beijing Dynamic Power, Bladon Jets, Delta, Eltek, Emerson, Enatel, Flexenclosure, Generator Logic, Heliocentris, HIMOINSA, Huawei, IPS, IPT Powertech, Mantrac, Pramac, Sedemac, Total

Distributed generation Working group recommendations

Key recommendations

RECOMMENDATION 1: Convert indoor sites to outdoor where possible. The energy load of an indoor site can be 3-4x that of an outdoor site.

RECOMMENDATION 2: Vendors should respond more specifically to RFPs instead of pitching off the shelf solutions which buyers complain often don’t meet their needs.

RECOMMENDATION 3: Buyers should consolidate suppliers and standardise equipment to the narrowest range possible to enable their installation and maintenance teams to develop expertise in the chosen systems.

RECOMMENDATION 4: Security guards and other local stakeholders must be fairly compensated to avoid conflicts of interest.

RECOMMENDATION 5: You cannot optimise energy opex by looking at distributed generation in isolation: the best results are achieved when the genset, rectifier and battery work optimally together.

RECOMMENDATION 6: Towercos must treat suppliers as genuine partners, sharing training, sharing performance analyses and working together to ensure continuous improvement.

Key learnings

LEARNING 1: Lead acid is still widely used as the default energy storage chemistry, although lithium-ion is being explored by several buyers.

LEARNING 2: It is critical that vendors understand who is responsible for distributed generation equipment in different scenarios; whether the MNO or towerco, and whether the towerco manages just AC or a full DC power service.

LEARNING 3: All the buyers in the working group selected suppliers on the basis of total cost of ownership (TCO), so a low upfront capex solution might prove unattractive if maintenance was expensive and/or if the lifecycle of the equipment fell short of expectations.

LEARNING 4: Early experiences with ‘all in one’ pre-integrated powercubes have been mixed, with many let down by poor quality connections between components. Power cubes designed and integrated by a single supplier had been found to be more reliable to date.

LEARNING 5: You cannot just replace diesel without risk of violent repercussions from the ‘Diesel Mafia’.

LEARNING 6: “Technology is not the biggest issue – people are.” Skills are scarce when it comes to the installation and maintenance of complex distributed generation systems; make them as simple as possible, and training is key.

LEARNING 7: The cost of ground rent can destroy the business case for substantial PV arrays.

LEARNING 8: African towercos have largely built through the acquisition of legacy cell sites, and many of these older sites have indoor configurations that are tough to hybridise. Many towercos will sweat their acquired energy assets until the end of their natural lifecycle before replacing – vendors may have to be patient for towercos to invest in hybrid and renewable energy.

LEARNING 9: Appetite for super-silent gensets ranged from less than 1% of the network to as much as 10%.

LEARNING 10: RMS is only an effective tool to combat fuel pilferage within the supply chain if employees can effectively be held accountable.

Executive summary

Econet Power

Econet Power is a new ESCO-type carve out from Econet’s home market of Zimbabwe. Sister company Econet Towers is a ‘steel and grass’ towerco, managing only the land and the towers, while Econet Power manages the energy systems at 1,380 sites, of which 48 are off grid. Of these 44 have been converted to solar power.

Econet Power are seeking to utilise renewables on as many as 650 sites, rising to 1,000 sites. Their RFP was drawing to a close during the Meetup, to be followed by a proof of concept phase with a view to deployment in February 2017.

Around 80% of Econet sites have outdoor equipment, typically with a 2-3kWh load. The remaining 20% of indoor sites have much higher loads, typically in the 8-10kWh range.

Grid conditions in Zimbabwe have improved dramatically, from typically ten hours of downtime per day to an average closer to three, as a function of a recent power purchase agreement, although whether this is sustainable remains to be seen. Protecting sites against a potential reversion to previous grid reliability, Econet typically sends out RFPs seeking 10-20 hours of autonomy, although they noted that many of their RFP requirements were not being met.

Energy storage consists exclusively of lead acid batteries to date, although Econet Power are looking at lithium-ion.

Helios Towers Africa

Helios Towers Africa has around 3,500 sites in Tanzania, 1,600 in the DRC, 400 in Congo Brazzaville, and 750 in Ghana. Of these a little over 800 in Tanzania are off grid, plus around 640 in the DRC and 180 in Congo Brazzaville. No figure was disclosed for off grid sites in Ghana.

Helios Towers Africa find grid conditions in Tanzania currently to be relatively reliable, with an average of perhaps 18 to 19 hours of good grid per day. That drops to 14-15 hours in the DRC, where the company are deploying their first 50 site solar trial.

It should be noted that Helios Towers Africa had provided an AC power service only in Ghana, but that is now being evolved to full DC power services.

Helios Towers Africa are currently deploying improvement capex to integrate recent acquisitions from Airtel in the DRC and in Congo Brazzaville.

Two philosophies drive Helios Towers Africa’s procurement strategy: lean six sigma and an imperative to treat suppliers as genuine partners.

Helios Towers Africa recently concluded partner selection, with at least two approved suppliers in each supplier category. The move to standardise equipment was motivated by the wide variety of systems deployed at sites, which was adding complexity and cost to O&M.

Airtel Nigeria

Airtel has around 6,000 cell sites in the ~25,000 site Nigerian market, although 4,719 sites have been sold to American Tower (Airtel retains “a few” sites as well as 16 data centres).

Only 20% of Airtel’s sites are on grid, and many of those on grid sites have useable power for only half the day, qualifying them as unreliable grid sites.

It is not unusual to see DGs running in tandem 24/7 in Nigeria, where 2,500L of diesel can be burned per site per month, costing around US$3,000. The opex challenges this creates are compounded by theft and escalating lease costs as landlords raise prices.

Airtel Nigeria are committed to ‘going green’, seeking the most beneficial solutions from a TCO (total cost of ownership) point of view.

Vodafone

Vodafone were represented by the Network Site Infrastructure team at Vodafone Procurement Company, which is responsible for procurement across over 50,000 Vodafone, Vodacom and Safaricom sites in Africa.

Like Airtel, Vodafone are committed to ‘going green’ and reducing carbon emissions, evaluating solutions on a TCO basis, incorporating up front capex, transportation, maintenance et cetera. Asked if there was a magic number in terms of return on investment, Vodafone’s representative said there was no fixed number, but that a sub-three year ROI was often required.

30% of sites was the current suggested addressable market for hybrid and renewable energy innovations.

ANTOSC

ANTOSC is a new towerco being created in response to the infrastructure sharing mandate in Angola. The company hopes to have 90 sites by the end of 2016.

There are around 2,000 towers in Angola, with perhaps a further 2,000 needed, particularly if a third MNO were licensed. Around 30% of sites are on grid, although grid quality was described as ‘unreliable’, with 70% off grid, mostly powers by diesel gensets.

ANTOSC were seeking plug and play, efficient, integrated solutions upgradeable for two to three tenants. Load averaged 2.5kWh, rising to 5kWh at peak, per tenant.

Managed service providers

Several multi-country managed service providers also participated in the working group, including:

- Camusat, which operates around 5,000 sites across 20 countries, offering a full suite of installation, operations and maintenance services, with an optional full service opex model.

- Likusasa, another turnkey installation and upgrade firm which installs around 100-150 power systems per year across multiple African markets.

- A third turnkey infrastructure provider, Mer Group, called attention to their involvement in designing and installing innovative remote sites to reduce reliance on diesel, with complete hybrid energy systems for sites as small as 300-500W.

Hybrid and renewable power

All participants spoke of their companies’ commitments to reduce carbon emissions and reduce energy opex.

One participant highlighted that running DGs 24/7 in dense urban areas like Lagos could be seen as a health and safety risk, which had prompted the local government to review energy permitting. Another participant admitted their company was burning 800,000L of diesel per month – seeking to reduce that figure by 50% would also remove a significant proportion of exposure to risk of fuel theft. However, the risks of repercussions from the so-called ‘diesel mafia’ could extend beyond vandalism.

Tighter governance of security, starting with making sure security guards are fairly paid and local community stakeholders engaged, were cited as mitigation steps. Effective remote monitoring of fuel, it was noted, demanded alignment of interests: with much fuel theft originating within the supply chain, there remained a high risk of sabotage of telemetry systems if the contractors and their employees could not be effectively held accountable.

“Technology is not the issue when it comes to solar power – people are,” said one buyer. “A DG might last eight years in Africa and a solar system 15 years, but if people issues mean you cannot get the full value out of the system, whether it be due to vandalism and sabotage, or simply because you cannot hire field maintenance engineers who understand the system, then the value proposition breaks down. That’s why we feel it’s essential to educate and train our people, so we can get the best out of our equipment.”

The economics of utilising solar at single tenant sites were felt to be challenging due to the substantial ground rent costs of the space for PV arrays, suggested one participant, while another suggested they had demand for solar across sites with loads from 500W to 8kWh.

One reason why hybridisation is proceeding slower than many vendors might have hoped is that the sites towercos are acquiring in Africa have a lot of shelters; legacy configurations that are tough to hybridise. It is often more economical to sweat acquired power assets to the natural end of their life cycle, than to hybridise immediately (although TowerXchange have heard unconfirmed reports that IHS, among others, tend to hybridise sooner after new sites are acquired).

Experiences deploying early power cubes were mixed, with some buyers complaining that these ‘all in one’ pre-integrated, containerised solutions were difficult to install, often let down by poor quality connections. “We’ve had to dismantle some power cubes,” complained one buyer. Better results had been achieved with power cubes designed and integrated by single suppliers. The weight and logistical challenges of transporting power cubes was cited as another differentiator, while another buyer called attention to customs and regulatory conditions which may make it more favourable for imported items such as power systems to be packaged.

“We tend to use DG as backup power at cell sites and data centres in Spain and Italy, but we’ve deployed some power cubes in Albania and Romania,” said one participant. “We’re responding to carbon emission reduction commitments in the UK, but the targets are not always as clear in Africa.”

Diesel gensets

“We don’t buy off the shelf gensets,” said one buyer. “It’s never about one solution: it’s about how the DG, rectifier and battery work together.”

“We were replacing an average of 1.5 contactors every day,” said another buyer. “As a result we now use DC control changeover switches.”

Sound levels were another topic of discussion. It seems there is little consistency in the regulations governing sound levels, to the extent that some regulations specify a decibel limit, but lack detail on how far away from the site that measurement should be taken! Regulation often differentiates between daytime and night time noise limits: for example in one market the limit was 70dB limit during daytime, 55dB at night, prompting the local tower owner to adjust their specs to a 69dB daytime limit regardless of load. One supplier called attention to the capability of some controllers in hybrid systems to automate the imposition of a curfew, reducing night time noise levels. Ultimately the tower owners in the working group felt they rarely needed to invest in super-silent DGs: one stakeholder suggested as much as 10% of the gensets in their network for super-silent, another two suggested the figure was less than 1% in their networks.

Download TowerXchange Meetup Africa & ME 2016 report