How smart meters can build smart savings for towercos

With a large aggregated power demand distributed across varied sites, tower owners aren’t always the most enticing client for power providers. Vodafone is a large energy user with a direct presence in 24 countries owning and/or operating in excess of 300,000 sites of all shapes, sizes and consumption profiles. Therefore, in order to understand Vodafone’s real needs and drive prices and efficiency, Eric Estrade, Principal Group Supply Chain Manager, Energy, Vodafone Procurement Company, turned to smart metering solutions to help. Through the use of smart metering data, he was able to collate energy usage data to build profiles and achieve better energy tariffs, as well as planning for more creative solutions which could help drive greater efficiency and cost reduction. Here he tells us about his experiences and future plans.

TowerXchange: Can you introduce yourself and tell us about how you came into your current role? 

I’m Vodafone’s procurement lead in the Energy team in Luxembourg focusing on smart grid development and energy data management, with a mix of procurement and project management. This is supported by my long history in project, programme and transformation management in telecom infrastructure. With a proven track record in passive infrastructure global procurement centralisation for Vodafone and having dealt with energy and DC power at sites, my boss asked me some years ago if we could purchase electricity. Of course, I said ok, and we started.

The challenge we then faced was improving what was historically a commodity purchasing model into something more suitable to Vodafone’s varied energy consumption profiles across the different elements of the estate portfolio, with radio base stations being the largest contributor.

We realised we were building contracts with profiles that had nothing to do with our real kind of consumption: a radio base station energy profile is unlike a domestic, commercial or office profile. Therefore, we asked ourselves, how do we get access to the data which can give us a better insight into our profile to open negotiations with energy suppliers?

From this we established the smart metering & Energy Data Management [EDM] programme, focussed on collecting energy profile data, to drive energy purchasing and efficiency, thus reducing cost from two different angles.

TowerXchange: With grid access readily available in most of Europe, how much control do tower owners really have over their spend in this area, and what kind of efficiencies can really be made?

Clearly the energy landscape in Europe is different from the emerging markets. The focus here is to the address the cost base primarily in terms of getting the correct tariffs and reducing consumption. Do we consume less or consume better?

We first started by looking at the price we pay and challenged ourselves: “Do we have the right contract with right terms in place for the base stations, are we purchasing at the right time, on the right market, and what are the associated risks? Additionally, are we paying for what we actually consume and not just a rolling monthly estimate?” If you have a smart meter then you know what you use and therefore should be paying for; it’s a source of opex efficiency. A smart meter is a little box with a lot of power to drive positive outcomes.

After addressing the price, our focus turned to consumption analyses. By benchmarking sites against each other we could identify and address upward trends and poor performing sites using standard reporting and more detailed big data tools.

TowerXchange: We see a lot of innovations in terms of hybrid and green solutions coming out of Africa or Asia where the diesel supply chain is an issue; are there any innovations which excite you from a European perspective?

Yes, it’s time to look at how onsite generation and energy backup/storage used in tower networks with stable conditions can become a source of revenue. We want to monetise our assets by making the most of the IoT world to get the data and control back to our equipment. Then you can make your energy storage infrastructure available for your energy provider and change the business model from passive to active user.

In Europe, the challenge for energy providers is how to balance energy supply versus demand, and during periods of peak demand trying to avoid turning on expensive power plants. This is where tower networks can step in by using onsite generation and energy storage assets to remove load from the grid at short notice.

Energy generation and storage assets at towers across Europe are an insurance policy should the grid fail, which doesn’t happen very often.  As a result there is a massive and heterogeneous bank of batteries which aren’t used. The next transformation for me is how it is possible to monetise the backup and make this flexible resource available through IoT connectivity. So, it’s how we could make the most of the smart meter ecosystem at the base station level.

Frequency Response and Demand Response programs are used by European grids with power intensive customers (such as data centers, automotive factories, chemical refineries, et cetera). DSO/TSOs (Grids) are incentivising these kind of customers to give access to their own backup either for load shedding or as a direct resource for a quick demand response scheme. This process has been in existence for years but because towers represent a small unit load, albeit across thousands of sites, they haven’t had access to such incentive programs thus far.

I’m currently engaged in the Horizon 2020 EU funded SmartNet Project (http://smartnet-project.eu/).  Vodafone is involved in both smart grid technologies development and the physical deployment of pilot solutions that synchronously aggregate the load availability/curtailment across multiple sites to respond instantly to peak demand in the same way a big unique user would. This will be the base for future energy market changes in terms of decentralised resource integration by the DSOs and TSOs and ancillary services creation.

Is anyone else doing it? Numerous companies inclusive of the grid providers themselves are looking at this with, for example, the UK and Germany, having identified the potential of decentralised resources. Getting access to energy storage capabilities is current but the ability to aggregate and officially offer this flexibility for peak demand is something different that market leaders are working on. The SmartNet Project is about designing the integration of new capabilities, renewables and all kind of decentralised energy resources, across Europe with taking into consideration the energy stock market, and proposing an organised ecosystem and supply chain mechanism.

In terms of the impact for towercos, the challenge is to imagine changing the tower design now for the next five to ten years, integrating the flexibility to become a decentralised energy provider and monetising it. Battery dimensioning, energy storage technology evolution, extended usage in terms of load and cycles, security of supply, communication, remote management et cetera for MNOs; this is a way to further monetise the assets and their own smart connectivity capabilities.

Thinking bigger than tower self-fueling, like community power supply in emerging markets, will become key in Europe for a different target and scale which in this instance is energy grid support. EU authorities in their endeavor to redesign the future pan-European market of DSO ancillary services are taking it very seriously, both in regards to full renewables integration into the distribution ecosystem and all other small, but numerous, decentralised resources.

TowerXchange: Tell us about your sourcing process - how do you identify and select new solutions? 

As part of the procurement area there are several stages; first addressing internal R&D and technology experts’ demands to be investigated, combined with vendor scouting through exhibitions, and direct solicitations. It’s all about finding the right partners so networking at, say, TowerXchange events, can trigger processes for requests for information which can end to RFQs and business set up. It is important to be visible, for companies to come and meet us and for us to find someone we want to talk to. For example, I have been contacted by three different energy management software providers since the event in Singapore and we have already started conversations.

TowerXchange: Energy, more than any other area of tower spend, relies on strong partnerships with your suppliers, can you explain how you work with your solution providers to drive down opex? 

Energy matters are primarily embedded in our contracts for any equipment and we have an energy policy we are constantly refining. In tenders for any new equipment there’s a very strong demand for energy efficiency and energy performance management that can be a decisive KPI for the selection of vendor and products.

Energy performance is embedded in our DNA and procurement processes. That’s our first requirement. If suppliers can’t answer this, then they won’t be taken further. When promises and commitments are made, it’s clear that we have the means to make sure that they are delivered. As an example, we’ve been installing ‘green clusters’ in four different countries, at 20 sites in total, with deep setting of smart sub-metering at the radio unit level to understand power used band-per-band, equipment-per-equipment so we can make sure every piece of equipment is performing in the field as expected and as per the lab test result. We currently use the same EDM platform to do multiple levels of metering and then put together benchmarks.

For energy supply, due to the hundreds of thousands of sites we have around the world we don’t change energy vendor in each country every year, so we set medium to long term contracts to allow us secure our energy supply at the right pricing. Due to both the procurement process change and the smart metering strategy we developed, we have become a customer of choice for electricity providers whereas five years ago, as a multi-site entity with low visibility on consumption profile, we were not. Changing this paradigm by giving permanent visibility on load and profile is bringing trust and as such, the conditions for win-win partnerships.

TowerXchange: Vodafone has managed to achieve strong results with smart metering - how achievable is this for most tower owners, and what kind of results can it deliver?

We have tangible results. The smart meter doesn’t give savings, however the data you get access to opens a massive amount of saving potential.  To illustrate this point; last year in Germany, because of real time monitoring we saved 10-13% on our electricity bill by making sure we were being billed on real consumption instead of an estimate. This is more about working capital than anything else but this is massive. In addition, we were able to secure better tariffs and challenge some of the taxation which all added to the savings. Having smart meters and the right platform is also instrumental to being compliant with the terms of the European Energy Directive, which requires all large companies to report their energy & CO2 emission performance and by consequence, baseline the principles for ISO 50001 certification. Having smart meters delivers a double benefit as it impacts both the budget and the compliance with the law, the last being non optional. An example of this is non-compliance with the EED in Germany for around 27,000 sites was estimated to be around €1mn/ year. We are very proud to say that after 18 months of efforts to set it up, Vodafone Germany has been fully certified ISO 50001 in February this year.

Another compelling case relates to Vodafone Portugal on hosted sites where the energy billing based on estimates wasn’t clear. We installed a pilot site with DC sub-meters on DSLAM racks and found a real usage 40% lower than the bill estimate. We rolled this out across 200 sites and saved an average of 25% on the bill for the year.

These are the low hanging fruit; I’ve never seen a case where smart metering didn’t deliver benefits in one way or another. When you have a payback from 10% in one country to 25% in another, the net benefit created by smart metering data is clearly proving the case for the investment.

For a towerco the decision to include a smart metering solution into their own design will always offer savings opportunities. It is a competitive advantage when you talk to MNOs and give them the opportunity to have transparency on their bill and analyse their own network equipment performance at the same time.

TowerXchange: With the near-term rollout of 5G and increasing diversification of site typologies (particularly in urban areas), how do you see this impacting energy needs and the way sites consume power?

The equipment is likely to be more energy efficient but we will still have a growing curve in terms of demand due to increasing numbers of sites to support growth. We’ve got to think about our design, making the most of our towers to become an active part of the energy grid. Telecoms is a core activity, supported by the tower itself, however backup will become strategic to be used as an active power reserve. That’s the paradigm we need to solve in the next 2-5 years.

Grid providers need metering not only for billing electricity, as has been the case since Edison and Rockefeller, but to manage new multiple and decentralised resources. This is the future of smart grids where towercos and MNOs will become key players, not only as an IoT solution supplier but as an energy resource provider.