The energy issues and innovations African tower owners are talking about
Exclusive insights ahead of the 2018 TowerXchange energy focus group
On the African continent, power remains the biggest operating cost and the biggest source of downtime for telecom tower owners. Ahead of TowerXchange’s VIP energy focus group being held at the 2018 Meetup Africa, TowerXchange speaks to the Meetup’s attending MNOs and towercos to understand the technologies they are piloting and how they envision cell site power solutions changing.
Who manages and invests in tower power systems across the African continent?
There are an estimated 146,947 towers in Sub-Saharan Africa. 38% of these, or 56,240 towers, are owned by independent towercos. With the exception of some of the smaller towercos in the South African market (where the vast majority of sites are on reliable grid), Africa’s towercos all offer power as a service, meaning it is their responsibility to invest in, operate and maintain the power equipment on cell sites. Power uptime requirements are set out in service level agreements between the MNOs and towercos and a failure to hit these can result in hefty fines for the towerco, negatively impacting their bottom line. Conversely, if a towerco improves energy efficiency on their sites, they reap the financial rewards; any reduction in power costs is not passed on to the operator and can thus provide an uptick in profit margin for the towerco. As such, towercos are heavily incentivised to improve energy performance and efficiency on their sites.
Whilst towercos own 38% of sites, this means that the vast majority of towers in Sub-Saharan Africa are owned by the MNOs. There has been an increasing trend by operators who retain towers to outsource the management of power on their sites to specialist energy service companies called ESCOs. Orange has been spearheading this initiative and has now signed four ESCO contracts in Sub-Saharan Africa, with GreenWish Partners in the DRC, Camusat’s Akitvco in Niger and Burkina Faso and with IPT PowerTech in Guinea. The number of sites handed over to ESCOs by Orange remains modest (around 2,500 sites) but the operator has issued ESCO RFPs in a number of other markets so this figure is expected to grow. Other operators in the market have also explored the ESCO model with Airtel signing a contract with Energy Vision in Gabon and Millicom signing a contract with Aktivco in Chad (plus Aktivco has signed one other ESCO contract with an as yet undisclosed MNO). In Zimbabwe, Econet has carved out their own ESCO, a company which goes by the name of Distributed Power Africa, which is now taking over responsibility for power across their ~1,500 sites in the country.
Whilst this places somewhere in the region of 5,330 sites currently under or contracted to be under ESCO management (around 4% of Africa’s total towers) this figure is expected to grow dramatically. Two years ago the figure sat at zero, demonstrating the rapid growth in a very short period of time. Whilst there is an increasing appetite amongst MNOs to work with ESCOs, towercos have been more hesitant, seeing their ability to deliver a good power service as one of their strategic differentiators. Paying a premium to an ESCO to take over power management requires significant upside for the towercos, something that they are yet to see. In Nigeria, IHS Towers (Africa’s largest towerco with a portfolio of over 15,000 sites in Nigeria alone) explored an opex model for power management. In their big five initiative, the towerco handed over responsibility for power management on 10,000 of their sites to five different companies. Purists don’t see the IHS Nigeria example as a true ECSO deal, but rather a guaranteed savings model and for this reason we have excluded the IHS figures from the ESCO count in figure two.
Figure two: Who has responsibility for power across Sub-Saharan Africa’s 146,947 cell sites?
What percentage of Africa’s cell sites are on good grid, bad grid or off-grid entirely?
To get a sense of the proportion of on and off-grid cell sites in sub-Saharan Africa TowerXchange put this question to tower owners at our 2017 energy working group (see figure three for select results). In South Africa, where MTN have 10,500 sites, just 53 were off-grid hybrids; in their Western and Central African markets (Benin, Guinea Bissau, Guinea Conakry and Liberia), where the grid was described as unstable, 80% of sites were battery hybrids. For Helios the percentage of off-grid sites across their four markets ranged from 55% in the DRC to just 1% in Ghana. Such figures show the disparity across the African continent in terms of the extent of electrification and the availability and quality of power. These figures are also transient with grid power availability and quality fluctuating significantly in many markets.
Figure three: Approximate proportion of cell sites on grid versus off grid (black segment)
How much power does a tower use?
A number of factors need to be taken into consideration when commenting on the average load of a tower. For a simple single tenant tower with outdoor equipment demand can be as low as 1kW, for a tower with three base stations this goes up to 2.5-3kW. The energy load of an indoor site can be 3-4x that of an outdoor site.
Outdoorisation of equipment has been a major trend for MNOs and towercos alike, due to the significant energy savings that it can deliver. Historically batteries were housed in air conditioned enclosures, but as they and other energy equipment has been developed to withstand higher temperatures, tower owners have increasingly transitioned towards outdoor configurations. Many older legacy sites have indoor configurations that are tough to hybridise however and as such, air conditioning is still widely in use across the continent, thus pushing up power loads.
There is also discussion around how developments in antenna could impact the load on cell sites. Whilst the relationship between MNOs and towercos mean that the towercos reap the rewards from any investments they make in power systems, should more efficient antenna and base stations be deployed by the operators, they would likely benefit from the energy savings generated by their investments.
What is the cost of power per tower?
How long is a piece of string?
The amount of diesel or grid power used is dependent on the configuration of the site and the energy system in place; what’s more the cost of diesel and the cost of grid power can vary dramatically market to market.
Figures four (a) and (b) show Helios Tower’s cost of power per tower in each of their markets in 2017 and 2016 respectively. 2016 figures show the breakdown by diesel and electricity (such figures were not available for 2017). One must be wary of drawing direct comparisons between years using the average cost of power per tower method as the number of sites in each country varied over the course of each year (due to acquisitions, new build and decommissioning activities). In spite of this, several key elements can however be observed.
In Ghana, whilst the vast majority of sites are on-grid, high electricity costs relative to other markets means that in 2016 Helios’ Ghanaian towers had the highest overall cost of power per tower (and in 2017 came only behind the DRC). Improvements in grid availability along with greater deployment of power management solutions meant that Helios’ diesel costs in Ghana reduced 2016- 2017, and whilst electricity rates increased, power escalation clauses in Helios’ contracts with its tenants meant such costs could be passed on to operators.
Contrasting with Ghana, in the DRC, over 90% of power costs are spent on diesel due to both the high proportion of off-grid sits and the high cost of diesel in the market. Strategies to reduce diesel consumption, such as solar hybrid solutions have a particularly attractive business case in such a market.
Figure 4a: Helios Tower’s 2017 cost of power per tower
Figure 4b: Helios Tower’s 2016 cost of power per tower, broken down into diesel and electricity
Where do inefficiencies in site operations lead to increased power opex?
Whilst TowerXchange’s upcoming energy focus group (being held on 10 October at this year’s Meetup Africa) will focus heavily around power system innovations which are driving performance and efficiency improvements at cell sites, it is important to not overlook process improvements that can also have a significant impact.
Diesel fuel theft continues to be a problem, with a an array of increasingly creative and coordinated ways in which criminal individuals and groups work. Strategies to mitigate theft have been at the heart of many a discussion at Meetups over the course of the past five years, from sophisticated access control systems and enclosures to improved community relations. It has been observed that much of the theft occurs during the fuel delivery process or during site visits and so increasingly we are seeing a trend towards fewer site visits with complete tank refuelling.
Process improvements can also have a measurable impact on energy costs for on-grid sites. For example, failure by service providers to top up energy meters on sites leads to increased generator and fuel usage; putting in place systems to ensure top ups are completed helps to reduce opex by reducing reliance on generators. Highlighting the impact that this can have, one can look Helios’ Ghanaian operations where 99% of their sites are on-grid. Putting in place corrective procedures to ensure maintenance partners topped up meters and ensured grid supply over a 9 month period saw Helios save 85,000 generator hours on 12 sites, equating to a total annual fuel cost saving of US$70,000.
What equipment are the continent’s tower owners piloting and investing in?
Grid connections, diesel generators and lead acid batteries remain the mainstay power solutions on African cell sites, yet considerable interest and promise is being shown in other technologies.
At the 2018 TowerXchange Meetup Africa, TowerXchange has invited MNOs, towercos and ESCOs along with select vendors to participate in a VIP energy focus group, designed to examine how power system technologies and configurations at cell sites are evolving.
Taking stock of the current power systems in place at select tower portfolios, and examining how the power demands of sites are changing, the focus group will examine technologies which are being piloted and showing promise, discussing the likelihood of RFPs in the next 12-18 months and what challenges still need to be overcome to ensure their successful integration into new and legacy sites.
In preparation for the working group, TowerXchange has been spending time speaking to some of the continent’s major tower owners to examine some of the emerging trends which will be discussed at this year’s focus group
Lithium ion poised to replace lead acid in some scenarios
Lithium ion’s ability to withstand higher temperatures and charge and discharge more quickly whilst promising a longer lifespan than lead acid means that the technology has been under the spotlight for a while. The fact that lithium ion is less of an attractive target to thieves also presents a value add. At the 2017 Meetup, many tower owners confirmed they were starting or currently carrying out trials of lithium ion. Fast forward 6-12 months and with promising results several expect to be issuing RFPs to start replacing lead acid batteries on select sites imminently.
Whilst the technology is showing promise, it is impossible within the timeframe that pilots have been carried out to verify manufacturers’ lifespan claims. Whilst in general the batteries are delivering the promised results, faults have been reported on both the hardware and controller level.
A large proportion of lead acid battery manufacturers are now manufacturing lithium ion batteries too, giving tower owners more choice in the market. Whilst an increasing number of suppliers are now offering lithium ion batteries in addition to other product lines, one towerco voiced how they preferred to work with specialist lithium ion battery manufacturers, preferring the focus that they had placed on the technology.
TowerXchange has also heard talk of dual chemical systems incorporating lead acid and lithium ion being trialled. Lithium ion’s high cyclability and resistance to different depths of discharge means that it is suitable for regular short blackout periods. Cheaper lead acid systems could be used to step in for more rare longer blackout periods.
What other chemistries are being explored?
In terms of where RFPs could be expected in the next 12 months, TowerXchange expects this to be limited to lead acid and lithium ion but pilots are underway for other chemistries, particularly by operators with larger testing facilities. One technology that an operator voiced as showing promise was Zinc Air, and TowerXchange look forward to discussions around alternative chemistries going forward.
Supercapacitors as an alternative to batteries?
As the name suggests, chemical batteries inherently rely on a chemical reaction for their charge/ discharge cycle. The problem with chemical reactions is that they produce waste heat, resulting in a loss of energy which impacts on the battery’s efficiency; the best battery efficiencies being reported in the field are somewhere between 85-95%. The chemical reactions in batteries are sensitive to temperature and will degrade over repeated cycles (albeit different batteries exhibit different sensitivities and different degradation rates).
Supercapacitors have been around for as a long as chemical batteries, but their application in energy storage has only been more recent. Their use has primarily been in power generation when the quick release of power is required due to their ability to discharge and recharge quickly. Supercapacitor manufacturers claim that they can fully recharge in as a little as hour, a drastic reduction on the four hours required for lithium ion or the 8-10 hours for gradual recharging of lead acid batteries. The manufacturers of supercapacitors also claim that because they rely on an electrostatic process rather than chemical reaction, supercapacitors can achieve efficiencies in the 98-99% range.
The claims are exciting and pilots are now beginning in Africa. The high cost of supercapacitors presents a barrier, but if field studies match up to manufacturer claims then the technology could offer a better TCO. Supercapacitors will never replace lead acid batteries in stand-by applications in good grid areas, they will not be able to compete on price, but in off-grid scenarios the technology may hold significant potential.
When it comes to renewable energy, solar has been the most widely deployed technology at African cell sites. Space constraints and the high cost of ground rent for substantial PV arrays can destroy the business case for solar, but in certain scenarios such as where fuel costs are particularly high, solar can present a very attractive option. In the DRC, Helios added 249 solar sites in 2017, taking their total in the country up to 299. With fuel costs in the country sitting around 140-160c/litre, Helios expect a payback period of around two years.
IHS Towers have also put a major focus on solar, at the end of 2016 they reported that over 50% of their ~23,000 towers had solar hybrid systems in place (figure five) with plans to extend this whilst also studying the potential for a solar farm in Rwanda. Plus Eaton Towers, who will also be attending this year’s Meetup, have voiced that solar remains a key focus for them.
MNOs and ECSOs are also examining solar solutions in a bid to reduce dependency on diesel and become more green. Zimbabwe’s leading MNO, Econet, is in the process of converting 300 towers to solar (via its ESCO, Distributed Power Africa) and going forward all new sites will have solar plus batteries in addition to the grid. Distributed Power Africa expects to complete a total of 1MW of solar projects for Econet before the end of 2018.
Figure 5: IHS Towers’ solar hybrid installations (December 2016)
Fuel cells and other renewable technologies
Whilst solar remains the renewable energy of choice across African cell sites, TowerXchange has been in touch with an array of innovative wind power companies, designing systems which can be installed within the tower. Such solutions appear to be very much in the early pilot phase at present but present an alternative source of generation. Fuel cells have been gaining much more traction with one company signing a deal in Kenya to deploy fuel cells across 800 sites. TowerXchange look forward to welcoming fuel cell companies to this year’s Meetup.
DCDGs have had mixed reviews, with one towerco having encountered significant challenges in a major deployment of the technology. That aside, interest in such generators continues with at least one towerco disclosing trials they currently have underway. Traditionally, tower sites have used AC generators because of their availability in the market but the lower fuel consumption as well as smaller space requirements of DC diesel generators means they may prove more suitable for some sites.
A note on integration
Whilst new technologies and evolutions in existing ones present interesting discussion points, it is important to not overlook the challenges of integrating such equipment into existing systems and configurations. Some energy experts have cautioned, for example, that amidst the excitement about lithium ion, many companies are incorrectly treating it too like lead acid, something that could cause problems in integration further down the line.
It is also important, particularly in markets where skills levels are lower, that ease of installation, operations and maintenance is not overlooked. The skills to service a generator are very different from those needed to service a solar panel, and having a large number of different products and suppliers adds to the complexity of an O&M provider’s job. Whilst MNOs, towercos and ESCOs remain open minded to new solutions which may improve energy efficiency, simplicity of operations, spare parts management, contractor training and service support remains equally important.
How to get involved in the VIP energy focus group
On 10 October at the 2018 TowerXchange Meetup Africa, TowerXchange will be hosting its third VIP energy focus group for the African tower industry. With many of the region’s biggest towercos and MNOs in attendance, this invitation only session brings together users of energy equipment and those at the bleeding edge of innovations to examine where tangible advancements are being made and how these are future proofed for tomorrow’s infrastructure.
Participation for vendors is strictly limited and by invitation only. To discuss how you can get involved, please contact Annabelle Mayhew: firstname.lastname@example.org
If you are an MNO or towerco who would like to get involved, please contact Laura Graves: email@example.com