IPT Powertech on the future direction of ESCOs
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IPT Powertech on the future direction of ESCOs

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The world’s largest ESCO discusses the state of the industry and where future growth will come from

IPT PowerTech, the world’s largest ESCO, operates the energy equipment across four countries with the largest number of ESCO sites worldwide. Established in the 1990s, IPT is also a managed service and energy solution provider with a presence in elevent countries in Africa, South East Asia and the Middle East. TowerXchange speak to IPT PowerTech’s VP and COO, Khaled Habbal to find out more about how their ESCO business is developing.

TowerXchange: IPT Powertech has continued to expand, with 10,250 sites in four markets today - how did you grow to this scale and what is your current ESCO footprint?

Khaled W. Habbal, VP & COO, IPT Powertech:

IPT Powertech Group has always been a front-runner in anticipating and delivering customer’s needs. Whether it’s tailoring specialised solutions to offering a complete power solution, merging hybrid and renewable energy solutions with telecom infrastructure, field managed services and maintenance. We give end-to-end solutions to towercos as well as MNOs. Having the experience in both Power Solutions and Managed Services, gave IPT Powertech the edge of merging both expertise which are the pillars of the ESCO business, to become leaders as the largest ESCO worldwide. Our current portfolio sits at a total of approximately 10,350 sites under Guaranteed Savings and T-ESCO and we remain very ambitious in our growth plans, with many additional projects in the pipeline. 

TowerXchange: To illustrate the adaptability of the ESCO model, please contrast the operating conditions across your footprint.

Khaled W. Habbal, VP & COO, IPT Powertech:

Recently, we have signed  an ESCO contract in Morocco for off grid and isolated sites. Our expansion in Morocco further illustrates the flexibility and benefits of the ESCO model. There is a large number of  sites in North Africa which are off grid or isolated, and the ESCO model works very well for them.  Africa as a whole has a large number of off-grid sites where 1,000s could benefit from the ESCO model, especially with the increasing cost of Diesel, making the ESCO solution a key component to reduce the Total cost of ownership, and significantly reduce OPEX cost, at a time when ARPU is continuously declining.

In Guinea Conakry, we signed an ESCO agreement with Orange in 2018. We have already initiated the system upgrade of all sites. Out of the total number of sites, around a third are entirely off-grid. The availability of all sites, be it on grid or off grid have improved significantly.

In Lebanon, the ESCO contract with both operators, Alfa and Touch were signed in 2018 and 2019, covering their entire networks. Grid availability in Lebanon is not stable in terms of number of hours by the national grid, making the need for high reliability on diesel generators. The ESCO solution came at the perfect time for both operators, in order to reduce the reliance on Diesel, at a time when Energy prices are increasing, the local currency is depreciating and the tariffs are stable in local currency. The ESCO solution’s reduction in diesel consumption was crucial for opex reduction for both operators, during a period of crises in the country.

TowerXchange: The IFC predict that the number of off grid sites in Africa will increase by 89,000 over this decade, to 205,000 in 2030. How many of these will be managed by ESCOs?

Khaled W. Habbal, VP & COO, IPT PowerTech Group:

In the long term, we hope that all of off grid sites will be managed by ESCOs – the only restraint on this is winning the buy-in from MNOs. Orange is leading the way in handing sites over to ESCOs, and other MNOs are seeing the momentum build, and we are witnessing  a lot of recent interest in the ESCO model, especially as  the cost of energy is skyrocketing. 

The ESCO model benefits all stakeholders.The reduction in diesel consumption has a financial benefit to the operator, and a significant green benefit to the environment, making the concept a sure win for everyone. The buy in from the MNOs on the concept remains the key driver for the adoption of ESCO. We are seeing increased interest, and we are getting more inquiries, and we believe that the IFC initiative, along with the success of the ESCO wherever it was implemented, is giving more confidence to the MNOs who are considering it.

TowerXchange: What will it take to generate the buy-in required to unlock the next wave of ESCO deals in Africa?

Khaled W. Habbal, VP & COO, IPT PowerTech Group:

IPT PowerTech are really pleased to see third parties like the IFC and TowerXchange endorsing the ESCO model. Impartial research and publications help telecom executives better understand the ESCO concept. Since organisations like the IFC, PROPARCO, DEG et cetera endorse the model, it makes it easier for stakeholders inside telcos to endorse it too. Orange is a vocal advocate for the model because they see the benefits in more MNOs adopting it and supporting the development of an ESCO ecosystem. 

Due to the COVID-19 crisis all new initiatives have had a bit of a slowdown, but we are seeing interest pick up again. In some areas, it is not a lack of MNO interest, but the policy environment which is holding ESCOs back. We are seeing more interest from MNOs in Africa contacting us and floating RFPs for ESCO across the continent. Orange remain at the forefront of the initiative, but more and more independent MNOS are also showing interest.

TowerXchange: Can you tell us more about your unique experience in Nigeria for the past few years, specifically with the initiation of the Guaranteed Savings Model?

Khaled W. Habbal, VP & COO, IPT Powertech:

The Guaranteed Savings Model, initiated and implemented in Nigeria, is a risk-free approach for securing full economisation and savings for the operators and Towercos. The model works by reducing the CAPEX and OPEX to reach the optimal Total Cost of Ownership (TCO) while maximising the lifetime of the equipment.  The success of this model is attributed to several factors varying between the quality of our products, technical knowledge of the technical team, and constant remote monitoring alongside adequate O&M training all under one umbrella.

Across the years, we have lifted our organisational and operational standards to meet the international requirements specifically on HSE standards as well as environmental aspects. This was carried through the reduction of CO2 emissions and adapting more environmentally friendly solutions through renewable energy. Safety is a top priority in our industry and the best way to ensure it is via proactive as well as preventive measures. 

TowerXchange: Finally, how do you see the immediate and long-term pipeline of opportunities for ESCOs? And how can we accelerate that pipeline to unlock greater efficiencies faster?

Khaled W. Habbal, VP & COO, IPT Powertech:

We see a lot of opportunities on the horizon in the market- whether in the Middle East, East Africa, North and Central Africa, West Africa, Pakistan, Southeast Asia and the Americas. There is a lot of global interest in the ESCO model, and we are currently in discussion with major MNOs to further expand the ESCO model, and its adaptability to their different needs.

In the coming years, we see a major drive particularly from MNOs who already took the strategic decision not to sell their towers and to keep them as strategic assets by divesting the challenge of power particularly where power availability is not reliable.

We are also seeing 4G overlay and very high loads coming to off grid sites which are increasing the difficulty of providing power in remote sites. This is something IPT Powertech has anticipated when dimensioning our sites.

In addition to off grid sites, and as environmental concerns and awareness are growing, we started seeing more interest in adding solar to the grid connected sites to reduce carbon emission. Orange, for example, are running a large initiative in Europe to add solar panels to grid connected sites.

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