Thank you to our speakers:
– Bernard Borghei, Co-Founder and EVP, Operations, Vertical Bridge
– Manjit Dhillon, Interim CFO and Head of Investor Relations and Corporate Finance, Helios Towers
– Will Stocker, Head of Performance Engineering, Helios Towers
– Wole Abu, CEO, Pan African Towers
– Tuoyo Ebigbeyi, CTO, American Tower (Africa)
Greening the Network is the new series by TowerXchange focusing on energy efficiency, renewable investment and network resilience. In this summary of the July’s live session of Greening the Network, we hear from Bernard Borghei, Co-Founder and EVP, Operations for Vertical Bridge, Manjit Dhillon, Interim CFO and Will Stocker, Head of Performance Engineering at Helios Towers, Wole Abu, CEO of Pan African Towers and Tuoyo Ebigbeyi, CTO of American Tower in Africa.
We began by discussing the scale and source of our emissions. American Tower (Africa) has around 20,000 towerco sites in seven countries. 99% of American Tower’s GHG emissions pertain to powering tenant equipment. In large part in Africa that power comes from its 15-16,000 diesel generators. American Tower has been investing in new technologies to reduce its carbon footprint, in EMEA over the last few years American Tower has spent US$100mn on storage and solar solutions which has reduced its diesel consumption by 100mn litres – that’s the equivalent of taking 13,000 cars off the road.
Helios Towers own and operate just under 7,000 sites in five different markets. Similar to American Tower, grid availability is not nearly good enough to rely on in their markets. Whereas in the west we are used to the grid being the primary power, for Helios grid power is a back-up and diesel generators take the strain. 80% their of sites are on grid, and typically African grid power is clean because of its reliance of hydropower, but Helios Towers are lucky to get half a day of grid power to their sites. Of their 7,000 sites, 4-500 now have solar installed, and a total of 7-800 sites are now hybridised to include battery storage which allows the cycling of different energy sources.
Pan African Towers is an independent towerco based in Nigeria with roughly 1,000 tenanted towers. Its emissions are primarily Scope 1 emissions from the burning of diesel in their generators. Pan African Tower’s network is effectively completely off grid because the grid in Nigeria is very poor. Towers have dual generators installed running 24/7/365. A solar hybrid site can be a third cheaper in terms of total cost of ownership than a site powered by diesel. Pan African Towers is also raising equity to expand, and ESG considerations have come to the fore with their investors. For Pan African Towers therefore, the story of sustainability is also the story of economics.
In the future rollout will be completely based on renewables, and old sites are being retrofitted by a new ESCO partner. So far 10% of sites have been converted into renewable sites (with around 3-4 hours a day of diesel generator runtime overnight). Progress would have been quicker this year, but with the disruption to supply chains due to COVID-19, Pan African will be happy to reach 25% solarised by the end of the year.
Vertical Bridge are the largest private REIT in the United States with a portfolio of 270,000 assets of varying sizes. Vertical Bridge are the only towerco who are able to boast of carbon neutrality, and it is to this achievement our panel turned first.
Figure 1: How to talk about emissions
Going carbon zero
Bernard Borghei described the move to carbon zero as a natural evolution for Vertical Bridge, but that doesn’t mean it was easy or did not require a lot of preparation. Vertical Bridge governs itself according to the three Ps: Profit, People and Planet. They do not view these three as mutually exclusive and with the profitability and people already covered through their normal operations and philanthropy, Vertical Bridge felt the time was right to commit to long-term carbon neutrality. Of course, Vertical Bridge is not a power-as-a-service towerco as our other towerco panellists are, but its process offers lessons for the whole industry.
Around four years ago Vertical Bridge began upgrading its old generators and HVAC units to be more fuel efficient. Vertical Bridge owns 1,600 broadcast towers and those sites come with huge generators and HVACs. The move to energy efficiency also incorporated installation of LED lighting to reduce energy consumption for its safety lights. Importantly, all these investments were good for the environment and for the pocket book. By Q3 last year Vertical Bridge had already heavily shrunk its emissions and needed a plan to go further. That is when they decided it was time to aim for carbon neutrality, and when they engaged Capital Natural Partners to help them chart a course.
For over a month Vertical Bridge discussed the operations of their business with their consultants, so they could fully understand the business and capture exactly where the emissions footprint was being generated. Once an outline of the business was created then Borghei was tasked with finding detailed information on the firm’s activities.
Without effective book keeping, this would have been much harder. But because Vertical Bridge follows the best accounting practices, the data required was already logged in its financial system under various GL codes. By using the financial system to pull information it was relatively straightforward to identify the types of emissions associated with various business activities.
But financial records are not enough. On top of the nature of the towerco’s activities, it is also necessary to work out how those activities are carried out. For example, the distance driven by your staff and the cars they drive; the flights taken and whether they flew coach, business or private jet. Site operations information is also incredibly important with generator runtime a critical statistic. Once collated, a first round of analysis is possible before revisions and queries need to be resolved.
To eliminate any residual emissions, Vertical Bridge are supporting four carbon offset projects, but they are also working with their contractors and suppliers to further reduce emissions in the future. Once you go carbon neutral you make a pledge to stay that way for the long run. Vertical Bridge is at the start of its carbon neutral journey, and it hopes other towercos will join it.
Investor pressure to go green
Since going public, Helios Towers has found more investors focusing on these issues, but they have always had socially conscious equity investors supporting them like the IFC and Albright Capital Management, and development funds like the EAIF and DEG providing debt. Manjit Dhillon, Interim CFO and Head of Investor Relations at Helios Towers, discussed the changing attitudes of investors towards the environmental impact of towercos, and the wider social impact of towercos.
At the time of going public Helios Towers worked on an ESG paper to highlight its ESG profile and set out how it could improve its work further, a process which is continuing today. Decarbonisation is one element, but investors are interested in seeing businesses become more sustainable overall. Barclays’ research has identified three key areas for telecoms to improve its social impact. The first is enabling faster connectivity, the second is creating a more diversity workforce, internally and externally and the third is environmental issues.
So in addition to Helios Towers’ work greening the network, it is also focusing on other areas. Since 2015 they have been making sure the regional teams are operating with a very local presence. 96% of Helios Towers’ workforce in Africa is local; the CEOs for the Congo is Congolese, for Ghana is Ghanaian and for Tanzania is Tanzanian.
Becoming greener is possible in Africa, but becoming carbon neutral is a long way away because of the paucity of grid connections in much of the continent – although Wole Abu of Pan African Towers’ expressed an ambition to move to carbon neutrality in Nigeria and leave diesel power behind entirely. In Africa Scope 2 emissions are difficult to manage as unlike developed markets there is usually one source of grid availability, and power purchase agreements with renewable suppliers are not possible. This requires an understanding from investors that towercos can and will green their networks, but there are hard limits on what is possible.
Dhillon also highlighted the sector’s Scope 4 emissions. If Scope 1, 2 and 3 emissions refer to direct and indirect emissions produced by a business, Scope 4 emissions are the emissions which are avoided thanks to that business’s work. Towercos help the world avoid a lot of emissions through infrastructure sharing, co-location and investments in green generation.
Figure 2: Who has joined Greening the Network
Efficiency and emissions reductions
Site availability remains the key metric by which towercos are measured. If you are providing power-as-a-service then your number one priority is to keep that site live and equipment connected. We asked our panellists if there was a trade-off between meeting availability targets and investing in a green network.
Partly by definition the co-location of telecom equipment combines efficiency and emissions reduction, even if you are merely using one diesel generator to power the base stations of two tenants, these are the Scope 4 emissions mentioned earlier. You can maximise the efficiency with which you use steel in the air and genset runtime if your towers host more than one tenant. This means that compared to operator-owned networks, towercos are already combining green networks with efficiency.
In Tanzania Helios Towers acquired two nationwide networks. Now through synergies in those networks, it has been able to consolidate 106 towers. This reduction in tower numbers was also a reduction in generator run time, diesel consumption, power used and miles driven.
American Tower is committed to greening the network. They are now 59% of the way toward fulfilling their global goal of 20MW of installed renewable capacity by the end of 2022. That means they are nearly two thirds of the way to adding solar assist to 5,000 sites.
But there are limits to how much solar can be installed due to space constraints. Towercos are acquisitive and legacy sites are often not sized to include a solar array. Future sites may be acquired with the correct space for solar, but unless changes to design make solar arrays much smaller, or easily mountable on the tower, there will be a limit to rollout. For example, In India some towercos are approaching 10% of sites solarised, but are struggling to increase this ratio due to space constraints.
Before solarising a site there are a couple of considerations. Commercial viability comes first and thanks to huge technological advancements the cost per kilowatt hours from solar is now competitive with alternatives all over Africa. There has been less advances in wind on a distributed scale, and fuel cells lack the distribution and maintenance networks of diesel or solar.
A second factor is viability at site. Even where a solar or alternative energy site might be viable you may lack the space at urban sites, or the supporting infrastructure for rural sites. These need to be factors considered to make sure the technology works It is an ongoing process, and our towerco panellists agreed that the ambition and aggression is there to see this through where possible.
Pan African Towers like to say they enjoy a last mover advantage. They see the mistakes and missteps of their forebears before they were established in 2018, and they apply the same strategy to their technology adoption. Since towercos began deploying solar and battery technology in Nigeria the technology has improved, and Pan African is ready to take advantage. They recognise the difference between efficiency and greening.
The cost per kilowatt hour is at least 20-30% cheaper than diesel in terms of both overall capex replacement cost and opex. All Pan African’s new sites will be fully designed as a hybrid site. This will reduce their Scope 1 emissions significantly. It also reduces their Scope 2 and Scope 3 emissions by reducing site visits.
Over the next 24-36 months they will also be renovating their existing sites, moving sites from reliance on diesel to solar first designs with an ESCO partner. They are using solar because it is hard to pioneer new technologies in Nigeria due to the fact that the country lacks the ecosystem to support new technology. State-of-the-art equipment is fantastic until something goes wrong and there’s not the technical skills locally to repair your equipment. This leads to a high Mean Time To Repair (MTTR) which forces players to go back to utilising diesel generators, which is the precise outcome they are seeking to avoid. Reliability and resilience are going hand in hand with cost reduction.
American Tower has tried to standardise the power systems used for its operations, to optimise supply chain and spares management. Reducing equipment variety reduces difficulties with maintenance and upgrading, whether it comes to keeping an inventory of spare parts, or managing firmware updates. However, American Tower reviews new technologies frequently.
Reviews begin on the technical side to make sure suppliers’ processes match American Tower’s own processes. Once you pass those technical gates you move to the CTO’s team. They will look at how your units work in a lab, but they will also want to see how it works in the field. If your technology works well in Burkina Faso then you might be on to something. Once you pass through all these gates American Tower will want you to standardise your solution for its opcos and provide a scale discount.
Helios Towers has a set of twelve key deliveries partners, which they have reduced from an original 60, as well as a broader list of other technology suppliers, but their introductory process is very similar to that of American Tower. Helios Towers’ current innovation hub focus is the site performance analysis team. At the moment the communication and analysis of data from sites is quite manual.
Towercos are looking at new technology all the time. American Tower is looking at fuel cells, wind and other technologies at present. Storage tech is also very important, with various lithium-ion batteries under review, as well as other chemistries like Vanadium Redox because it is so resilient.
Wind as a power source has been under review for some time. There are questions of space and regulation of additional towers for turbines at telecoms sites. There’s the question of whether to attach wind turbines to existing sites and protect their structural integrity and shareability.
American Tower are also exploring bleeding edge technology by supporting the MIT and Princeton. American Tower research projects are looking at intercellular structure of solar panels. The towerco is also partnering with remote monitoring solution research institutions to help examine how storage systems operate.
Vertical Bridge likened their move to carbon neutrality and growing awareness of environmentalism to the changes that took place in the last decade in workplace safety – a necessary step to further evolve towards a mature industry. The momentum behind hybridisation, solarisation and energy efficiency is unstoppable. Towercos are looking for partnerships with their suppliers as they want to be ready to move with technology as it develops. 5G, small cells, mini-macros, densification and more are going to reshape networks and towercos need to understand these technologies as they are developed to ensure they are deployed in an efficient and green way.