wednesday 27th may 12:00 bst | 13:00 cest/sast | 16:30 ist ... · 3 | esco roundtable borderless |...

| ESCO Roundtable Borderless | Wednesday 27th May 12:00 BST | 13:00 CEST/SAST | 16:30 IST | www.towerxchange.com1

Cover image courtesy of Camusat

To discuss your participation, contact Sarah Kerr on +44 7714 775700 or email [email protected]

Organised by:Lead Sponsors:

Co Sponsor:Co-host:

Tower Xchange

ESCO Roundtable BorderlessA Digital TowerXchange Event – Don’t lose touch with your peers A digital roundtable to discuss how ESCOs are positively impacting efficiency, service quality, environment and community

Wednesday 27th May 12:00 BST | 13:00 CEST/SAST | 16:30 IST


What is the ESCO Roundtable Borderless?

A virtual roundtable including presentations by key stakeholders, discussions by ESCOs and MNOs and digitally facilitated networking.Our goals:

< Create a digital meeting place to keep the industry connected while global travel is restricted, including digital networking< Increase understanding of the ESCO business model, accelerate adoption by MNOs and towercos, with the goal of scaling ESCOs faster< Share information on the successes of already active ESCOs, and the pipeline of upcoming ESCO opportunities from MNOs< Create enduring content on the ESCO sector through a post-event report to be published in June< Evangelise the ESCO model to prospective investors, thereby attracting more funding at lower cost, with a view to deepening the pool of viable prospective ESCO partners

ESCOSIn-house O&M

MNOs TowercosB2B and B2C

EAAS

Community power

Solar lanterns

Retail outlets

Phone charging

Schools

Data centresFibre PoPs

Commercial & industrial off-

takers

Agricultural off-takers

Feed-in-tariff to grid?

Investors

Cleantech

Utilities, O&G

Infrastructurefunds

Private equity

Development

Bank debt

Export credit agencies

Installation& service

Data collection and utilisation

EAAS

EA

AS

EA

AS

EAAS

Technologyagnostic ESCOs

AggregatorESCOs

PowercubesPowercubes

3rdpartyO&M

Energy system componentsBatteriesFuel cells

CapacitorsControllers

InvertersAir

conditioning

GensetsSolarWind

Biomass

Engaging the entire ESCO ecosystem

Source: TowerXchange

IPPs

Micro grids

Solar farms

Wind farms

Small biomass

and hydro plants

Why should you register for the ESCO Roundtable Borderless

Join our sessions from you home office or living room

Digitally network with peers through a dedicated networking tool

Hear the latest ESCO market update from TowerXchange

An exclusive update from Orange, the ESCO trailblazer

Hear direct from ESCOs on their latest successes

Understand the upcoming pipeline of ESCO deals


The Energy Services Company (ESCO) business model achieves launch velocity

ESCOs operate power systems at >20% of Africa’s unreliable grid and off-grid cell sites, rising >50% by 2021, while a next generation of ESCOs can ease financial pressure on Asian MNOs and towercos

IPT pioneers guaranteed savings model for IHS Nigeria

Ethio Telecom RFP for an initial 1,200 sitesnears conclusion

Energy Vision operates Africa’s first ESCOfor Airtel Gabon AST scales to 10,000 sites, Ardom improves

margins through Indian market turbulence

Millicom Chad partners with Aktivco ESCO opportunities in Pakistan, Philippinesand LatAm

Orange activates 10 year ESCO partnerships in six countries, three more imminent Sagemcom adds ESCO contracts with Orange

Sierra Leone and Liberia to DRC

Yoma Micro Power, Voltalia and Yoma Mandalay power hundreds of cell sites in Myanmar

Safaricom preparing ESCO RFP

IPT provides ESCO for Alfa and touch in Lebanon

Etisalat to launch 1,000 site RFP in Egypt

Orange reports uptime ratio improvementsof 30-40%

MTN has 13,000 potential ESCO sites

DPA powers 1,800 Econet sites, expands into C&I

Vodacom South Africa launches ESCO RFPfor 1,400 sites

ieng contracts over 700 ESCO sites across CAR, Guinea C, Liberia and Afghanistan


ESCO Roundtable BorderlessWednesday 27th May 12:00 BST | 13:00 CEST/SAST | 16:30 IST

Part one: Introduction to ESCOs by TowerXchange and Orange

12:00 Introduction to ESCO Borderless by TowerXchange < The format for today’s digital roundtable and how to join the

networking < The scale of the current ESCO market < Forecasts for the continuing growth of ESCOs Matthew Edwards, Head of Research, EMEA, TowerXchange

12:10 What Orange expects from its ESCOs < Why Orange has chosen to work with ESCOs < Orange experiences from live ESCOs in six countries, managing

3,000 cell sites < Expectations for ongoing ESCO relationships < How Orange will support the maturation of the ESCO ecosystem Hervé Suquet, CTIO, Orange

12:25 Q&A

Part two: ESCO Q&A

12:30 How each ESCO is solving their partners’ power problems < What is each ESCO’s footprint, future plans and what makes them

unique? < How can and ESCO adapt to limit the impact of the coronavirus

outbreak on networks? < What are the typical improvements in site availability once sites

transfer to ESCO-management?

< What is the case for ESCOs to manage on-grid as well as off grid / bad grid sites?

< How does combining energy services with security, passive and active maintenance help minimise energy usage?

< How can the ESCO model be versioned to suit towercos? < How do you balance maximising legacy equipment lifespan

against site modernisation? < What improvements can be unlocked by an ESCO audit of site

assets and operation? Thibaut de Rodellec, Deputy CEO, Camusat Gabriel Bou Gebrael, General Manager – Telecom Services, IPT PowerTech Kadri Hakim, Co-CEO, i-eng Further ESCOs to be confirmed

12:55 Q&A

Part three: The ESCO Pipeline

13:05 MNO requirements < What is motivating each MNO to explore partnering with ESCOs? < How will partners be evaluated & how will success be measured? Siphile Sibaya, Infrastructure and Facilities, MTN Group Further MNOs to be confirmed

13:20 Q&A

13:30 ESCO Borderless Concludes

ESCO Borderless is our digital roundtable and special report brand, which brings together the ESCO, MNO, supplier and investor ecosystems to share information and network. The ESCO Roundtable Borderless will combine discussions and digitally facilitated Q&A sessions. Networking will be encouraged through a dedicated meeting app and through individual introductions, for those who want to take conversations offline. The ESCO Borderless Report will follow in June.


Our speakers

Hervé Suquet

CTIO

Orange

Gabriel Bou Gebrael

General Manager –

Telecom Services

IPT PowerTech

Kadri Hakim

Co-CEO

i-eng

Thibaut de Rodellec

Deputy CEO

Camusat

Siphile Sibaya

Infrastructure and

Facilities

MTN Group

Matthew Edwards

Head of Research,

EMEA

TowerXchange


Lead Sponsor

Camusat

In 40 years Camusat has become one of the market leaders in the implementation of telecom infrastructures and one of the most experienced network developers in the world with over 2.900 employees across five continents. Expert on 5 business lines (telecom site construction and installation, power systems & renewable energy, active equipment installation, fixed and fiber networks deployment and managed services.) Camusat Group fully support the constant evolving telecom actors’ needs, building quality telecom network infrastructures, and preparing the ground for the deployment of future communication technologies.

At the end of 2017, Camusat launched a new activity through its in-house investment vehicle Aktivco. This investment vehicle along with Camusat’s worldwide operational capacity is answering the telecom sector’s need to outsource its energy infrastructure. Aktivco holds and manages energy assets over a long period, thus allowing telecom operators to focus on their core business. Already leader in Africa with more than 2,500 telecom sites under Esco model, Aktivco plan to deploy 10,000 sites by 2022.

Flawless execution, quality services and innovative solutions developed by R&D department allow Camusat Group to meet their stakeholders’ objectives.

www.camusat.com

Lead Sponsor

ieng Group

Established in 2007, ieng Group is a leading provider of EPC and O&M services for the telecom and power industries in Africa and Emerging Markets. The Group has operations in 18 countries in Africa and Asia and employs 2,000 full-time employees. The Group established CREI (Communication and Renewable Energy Infrastructure) as its investment arm that develops, owns and operates a portfolio of renewable energy assets across Africa and Emerging Markets. Leveraging on the reputation, operational/ technical expertise and network of ieng Group, CREI aims to become a leading player in the ESCO Industry. The firm believes in reducing environmental impact and saving on CO2 emissions by deploying more energy-efficient power solutions thus providing a valuable alternative to operators that seek to outsource their power generation requirements.

www.ieng-group.com

Lead Sponsor

IPT PowerTech

IPT PowerTech Group is a leading full-fledged energy systems integrator, and complete energy-efficient solutions provider; offering the Largest portfolio of customized telecom hybrid solutions worldwide

with advanced inhouse solutions development and manufacturing capabilities.

IPT Powertech Group is also a complete telecom infrastructure solutions provider combining telecom services expertise with managed services proficiencies with more than 4,500 specialists on board across Middle East, Africa and South East Asia.

Through our unique model, coupling our innovation in energy savings solutions along with our telecom infrastructure services expertise we have developed to become the largest T-ESCO globally with more than 10,000 sites under full management, where power is sold as a service on full or partial OPEX model basis.

www.iptpowertech.com

Co Sponsor:

Caban Systems Caban Systems, headquartered in Silicon Valley, is a technology company focused on designing and manufacturing lithium-ion energy storage solutions for the telecom industry. Our connected platform delivers real-time remote management optimized to provide clean and reliable power for bad-grid, off-grid, and multi-tenants in co-located sites. It’s propriety design enables a reduction of up to 85% in operational costs by eliminating diesel and minimizing maintenances. Caban operates a manufacturing line in California and has operations throughout in LatAm, North America and the MEA.

www.cabansystems.com

Our sponsor


Networking is an essential part of the event experience, and the same is true at ESCO Roundtable Borderless.

For our speakers, sponsors and delegates, we will be acting as a community host to facilitate networking through a dedicated ESCO Borderless App, which will stay live post-event to enable conversations and networking on the ESCO Borderless platform.

Those that sign up as speakers, sponsors and delegates will be able to navigate the attendee list, contact people they want to meet and arrange follow-up conversations by email, phone and eventually face-to-face. And just like a real event, TowerXchange will facilitate introductions to keep missed connections to a minimum.

Digital Networking


ESCO Roundtable BorderlessWednesday 27th May 12:00 BST | 13:00 CEST/SAST | 16:30 IST

Industry breakdown of anticipated audience

Register as a delegate toget the full experience

£250+VAT

Sponsorshipoptions

To discuss sponsorship, contact Commercial Director, Sarah Kerr on

+44 7714 775700 or [email protected]

By invitation only: restricted to Director,VP and C-level attendees

MNOs

ESCOs

Energy systems

IPPs

Investors

Towercos

C&I off-takers

Utilities

26.7%

22%17.3%

7.3%

6.7%

3.3% 3.3%

8%

*Delegate passes are free to qualifying full-time employees of ESCOs, MNOs, and towercos.

Benefits Registrant Delegate* Associate sponsor ESCO sponsor

Watch the ESCO Roundtable Borderless

Access to the ESCO Roundtable Borderless Report

Access to live Q&A

Access to networking app

Facilitated introductions 3 5 10

Branding on Borderless website, marketing, app and report

Interview in ESCO Roundtable Borderless Report

Advert in ESCO Roundtable Borderless Report

Dedicated email shot to TowerXchange-selected data

Speaking role in ESCO Roundtable Borderless

Tower Xchange

mailto:skerr%40towerxchange.com


Introducing TowerXchange

Over the last eight years, TowerXchange has built an unrivalled reputation as the leading research firm and community host in the world of telecom towers and power.

TowerXchange are recognised for the quality of our research, for insightful agendas, and for delivering an outstanding customer experience. We pride ourselves in our ability to facilitate personal connections between decision makers within this small but influential ecosystem.

TowerXchange has published over 4 million words of research, built relationships with over 40,000 decision makers, and we have hosted 24 large scale events. TowerXchange Meetups are now proven, must-attend events for decision makers on five continents.

We have been tracking the emergence of ESCOs for several years, culminating in the publication of the TowerXchange ESCO market report 2018, and the inauguration of this dedicated new event designed to accelerate the emergence of ESCOs as a critical new category of stakeholders in communications infrastructure.

Matthew Edwards, Head of Research, EMEA, TowerXchange

Request a copy of our ESCO research

mailto:matthew.edwards%40towerxchange.com

mailto:matthew.edwards%40towerxchange.com


ESCOs now operate the power systems at almost 50,000 cell sites, rising to over 100,000 by 2024ESCO market-makers TowerXchange and Orange call for leaders of this new ecosystem gather at the ESCO Roundtable this October

While it impressive that the ESCO market has doubled in size in the last three years, even more importantly, ESCOs are achieving their performance objectives. Challenging Service Level Agreements (SLAs) requiring 99.95% uptime (the equivalent of 14 minutes of downtime per month) and above are being achieved and surpassed – TowerXchange has received multiple reports that ESCOs are regularly achieving 99.99% or even 100% uptime each month. Very few penalties for downtime are being incurred. Similarly, costs and carbon footprints are being reduced. The magnitude obviously varies by operating conditions, but savings in the range of 15-70% are regularly disclosed. There has not just been operational proof of concept; investor buy-in in the form of hundreds of millions of dollars of committed capital represents the financial proof of concept for the business model. Development Finance Institutions are a popular source of affordable debt for ESCOs, but we’ve seen private equity and infrastructure funds linked with the asset class. One thing that continues to attract a deepening pool of prospective investors in ESCOs is the healthy pipeline of opportunities that are coming to market, which promise to sustain ESCOs’ impressive growth trajectory in the coming years. TowerXchange is aware of live ESCO RFPs for a total of 6,600 sites across six countries in Africa (see figure one). We also understand that at least one of the Myanmar towercos has had an on-off ESCO RFP for several months, while the Pakistani market is beginning to open up with a landmark first ESCO proof of concept on almost 70 sites soon to be announced.

Read this article to learn:< The current scale of the telecom ESCO market - which companies are the market leaders?< The pipeline of live ESCO RFPs< Where will we find further growth beyond that near term pipeline?< Sizing the ESCO market in aggregate MW and total capital to be deployed to modernise sites< Forecast for the growth of ESCOs over the next five years

Keywords: Aktivco, Applied Solar Technologies, Ardom, Bhaskar Solar, Business Model, CREI, Camusat, Debt Finance, Distributed Power Africa, ESCOs, Energy, Energy Efficiency, Energy Storage, Energy Vision, Environ Solar, Fixed Price, Hybrid Power, ieng, IPT PowerTech, Market Forecasts, Multi-Region, O&M, Off-Grid, Orange, Renewables, Research, SLA, Sagemcom, Unreliable Grid, Uptime, Voltalia, Yoma Micro Power

Telecom energy services companies today own and operate the power systems at 49,316 cell sites. While that represents only 1% of the 4.7mn cell sites in the world, it also represents more than 10% of the estimated 400,000 site addressable market for telecom ESCOs. The ESCO market has grown by more than 5.5x in the last five years. Over the next five years, telecom ESCOs will spend US$1.8bn to deploy a total of 200MW of distributed generation and energy storage. Leaders from the telecom ESCO ecosystem are taking part in the virtual ESCO Roundtable Borderless on the 27th May.

by Matthew Edwards, Head of Research, EMEA, TowerXchange


Meanwhile, ESCOs that have navigated the turmoil of market restructuring in India are seeing light at the end of the tunnel. ESCO pilots continue in Central and Latin America. Looking beyond opportunities in the immediate term, TowerXchange has identified a next tier of 73,250 cell sites where conditions are suited to partnerships with ESCOs. That five year pipeline totalling 79,850 cell sites represents a further 200MW of distributed generation and energy storage. Including sites where the power systems are already owned and operated by ESCOs, the market size aggregates to a total of 300MW, much of it renewable. We estimate the value of the telecom ESCO market, in terms of total capital outlay on site modernisation in the coming five years to be US$1.8bn. That market valuation is based on equipment vendors’ addressable market including both currently contracted sites not yet modernised, and the aforementioned five year pipeline of a further 79,850 sites, but adjusting for the lower capex deployed at on-grid sites. Turning to the ESCO market leaders (see figure two), you could describe any of seven different ESCOs as the market leader, depending on how one defines market leadership. < In sheer site count terms, IPT PowerTech is the world’s largest telecom ESCO with over 10,000 sites across Lebanon, Guinea and through their ‘guaranteed savings plan’ with IHS Towers Nigeria

Figure one: Live ESCO RFPs known to TowerXchange

How we define a telecom ESCO

TowerXchange has used a broad and inclusive definition of an ESCO in this study. We define an energy

services company (ESCO, sometimes known as a TESCO – Telecom Energy Services Company, or RESCO

– Renewable Energy Services Company) as any company which deploys their own capital to acquire

energy equipment for telecom cell sites, then selling energy back to the site owner (MNO or towerco),

either charging a fixed monthly fee or charging by the kWh consumed.

An alternate model is the ‘guaranteed savings’ model, under which the towerco or MNO continues to

deploy their own capex, but their ESCO partners still take a risk in guaranteeing the performance of

their systems<

Source: TowerXchange, 2019 Q4

Orange Mali1,800

Vodacom South Africa 1,400

Ethio Telecom 1,200

Safaricom1,200

Orange Cameroon 300

Etisalat Misr1,000


Figure two: ESCO pioneers by site count

Source: TowerXchange, 2019 Q4*Unverified site count

IPT PowerTech 10,200inc 6,000 Nigeria,

2,500 Lebanon,

1,700 Guinea

Mahindra Powerol, India 3,500

Sagemcom 1,000across DRC, Liberia, Sierra Leone

Environ Solar / Bhaskar Solar, India 800

ieng’s CREI 736inc 400 Guinea, 200 Liberia, 126 CAR, 10 Afghanistan

Applied Solar Technologies,India 9,150

Camusat’s Aktivco 2,000across Burkina Faso, Chad,

Cote d’Ivoire, Niger

Energy Vision 9,800including 500 Gabon, 700 Nigeria,

8,600 India via Tower Vision

Distributed Power Africa2,000

Ardom, India 500 Ascot 400

inc 320 Sudan, 60 Greece,30 Indonesia

Cambridge Energy Resources, India 970

*Pace Power, India 300 *Acme, India 100 *Caban Systems, undisclosed

*Enertika, CALA, 3,500

Biswal, Nigeria, 2,800

*Mantrac, Nigeria, 1,200

Yoma Micro Power, Myanmar 250

Voltalia, Myanmar 160

OMC Power, India 150

MediPower, Italy 150 Undisclosed, Pakistan 70

HYBRICO, CALA 50


< Camusat’s Aktivco may be the fastest growing ESCO, having won contracts from Orange in four African countries totalling 2,000 sites, with at least one more award imminent< India’s Applied Solar Technologies (AST) has the highest site count of ESCO sites under the fixed cost model, with over 9,000, supplemented by a solar rooftop business for other C&I off-takers< The Energy Vision extended management team provides energy as a service to just under 10,000 cell sites, including Africa’s oldest ESCO with Airtel Gabon, a recent contract win for 700 sites from a Nigerian towerco, and via their relationship with India’s Tower Vision, which provides energy as a service on all 8,600 sites in their portfolio< If you want to measure market leadership by

Figure three: Comparing towerco growth in MEA from 2009 with ESCO growth six years later Source: TowerXchange, 2019 Q4

organic growth, the Yoma Micro Power portfolio has grown 25x in the past 18 months: they had 10 hybrid power plants serving towers, communities and commercial and industrial (C&I) off-takers in Myanmar a year and a half ago – that figure is up to 250, and they’re targeting 2,000< Speaking of telecom ESCOs that also serve C&I off-takers, the market leaders in this category are Distributed Power Africa, which provides power to 1,800 Econet cell sites, but also provides installations up to 5MW, serving C&I customers as well as 200 PoPs, including data centres and switching centres, for Liquid and DFA

A review of credible ESCOs must also mention CREI, the new investment vehicle from ieng, which is

deploying ESCOs for Orange CAR and for MTN in Guinea and Liberia. Sagemcom also has 1,000 ESCO sites for Orange in three countries.

Turning to India, several credible ESCOs have emerged with leaner processes and improved margins after the turbulence of MNO market consolidation. The aforementioned AST lead the way, but Mahindra Powerol operates 3,500 sites on an energy as a service (EAAS) basis, most for American Tower. American Tower, alongside Indus Towers, are also among the principle customers of the impressive Ardom.

New ESCOs are emerging serving new markets. Engro’s Reon are poised to make a big impact in Pakistan, alongside SBEEC which provides smart metering for 1,000 sites, with intention to expand into full EAAS. In Latin America, HYBRICO and Caban Systems are piloting ESCOs for MNOs and towercos, while Enertika claims to be providing an EAAS-type service focusing on air conditioning at 3,500 sites.

We have not seen a disruptive innovation like ESCOs, with the potential to unlock new capital, new efficiencies and performance improvements in the operation of communications infrastructure, since the advent of the towerco business model. Indeed, when one overlays the adoption of ESCO with the adoption of towerco partnerships six years later in MEA (see figure three), you can see there is a precedent for the continued scaling of ESCOs. ESCOs already operate more than 10% of the cell sites in bad grid markets – they already operate 20% of such sites in SSA, rising to 50% by 2022.

Towerco sites

ESCO sites

20092015

20102016

20112017

20122018

20132019

20142020

20152021

20162022

20172023

20182024

20192025

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000


Figure four: TowerXchange forecasts ESCOs will operate the power systems at 108,566 cell sites by 2024

Referring to figure four, TowerXchange forecast that the number of sites where power systems are owned and operated by ESCOs will more than double from 49,316 today to 108,566 by 2024. Three years ago, the narrative around ESCO concerned the search for “proof of concept”. Today, ESCOs have achieved launch velocity, and the next five years will be about driving to scale, whether that’s by engaging new MNO and towerco customers, attracting more low-cost capital, entering new markets, or adding incremental customers and new off-takers to ESCOs’ existing footprints<

Join the market leading ESCOs, plus many of their current and prospective MNO and towerco customers, and their investors and suppliers at the ESCO Roundtable, taking place on October 13 and 14, co-located with the TowerXchange Meetup Africa, at the Sandton Convention Centre, Johanneburg. The event will be co-hosted by TowerXchange and Orange, together with founding sponsors Aktivco and IPT PowerTech, and associate sponsors Energy Vision, ieng and Reon Energy.www.towerxchange.com/meetup/esco-roundtable

TowerXchange market sizing and forecasting methodology

TowerXchange doesn’t use mathematical models to map market size and to forecast growth. We prefer to speak to market stakeholders, quantify the scale of their businesses today, and speak to their prospective customers, size current RFPs, and identify the specific markets where they are considering partnering with ESCOs. We aggregate those insights to build our market sizing and forecasting data<

Source: TowerXchange, 2019 Q4

Year Asia sites MEA sites RoW sites Total ESCO sites

2015 6,654 200 1,810 8,6642016 8,854 13,980 1,810 24,6442017 £9,379 14,850 1,760 25,9892018 12,325 17,800 3,750 33,875

2019 24,430 21,126 3,760 49,316

2020 27,030 27,726 3,810 58,566

2021 30,930 32,376 4,010 67,316

2022 35,930 40,126 4,260 80,316

2023 41,930 47,626 4,510 94,066

2024 46,930 56,876 4,760 108,566

120,000

100,000

80,000

60,000

40,000

20,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

http://www.towerxchange.com/meetup/esco-roundtable


Keywords: Aktivco, Asset Register, Bankability, Batteries, Best of TowerXchange, Burkina Faso, Cameroon, Central African Republic, Congo Brazzaville, Cote d’Ivoire, DRC, Dimensioning, ESCOs, Egypt, Energy, Energy Efficiency, Ethio Telecom, Ethiopia, Guinea Conakry, Hybrid Power, IPT PowerTech, Liberia, Logistics, MNOs, MTN, Mali, Niger, Off-Grid, On-Grid, Operational Excellence, Opex Reduction, Orange, Procurement, ROI, Renewables, SSA, Safaricom, Site Surveys, Site Visits, Skilled Workforces, Solar, Sudan, Unreliable Grid, Uptime, Vodacom

ESCOs emerging as critical newbuyers of telecom energy equipmentMTN, Ethio Telecom and Vodacom poised to follow Orange in partnering with ESCOs to drive operational efficiency and green energy

At the TowerXchange Meetup Africa 2019, in the Energy working group and ESCO round table, it was clear that ESCOs were emerging as critical stakeholders in telecom energy in SSA. Why? In Africa’s unforgiving operating environment, the gensets and batteries on which most cell sites rely do not last long. Ageing power systems result in increased instances of downtime. Diesel gensets often run 24/7, making fuel logistics critical to continuity of service, yet diesel refuelling is not the core competency of any MNO. Even though the cost of green energy has never been lower, only a single digit percentage of Africa’s cell sites run on green energy. Africa’s MNOs are among the largest power generators on the continent – they don’t want to be! All these factors are driving a growing number of Africa’s MNOs to partner with ESCOs. Towercos have made tremendous progress in improving uptime and efficiency in African telecoms. But the towerco business model breaks down in rural, single tenant environments. Towercos cannot achieve the necessary scale in smaller countries, especially where the operating environment in those countries is challenging. Finally, the towerco business model is not calibrated to emphasise green energy – most hybridisation entails renewing and upgrading battery banks, rather than progressing to full hybrid renewables. ESCOs hold the key to unlocking the capital investment in renewable energy solutions that can address the MNOs’ challenges, and fill a gap in the market left by towercos.

Read this article to learn:< Orange’s successes as ESCO pioneers in six, soon nine, African countries< MTN’s appetite for ESCO partnerships< The requirements of Africa’s two largest ESCOs: Aktivco and IPT PowerTech< The answers to ten frequently asked questions about ESCOs

By the end of 2020, Orange will be working with ESCOs in nine Sub-Saharan African countries – outside of their partnerships with towercos, almost all Orange’s power systems in Africa will be operated by ESCOs. MTN plans to transition the majority of their 13,000 retained towers in bad grid markets to ESCOs. Safaricom are exploring an ESCO in Kenya, Ethio Telecom has issued a substantial ESCO RFP in Ethiopia, and Vodacom is exploring ESCOs in DRC and South Africa. ESCOs will operate the power systems at more than half of Africa’s off-grid cell sites, or cell sites on unreliable grid connections, by the end of 2021.

By Kieron Osmotherly, CEO, TowerXchange


Orange pioneers the ESCO model Orange has activated ten year ESCO contracts in six countries (DRC, Niger, Guinea Conakry, Cote d’Ivoire, Liberia and Burkina Faso), with live RFPs for ESCOs in three more countries (Cameroon, Central African Republic and Mali). Since partnering with ESCOs, Orange reports network uptime ratio improvements of 30-40% in Burkina Faso and Niger. Even when sites go down, mean time to repair (MTTR) has been significantly improved. “It’s a partnership, not a supplier relationship,” explained Orange Deputy CTIO Jocelyn Karakula at the ESCO round table at the 7th Annual TowerXchange Meetup Africa. “We’re structuring deals such that ESCOs should be profitable from day one,” added Karakula, before concluding: “at this relatively early stage, our ESCO partnerships have been a success from an economics perspective, in some cases surpassing what was expected in the business plan.” MTN has 13,000 potential ESCO sites MTN retains around 40,000 towers outside their partnerships with towercos. The power systems at around 13,000 MTN sites could be handed over to ESCOs in the medium term. At the TowerXchange Meetup Africa 2019 Energy Working Group, MTN revealed that they have issued a non-binding proof

of concept (PoC) for an ESCO to assume an initial 100 of their 2,000 sites in Sudan. Diesel prices have recently trebled in Sudan, driving up opex in a market where 90-95% of cell sites run on diesel gensets 24/7. Under the Sudanese ESCO PoC, MTN is not proposing to sell their existing power assets, but is looking for a partner to replace those assets with renewable energy solutions. MTN are open to solar, wind, LPG – any alternative to diesel. Another ESCO PoC is in the pipeline for MTN Congo Brazzaville, with an RFP expected in Q120. MTN sees ESCO partnerships as a logical next step for their smaller opcos, including the aforementioned Sudan and Congo Brazzaville, plus Liberia, Guinea, South Sudan, Yemen, Syria and Afghanistan. MTN is less keen to partner with ESCOs where they already have a towerco partner:

in Nigeria, Cote d’Ivoire, Cameroon, Ghana and Uganda. Sites in MTN’s relatively good grid markets of Iran (~15,000 sites) and South Africa (~12,000 sites) are also unlikely to be handed over to ESCOs. MTN explained that their principle energy challenge in South Africa was not so much one of grid availability, which remained high, but more one of battery theft, which affected ~3,000 sites per year. MTN has not deployed much lithium-ion yet, and where it has, has not seen much dampening of theft. MTN currently sources most of their hybrid energy solutions from the big four OEMs: Huawei, ZTE, Nokia and Ericsson. Asked about their appetite for green energy going forward, MTN said they were acutely aware of their carbon emission reduction targets and taxes, and suggested they foresee using ESCOs as the primary vehicle to extend their rollout of green energy solutions.

The cherry on the cake: multi-tenant ESCO sites MNOs, Orange in particular, would like to see the ESCOs’ perimeter expanded to include maintenance of both passive and active equipment, site security and, ultimately, co-location of sites to multiple tenants, enabling the mutualisation of power systems and a full range of services to multiple MNOs. We are already seeing ESCOs building new sites for MNOs, deploying networks deeper into rural areas and accelerating digital inclusion. Another goal is for every operator in a given country to partner with an ESCO. Imagine the efficiencies ESCOs could enable if they were able to consolidate the primary or backup power systems on every site in a country, and share those resources with every MNO! We could see dramatic reductions in both capex and opex, as site visits would be dramatically reduced. And the impact in terms of carbon emissions reduction could be tremendous!


The requirements of Africa’s two largest ESCOs: Aktivco Aktivco is Camusat’s ESCO play, managing 2,000 sites in Chad, Burkina Faso, Cote d’Ivoire and Niger. Aktivco expect to build 250-280 additional sites per year across these countries. They anticipate closing two more ESCO contracts in new countries imminently, adding a further 1,000 sites. Around 40% of Aktivco’s sites are on grid, albeit those grid connections are of variable quality. For example, grid uptime is ~98% in Cote d’Ivoire, but still suffers short outages; the grid is also quite reliable in Burkina Faso, but connections are expensive; while in Chad, grid availability is closer to 60%, and there is an energy crisis in Niger.

Aktivco deploys their own powercube, ePower, but they aggregate best-of-breed components.

New technologies must be certified by Aktivco, which undertakes proof of concept tests in Romania. The requirements of Africa’s two largest ESCOs: IPT PowerTech IPT PowerTech is also an ESCO, operating 10,000 sites in SSA. Half are in Nigeria, where they operate the “guaranteed savings model” under which their client, IHS Towers, deploys the capital, but IPT takes the risk (and reward) from diesel savings. IPT operates a conventional ESCO model for Alfa and touch, the two MNOs in Lebanon, representing around 30% of IPT’s ESCO sites. The balance of IPT’s ESCO sites are in Guinea in a partnership with Orange. IPT is adding around 500 sites per year. Capacity shortages mean even in Lagos, the grid is online for only around five hours per day, so

all of IPT’s Nigerian sites are effectively off-grid. IPT is the largest of what was originally dubbed IHS’s “Big Five” partners, of which Biswal and M-P Infrastructure also remain active. Around 60% of IHS Nigeria’s sites have been hybridised, including the majority of those operated by IPT, although around 6,000 IHS Nigeria sites still run primarily on diesel. IPT has some sites on good grid connections outside Nigeria. IPT are open to exploring innovative energy solutions, which they test in their facilities in Lebanon. Ten frequently asked questions about ESCOs ESCOs already own or operate the power systems on more than 25% of SSA’s cell sites on unreliable grid connections or off-grid, and TowerXchange foresee that proportion approaching 50% in the next two years. As such, it is important to understand a few fundamentals about the ESCOs. What kind of energy equipment do ESCOs buy? While there are a couple of ‘technology agnostic’ ESCOs, Africa’s largest ESCOs deploy their own hybrid energy solutions. As such, manufacturers of containerised, plug and play hybrid energy systems will find it difficult to sell to ESCOs – so they may need to compete to win ESCO contracts directly. However, most ESCOs are aggregators of third party components, of which they ESCOs emerging as the fastest growing, and soon the largest, category of buyers in SSA.

Orange’s Jocelyn Karakula leads the ESCO round table


ESCOs standardise where possible, and are inclined to use proven solutions with which their field maintenance teams are familiar. Some ESCO partnerships include explicit targets to increase utilisation of renewables: “our green energy ratio was 3% - modernisation driven by ESCOs should drive this over 50%,” said one MNO. Most ESCOs continue to primarily use lead-acid batteries – “we’re open to lithium-ion,” said one ESCO “but not convinced”.

All equipment must integrate with the ESCO’s monitoring and management platform. Most ESCOs are at a relatively early stage in their evolution, such that vendor financing can be attractive to them, although operational delivery and the ability to achieve SLAs will always be their greatest priorities.

ESCOs consider total cost of ownership (TCO), not just the capital cost of solutions, and with ten year contracts, ESCOs’ TCO horizon may be longer than an MNO’s or even a towerco’s. How long does it take an ESCO to modernise its sites? It can take up to a year to negotiate the SLAs and KPIs, and to finalise an ESCO contract, but the process can be expedited when subsequent contracts are iterations of an initial agreement. Even when a contract is signed, ESCOs don’t start upgrading sites right away – they start with a comprehensive audit of sites to determine the ideal solutions. While ESCOs typically modernise the energy equipment at 2-4% of their portfolio per month, one their biggest challenges is the lag between the order and installation of equipment, which typically takes two to three months.

ESCOs aim to upgrade the energy equipment at the majority of their sites, typically over a 24 month period. Most ESCOs are prepared to run down any remaining lifecycle of legacy power systems before modernising sites. What savings are MNOs looking for when working with ESCOs? And how profitable are ESCOs? For Orange, targeted savings are based on a total cost of ownership (TCO) analysis, against a baseline based on the cost of passive infrastructure, energy opex and security.

“As many of the MNO’s costs are transferred to the ESCO, and Camusat was already providing managed services for many of these sites, we already know how much fuel goes into the existing sites, so we know inherited fuel and security costs,” said Orange’s partner ESCO Aktivco. “This is why the strongest ESCOs are already operational companies – we have a good understanding of the cost of a maintenance site visit. Sometimes we also absorb the MNO’s operational team, so we need to know the overhead costs too. We prefer the MNO to be as transparent as possible about their existing costs, otherwise we’d have to inflate our quote to be safe.” Of course ESCOs deploy substantial capex into site modernisation, the effect of which on opex is not always clear at the outset of the agreement. So it may be a couple of years before the full TCO can be compared before and after the portfolio has been fully modernised. Only then will we be able to make a final judgement about how profitable ESOs are.

Towercos’ appetite to partner with ESCOs Many emerging market towercos are rightly proud of their achievements in developing and providing power-as-a-service. Many of those towercos have invested substantial financial and human capital to develop the operational excellence necessary to achieve and surpass challenging uptime SLAs. “I like spending capex to reduce opex,” summarised the CEO of one African towerco. It will be a challenge to convince towercos with mature, accomplished energy services teams to relinquish that responsibility to ESCOs. But towercos entering a virgin market, such as Ethiopia, or towercos making their first forays into managed power services, would be well advised to seriously consider partnering with ESCOs


Orange proudly proclaim that their ESCO projects enable their partners to be profitable from year one, a suggestion not disputed by their biggest partners. With the ESCO’s fees fixed from the outset of the contract, achieving profitability is contingent upon reducing energy opex, which first means reducing diesel consumption. This in turn is dependent on operational performance and site modernisation. So just because an ESCO can be profitable in year one, doesn’t mean to say it will be. Some aspiring ESCOs have questioned whether that near term profitability is achievable without the ESCO bundling passive and active maintenance, together with site security. What is clear is that all stakeholders agree that the ESCO business model is significantly enhanced when additional MNOs from the same country partner with the same ESCO. How do MNOs evaluate respondents to an ESCO RFP – is price the primary factor? Of course price is a significant factor, but the financial strength of the ESCO company is critical – it is important for the ESCO to demonstrate their capability in the long term. There is also a growing feeling that it would be healthy to have more than the two to three ESCOs that are currently securing the majority of contracts in Africa, to mitigate counterparty risk. “Some MNOs are less focused on site modernisation, they just have price and performance targets,” said one ESCO. “Other MNOs want to understand how you will reach those performance targets, for

example in terms of the number of sites modernised per month, and the impact on their green energy ratio.” How are ESCOs paid, in what currency, and is there indexation? While there are variants on the model, most ESCOs agree a fixed fee per site per month. There are typically a number of different rates for different site typologies. One ESCO revealed that they were paid in three parts:< The fee related to energy is paid in whatever currency they buy the fuel in<The O&M fee is typically paid in local currency< Fees related to capex are typically paid in Euros or U.S. dollars so as to minimise FX risk Indexation tends to be calibrated according to the energy mix. Where energy primarily comes from the grid, indexation is primarily linked to CPI. Where energy primarily comes from diesel, indexation is primarily linked to the price of diesel. How do ESCO agreements accommodate changes in power load, as next generation networks are rolled out or as co-locations are added? Orange explained that they undertake an audit of every site prior to opening an ESCO RFP, assessing the current and future configuration – so there’s visibility of site configuration changes anticipated, for example with 4G overlays increasing power requirements. Orange’s terms are described as

“flexible enough to accommodate change over the ten year term of the ESCO contract.” One of Orange’s partner ESCOs added “We are aligned to our MNO partners’ changing power load. We know that if a site starts with a 3kW load, it probably won’t stay at 3kW over the ten year term of the contract. The load, the site typology, even the location of the site may change. Flexibility is key, but yes our pricing changes based on load and as the site typology changes over the years.” Do ESCOs acquire the existing power systems at cell sites when they assume control? Some ESCO contracts transfer ownership of legacy power assets from MNO to ESCO, but more often, the ESCO receives an indefinite right of use for free. In either case, the ESCO will deploy its own capex to modernise, after which the ESCO will own the power equipment. What happens at the end of the ESCO contract? In the unlikely event that an ESCO contract is not extended, the MNO typically has a reversibility clause giving them the right to buy the power equipment. What is the addressable market for ESCOs? There are a range of opinions on this matter, but most commentators agree that cell sites in countries with a significant number of sites off-grid on unreliable electricity grid connections, where grid


is usable on average for less than 16 hours per day, are the most obvious targets. Where emerging market towercos remain reluctant to partner with ESCOs, towerco sites might be medium term rather than near term targets for ESCOs. ESCOs can still partner with MNOs alongside a towerco, as exemplified by Orange Cote d’Ivoire, which is working with both IHS Towers and Aktivco. We have already seen ESCOs take over 100% of the sites for MNOs in countries without towercos present – a fact which illustrates that the addressable market for ESCOs includes on-grid as well as bad grid and off-grid sites. The near term pipeline of ESCO opportunities consists of ~3,000 Orange sites in Mali, Cameroon,

the Central African Republic and Egypt, the opportunity in the latter country being subject to resolution of issues related to diesel subsidies. Orange has identified a total of 15,000 sites, in 13 countries, which could be transferred to ESCOs. A substantial ESCO RFP is in progress from Ethio Telecom, while another large ESCO opportunity is imminent in Kenya with Safaricom. MTN has 13,000 cell sites in bad grid markets, and is keen to explore ESCO partnerships – MTN has an ESCO proof of concept live in Sudan and another imminent in Congo Brazzavilla. Vodacom has long been considering partnering with an ESCO in DRC and, potentially, in South Africa. Once an ESCO is active in a country, convincing the other MNOs to partner with the same ESCOs would

unlock significant economies of scale, so this is also a priority. The “TowerXchange ESCO Market Report 2018” identified a total addressable market for ESCOs of 125,280 cell sites in SSA and MENA, of which around 20,000 (16%) are already contracted. How will the role of the ESCO expand in the future? The scope of ESCOs is expanding all the time, from power-as-a-service to full passive and active infrastructure maintenance and security. ESCOs are already starting to expand beyond cell sites to manage the power systems at data centres, technical sites and MNOs’ retail outlets. ESCOs are also starting to explore community power and, potentially in the future, co-location sales and the mutualisation of power systems to all operators in a market. We are already seeing ESCOs build several hundred new sites per year. Special thanks to Jocelyn Karakula, Deputy CTIO of Orange, for moderating the ESCO round table, and to the energy equipment buyers who attended this year’s energy working group, including Aktivco, IPT PowerTech and MTN. TowerXchange are partnering with Orange to host an “ESCO Roundtable” for the pioneers of this transformational model. Checkout www.towerxchange.com/meetups for more information

The energy working group at the TowerXchange Meetup Africa

https://www.towerxchange.com/meetups/

wednesday 27th may 12:00 bst | 13:00 cest/sast | 16:30 ist ... · 3 | esco roundtable borderless |...

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