TowerXchange’s annual telecom ESCO market report 2018...TowerXchange’s annual telecom ESCO market report 2018 ... The Energy Services Company business model for telecom has achieved

| TowerXchange ESCO Market report 2018 | www.towerxchange.com1

A detailed study of the projects and providers of energy as a service to telecom tower companies and MNOs

TowerXchange’s annual telecomESCO market report 2018

Image courtesy of Yoma Micro Power© Site Seven Media (trading as TowerXchange), 2018

www.towerchange.com


Contents4 Executive summary5 TowerXchange’s research methodology5 How we define a telecom ESCO6 Business drivers to partner with ESCOs7 The current state of the telecom ESCO market13 Early adopters of ESCO partnerships15 ESCO business models (in theory)16 ESCO business models (in practice)18 Community power19 ESCO economics21 Investibility22 Critical success factors24 ESCOs and towercos: where they are, and aren’t, competing for the same sites27 Growth of towercos compared to growth of ESCOs29 Quantifying the addressable market for ESCOs – a regional breakdown 30 Middle East and Africa 32 India 34 Myanmar 35 Afghanistan, Bangladesh, Cambodia, Pakistan and Indonesia 35 China 36 Central and Latin America and Europe

37 TowerXchange forecasts the telecom ESCO market to grow to over 67,300 sites by 202439 Who’s who: what you need to know about the leading ESCOs and their partners

51 Appendices 51 Market research data used in this report 52 Orange interview 57 Aktivco interview 61 Ascot interview 66 Ausonia interview 70 Bhaskar Solar interview 73 Energy Vision interview 79 Flexenclosure interview 82 GRIDSERVE interview 87 GreenWish Partners interview 91 ieng interview 94 IPT PowerTech interview 97 Voltalia interview

Index of infographics7 Figure one: The fragmented global ESCO market, by site count8 Figure two: Aspiring ESCOs yet to secure a contract (or yet to disclose that they have secured a contract)

9 Figure three: Who owns the energy equipment on the world’s cell sites?9 Figure four: ESCO sites by grid status10 Figure five: ESCO sites anchor tenants: MNOs compared to towercos11 Figure six: Current and prospective ESCO projects, MEA and Asia16 Figure seven: ESCO sites by business model17 Figure eight: ESCO contracts by business model20 Figure nine: Where does the capex go to hybridise a cell site for the ESCO model?23 Figure ten: ESCO contract duration (where disclosed)27 Figure eleven: Comparing towerco growth from 2009 with ESCO growth six years later29 Figure twelve: ESCO sites by geographical market30 Figure thirteen: Launch velocity: 17,600 MEA cell sites contracted by ESCOs since Q21631 Figure fourteen: The addressable market for ESCOs in MEA33 Figure fifteen: The addressable market for ESCOs in India36 Figure sixteen: Breakdown of the 389,920 site addressable market for telecom ESCOs in 201837 Figure seventeen: TowerXchange forecasts ESCOs will have 67,300 cell sites by 2024

TowerXchange’s annual telecom ESCO market report 2018A detailed study of the projects and providers of energy as a service to telecom tower companies and MNOs

Welcome to TowerXchange’s inaugural market report examining the growth of telecom Energy Services Companies (ESCOs). In this report we will summarise the current state of the ESCO market by provider and by project, finding a total of 30,375 cell sites worldwide managed by 20 active ESCOs. We breakdown the current and addressable ESCO market by geography, and conclude with a forecast for the growth of the ESCO market through 2024.



Executive SummaryThe Energy Services Company business model for telecom has achieved launch velocity. In 2015 telecom ESCOs had contracts to manage 8,664 cell sites, and over the subsequent three years we’ve seen 251% growth in terms of the number of sites managed by ESCOs. TowerXchange has identified 20 active telecom ESCOs, who between them own and operate the energy equipment at 30,375 cell sites at time of writing (September 2018). 15,880, or 52.3% of contracted ESCO cell sites are in the fastest growing geographical market: Sub-Saharan Africa. 6.3% are in the new MENA market. 21.1% of sites are in the oldest ESCO market, India, where growth has slowed due to MNO and towerco consolidation. Growth prospects are healthier in Myanmar, where 7.8% of the world’s ESCO sites are located. Despite the popular assumption that grid power is too widely available and reliable for the ESCO model to work in developed markets, 6.7% of the world’s ESCO sites are in Central America, with 5.6% in Europe. Of the sites where ESCOs own and operate the power systems, a little under two thirds (63.1%) of those sites are owned by towercos. A little over a third (36%) are owned by MNOs. MNOs and towercos alike increasingly

recognise ESCOs as proven business partners, able to deploy capex into long-term payback hybrid and renewable energy solutions, reducing energy opex and carbon footprints, while improving uptime and quality of service (QoS). ESCOs deploy anything from US$10,000-$40,000 of up front ‘improvement capex’ to hybridise the power systems at a cell site, with India generally at the lower end of that range, Africa at the upper end. The majority of ESCO contracts are of a ten year duration. 69% of ESCO contracts used a fixed monthly fee model, often combined with tiered pricing based on site load. A variant on the fixed energy model has emerged for towercos: the guaranteed savings contract, pioneered by IPT PowerTech and their partners IHS Towers. 9.5% of ESCO contracts use the guaranteed savings model. 9.5% of ESCO contracts use a more variable, kWh consumption or PPA model. 73.7% of ESCO sites are off grid or on unreliable grid connections. Perhaps more importantly, 23% of ESCO sites are on grid, proving that ESCOs can extend their business model to manage backup power for sites with reliable grid power.

TowerXchange has quantified a 389,920 site addressable market for ESCOs, of which 7.8% have been contracted to date, suggesting a long runway for growth. Cost of capital remains the number one challenge ESCOs must overcome. Towercos own the energy equipment at 53% of the world’s cell sites, and many of those towercos can access capital at a low single digit cost. ESCOs are generally less mature businesses, with the majority dependent on debt and equity which mean their cost of capital can be five times (or more) that of a towerco. This explains why seven of the last eight ESCO contracts have been with MNOs rather than towercos, with a similar proportion in the near-term pipeline. TowerXchange forecasts that the ESCO industry will celebrate contracting its 50,000th site during 2021, reaching 67,300 sites worldwide by 2024. There is potential for upside in this forecast should more major MNOs or towercos adopt a policy of partnering with ESCOs across their footprint. Our study concludes with interviews with a selection of the world’s leading telecom ESCOs and their key strategic partners, including Aktivco, Ascot, Ausonia, Bhaskar Solar, Energy Vision, Flexenclosure, GRIDSERVE, GreenWish Partners, ieng, IPT PowerTech, Voltalia and pioneering MNO Orange<


TowerXchange’s methodology is simple: we speak to the management teams of the ESCOs, plus their clients, suppliers and investors, we ask them to share key data points with us, then we consolidate and analyse the results. It should be noted that we do not verify ESCO site counts,

nor their descriptions of contract structures, by reviewing the actual contract – this is impossible due to non-disclosure agreements. Inevitably this means there will be some dispute about portfolio sizes, and as to whether what one company calls an ESCO is defined as such by another company. TowerXchange’s focus has been to identify every ESCO and ESCO-type contract and supplier – we’ll leave it to the reader to make up their own mind whether what one company calls an ESCO satisfies their own definition. TowerXchange don’t use complex models to forecast the growth of the ESCO market – we rely on simpler market data – how many sites are there live RFPs for now? And in which countries do we know MNOs and towercos are considering partnering in the future? And how many sites do those MNOs and towercos own in those countries? We lengthen out the forecast timeline because complex deals like ESCO partnerships inevitably take longer to agree than stakeholders anticipate, then we moderate the forecast to assume one or two ESCO deals are absorbed by tower sales or absorbed into towercos power-as-a-service agreements <

How we define a telecom ESCOTowerXchange 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. For the sake of clarity, a tower company providing a full power-as-a-service model is not included as an ESCO unless that power is provided in partnership with a specialist third party which owns (or at least co-owns) the energy assets<

TowerXchange’s research methodology

Author: Kieron Osmotherly, TowerXchange


Business drivers to partnerwith ESCOsThe principle drivers for MNOs and tower companies (towercos) to partner with ESCOs are simple: the need to reduce operational costs and the cost of network expansion, whilst maintaining high uptime standards and the associated quality of service experience for subscribers.

While reducing the cost of cell site energy is a key driver, making energy costs more predictable, to the point of levelising the cost of cell site energy, is similarly important. Energy represents around 50%[1] of the total operating costs for many cell sites, particularly those off-grid or on unreliable grid connections.

Whilst renewable energy programmes are progressing from pilot to full rollouts, the majority of off-grid / unreliable grid cell site power systems are still dependent on diesel, the cost of which is compounded by delivery costs and pilferage. Pilferage is widely confessed to account for 10-15% of diesel costs, but in extreme circumstances it can rise above 30%.

Optimising energy efficiency is a capitally intensive undertaking. While many MNOs are struggling with debt-laden balance sheets, their capital expenditure priorities are often acquiring new spectrum and extending / densifying their networks – hybridising cell site energy systems is seldom at the front of

the queue. While towercos that provide power-as-a-service do have an incentive to reduce their cost of sales by improving energy efficiency, they seldom push beyond the ‘quick wins’ of battery hybridisation. While some power-as-a-service towercos have invested in solar hybrids, their priority is always going to be to lease-up their towers and extend their networks. Only ESCOs have an undiluted focus on cell site energy efficiency. Partnering with ESCOs also reduces the complexity of sourcing, deploying, operating and managing hybrid power systems. Such power systems often combine many different suppliers and technologies, so the ESCO becomes the single point of contact for cell site energy <

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Energy Vision has delivered Power Availability (PA) of 99.99%, reduced CO2 emissions by 3,088 tons/year and reduced fuel consumption by 1,157m3 per year, equating to a 68% fuel and CO2 emission reduction! – Ofer Ahiraz, CEO, Energy Vision

“ “An ESCO contract is, before anything else, about balance sheet optimisation. When MNOs outsource the power to an ESCO, they convert it from a high cost power generation expense with exposure to fuel price, currency fluctuations and import risk, to long term fixed contracts thus creating predictability in opex whilst also reducing opex and total cost of operation – Charlotte Aubin, Founder, GreenWish Partners

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The current state of the telecom ESCO marketFigure one: The fragmented global ESCO market, by site count Source: TowerXchange

IPT PowerTech9,800

Enertika3,500

M-P Infrastructure2,000

Applied Solar Technologies4,000

Ascot[2]

2,110

Distributed Power Africa1,600

Aktivco2,000

Biswal2,000

Bhaskar Solar800

Ardom Towergen500

Cambridge Clean Energy, 464

Pace Power, 400

GreenWish Partners[3]

300

MediPower, 150

Energy Vision280

ACME Group, 100

Voltalia, 171

HYBRICO, 40

OMC, 150

Yoma Micro Power, 10


20 active ESCOs have over 30,000 cell sites between them: TowerXchange research has revealed that the energy equipment at 30,375 cell sites worldwide are currently owned and operated by 20 different ESCOs (see figure one). IPT PowerTech is the market leader, with 9,800 sites across Nigeria, Guinea Conakry, Lebanon and Myanmar. IPT has 32% of all ESCO contracted sites. Applied Solar Technologies reportedly has 4,000 sites and is the largest ESCO in India, where Bhaskar Solar (800 sites), Ardom Towergen (500), Cambridge Clean Energy (464), Pace Power (400), OMC (150) and ACME Group (100) are also active. New entrants HYBRICO have secured an initial 40 sites in Central America, with a pipeline to add hundreds more. ENERTIKA is the CALA market

leader, where they claim to have 2,000 sites, with a further 1,500 in Europe. Leading diesel and hybrid genset manufacturer Ausonia also has a 150 site ESCO business in Europe, trading under the brand ‘MediPower’, while their peers Ascot claims to have ESCO contracts on 2,110 sites worldwide: 60 in Europe, 30 in Indonesia, but the majority in the Middle East and Africa. Africa’s Aktivco is the fastest growing ESCO in the world, having contracted all 2,000 of their sites in the last two years. Aktivco are competing for contracts with GreenWish Partners (which secured a deal in DRC) and Voltalia, which is also active in Asia, and which claims to have the healthiest balance sheet among ESCOs, with a €180mn turnover and €900mn of assets on their balance sheet. The Who’s who section of this report includes profiles of 26 current and aspiring ESCOs as well as many of their partners. The six most credible prospective telecom ESCOs that have not yet secured contracts – or that have not yet disclosed that they have secured contracts – are listed in figure two.

Runway for growth: While the total of 30,375 ESCO sites represents just 0.7% of the world’s 4.4 million cell sites (see figure three), that statistic is misleading as TowerXchange has estimated that the addressable market for ESCOs is currently 389,920 cell sites, suggesting 7.8% ESCO addressable market penetration to date (see figure seventeen).

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IPT PowerTech currently manages power on 9,800 sites having signed ESCO contracts in Myanmar, Guinea Conakry and Lebanon and a Guaranteed Savings contract in Nigeria. This makes IPT PowerTech the leading T-ESCO globally – Khaled Habbal, VP & COO, IPT PowerTech

Many of our competitors are private equity backed, with a limited near-term capacity for investment whilst they re-finance. Voltalia has a very solid industrial background, €180mn annual turnover and over €900mn of assets on our balance sheet – we can afford to take a long term view - Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia

Figure two: Aspiring ESCOs yet to secure a contract (or yet to disclose that they have secured a contract) Source: TowerXchange

Cooltech CREI (ieng) Cysalys

Reon Energy Solutions Tillman GTS TowerPower


Referring to figure four, you will see that 73.7% (22,387) of the cell sites currently managed by ESCOs are on unreliable grid connections or off grid. Energy equipment is owned and operated by ESCOs at less than 10% of the total number of the world’s cell sites that are off grid or on unreliable grid connections (where grid power is usable for less than 16 hours per day).

ESCOs’ 7.8% penetration into their own addressable market, and their single digit penetration into the number of off-grid and unreliable grid sites worldwide, indicate the long runway for growth for ESCOs, assuming ESCOs can build compelling business cases to both secure the trust of MNOs

Figure three: Who owns the energy equipment on the world’s cell sites?

Figure four: ESCO sites by grid status

Source: TowerXchange


ESCOs

Towerco providing power-as-a-service

MNO

On grid

Unreliable grid

(<16 usable hours per day)

Off grid

Undisclosed

30,375

2,329,927

2,039,698

23% 31% 42.7%

3.3%

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ESCOs’ 7.8% penetration into their own addressable market, and their single digit penetration into the number of off-grid and unreliable grid sites worldwide, indicate the long runway for growth for ESCOs


and towercos, and assuming they can raise the necessary low cost capital.

Despite low penetration today, ESCOs are growing fast: TowerXchange analyses suggest that the number of cell sites managed by ESCOs has increased by 251% in the last three years (ESCOs had 8,664 sites in 2015). While growth in the Asian ESCO market has been relatively slow (33% over those same three years), growth has been driven by new ESCO projects in Africa (Nigeria, Gabon, Chad, DRC, Niger and Ivory Coast), and in MENA (Lebanon). The total number of ESCO sites in MEA has risen from a low base of 200 in 2015 to 17,800 today.

Towercos own 2.95mn (67%) of the world’s 4.4mn investible tower and rooftop sites. 63.1% of ESCO sites are owned by towercos – that’s almost in proportion. 36% of ESCO sites are owned by MNOs, with 0.9% undisclosed (see figure five).

Healthy pipeline for continuing growth: While the pipeline of the next 10,000 ESCO sites come almost exclusively from MNOs, most MNO ESCO contracts are for relatively small portfolios – hundreds at a time. An ESCO winning a contract with one of the 79 towercos that own 1,000 or more sites would obviously be more transformational in terms of scale.

Alongside the 12 countries in which ESCOs are currently active, TowerXchange has identified a near term pipeline of opportunities for ESCOs to contract over 10,000 more sites in at least eleven more countries, including Cameroon, Sierra Leone, Egypt, Mozambique, Madagascar, Liberia, Afghanistan, a second potential ESCO contract in Guinea Conakry, and potentially multiple opportunities in Iraq. In addition to the named countries, there are at least two near term opportunities in countries TowerXchange are not at liberty to name. A new 3,000 site ESCO opportunity is believed to be coming to market in India, where there may also be opportunities to drive scale by consolidating existing ESCOs in the country<


20,000

15,000

10,000

5,000

Figure five: ESCO sites anchor tenants: MNOs compared to towercos[4]

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Alongside the 12 countries in which ESCOs are currently active, TowerXchange has identified a near term pipeline of opportunities for ESCOs to contract over 10,000 more sites in at least eleven more countries

MNOs (36%)

10,950

Towercos (63.1%)

19,165


Figure six(a): Current and prospective ESCO projects, MEA


Burkina Faso: Aktivco Côte d'Ivoire: Aktivco Chad: Aktivco DRC: GreenWish+Sagemcom Gabon: Energy Vision Niger: Activco Nigeria: IHS ‘Big Five’: IPT, Makasa Sun, M-P Infrastructure, Biswal Lebanon: IPT Sudan: Ascot Zimbabwe: Distributed Power AfricaCountry with confirmed live ESCO(s)

ESCO RFP live or rumoured to be imminent

Confirmed live ESCO(s) with further RFPs live or rumored

No ESCO activity yet detected

Guinea Conakry: IPT with further RFP rumored


Figure six(b): Current and prospective ESCO projects, Asia


Country with confirmed live ESCO(s)

ESCO RFP live or rumoured to be imminent

Confirmed live ESCO(s) with further RFPs live or rumored

No ESCO activity yet detected

India: Applied Solar, Bhaskar Solar, Ardom Towergen, Cambridge Clean Energy, Pace Power, OMC, ACME Group with further RFP rumored

Myanmar: IPT, Voltalia


Early adopters of ESCO partnershipsOrange pioneers among MNOs: Among the MNOs, Orange has the most progressive attitude toward working with ESCOs, with five live projects totalling around 3,200 sites. Orange has ongoing RFPs for sites in multiple additional countries, of which two have been confirmed as Egypt and Madagascar. Airtel, Millicom and Mytel (Viettel) also have live ESCO projects, while Econet has carved out their own ESCO (Distributed Power Africa), and Ooredoo has partnered with IPT to provide power for 2,200 of their sites in Myanmar. Etisalat, mCel, Moov, MTN and Zain are all considering collaborating with ESCOs. In India, RCOM had been a pioneer of ESCO partnerships before the operator’s recent demise, with their infrastructure assets being acquired by Reliance Jio. Meanwhile, Vodafone India and Idea had been ESCO partners prior to the sale of their towers to American Tower. The transferability of those contracts to American Tower will likely be subject to the towerco’s exacting high standards. Towercos in India and Myanmar partner with ESCOs: Among Indian towercos, the aforementioned American Tower India continues to be a significant customer of India’s ESCOs, while Indus Towers and their soon-to-be merged counterparts at Bharti Infratel have also been ESCO clients for many years. Tower Vision and

Ascend Telecom also have a proportion of their sites managed by ESCOs. MNTI, one of Mytel’s towerco partners in Myanmar, has a contract with ESCO Voltalia to provide energy to 171 sites, while IPT PowerTech also provides the power systems for towerco PAMEL as well as their anchor tenants Ooredoo Myanmar.

African towercos more cautious about ESCOs: In contrast to India and Myanmar, Africa’s towercos

are currently more sceptical that ESCOs can improve upon their own successes in providing and improving the efficiency of cell site energy. The exception is IHS Nigeria’s ‘Big Five’ 10,000 site project, which some industry observers suggest is not a true ESCO as the towerco is contributing much of the capex.

ESCO DNA: the origin of the speciesESCOs generally come from one of four different origins: 1. Managed service providers with proven operational execution capabilities moving up the value chain to acquire and operate energy equipment.2. Energy equipment vendors (often containerised

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IPT PowerTech has recently renewed their contract with IHS in Nigeria and taken on the management of the power equipment on additional towers. We now manage 4,500 sites under a guaranteed savings model which makes us the largest of the different partners involved in the initiative – Khaled Habbal, VP & COO, IPT PowerTech


The rise of the in-house, operator-captive ESCO

A handful of progressive MNOs are starting to provide energy-as-a-service to third party tenants who lease space on their cell sites, and to clients in the local community, thus creating a new class of “operator-carve-out” ESCOs. The only publicly visible example of this to date is Econet’s Distributed Power Africa, which operates both the tower and power infrastructure for all 1,600 of Econet’s cell sites in Zimbabwe, with ambitions to extend the service to third party clients in South Africa, Mauritius, Kenya, Ghana and Nigeria. A less structured, but no less innovative, approach has been taken by Safaricom, which is providing power-as-a-service to tenants on its cell sites – effectively acting more like a power-as-a-service towerco than an ESCO. A similar trend emerged in the telecom tower industry, where increasingly we see MNOs carve out and keep their towers rather than sell them to towercos. Operator-captive towercos (towercos that are themselves at least 51% owned by parent MNOs) now own 51% of the world’s cell sites. Could we see a similar rise of the operator-captive ESCO?<

hybrid energy solution providers) extending beyond vendor finance to take more risk by deploying their own capital.3. Utility scale independent power producers diversifying into telecom.4. Pure ESCO startups.

We have not yet seen one of the electric utility or oil and gas giants (such as Engie or Total) directly enter the telecom ESCO market, but TowerXchange are aware of several that maintain a watching brief over the market – whether they eventually enter as an operational ESCO or as an investor in an existing ESCO remains to be seen.

There are countless small, local quasi-ESCOs found among an ecosystem of telecom managed services providers that is highly fragmented and localised. Some of those small local managed service providers own and operate the energy equipment at a handful of cell sites. Indeed, technically one could say that land owners who provide power as well as real estate to cell sites are providing an ESCO-like service. However, this ‘Mom and Pop’ / small and medium enterprise-led layer of the ecosystem is both unquantifiable and difficult to scale, and as such they have been omitted from this report<

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We now see technology companies, pureplay ESCOs, different types of investors and O&M contractors all submitting bids in our RFPs; often in partnership with each other to either bring a better cost of finance or greater experience in the sector to the bid - Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA


ESCO business models(in theory)

While there is no such thing as a standard ESCO business model, most ESCO contracts more closely resemble one of four models that have evolved to suit difference scenarios. Fixed energy model: A monthly, flat fee typically inclusive of all forms of energy consumed as well as refuelling, maintenance and security. TowerXchange have seen variants of this model with cell sites grouped by energy load and subject to tiered pricing, and variants where diesel costs are passed through to the client.

kWh consumption model: Governed by a power purchase agreement (PPA) wherein the MNO or towerco pays for the energy they consume by the kilowatt-hour (kWh), often subject to a minimum commitment. There is increased risk of taxation and regulation by government when using a kWh consumption model. Energy saving agreement: A target level of energy opex is mutually agreed, and any monetary savings achieved below that target are shared between the ESCO and its clients and partners.

Asset lease / vendor finance+: There are countless variations on asset leasing and vendor finance models, often with operations and maintenance services bundled into the price, that some suppliers claim to be ESCO deals. In most cases, TowerXchange does not consider such contracts as ESCOs, unless the supplier retains full ownership of the assets, or is contributing significant capex to the deal. Because each of these business models contains a variety of levers to calibrate the deal, there is significant variation within each business model category. Add to this the fact that many ESCOs / vendors come up with their own ‘brand’ for their

ESCO proposition, and it looks like there is more business model diversity that there really is. Managed services ≠ ESCO: TowerXchange would not categorise a contract wherein an MNO or towerco outsourced operations and maintenance of energy equipment to a third party as an ESCO. We label such contracts ‘managed services’. Managed services contracts tend to be shorter in duration, such that the resultant cash flows are less predictable, making the contract less attractive to long term investors. However, where a managed service provider deploys its own capex to upgrade and ultimately replace and own the energy equipment, we categorise such projects as ESCOs. This makes quantifying the ESCO market in telecom challenging as the same company can have both managed services and bona fide ESCO contracts<

“ “there is no such thing as a standard

ESCO business model


ESCO business models(in practice)

Referring to figures seven and eight, TowerXchange’s market research has revealed that the fixed energy business model is used in 69% (29 of 42) of telecom ESCO contracts, and those contracts represent 57.9% of total sites contracted by ESCOs. 9.5% of ESCO contracts (four of 42), representing 32.9% of total sites, use the guaranteed savings model – all four of these contracts are IHS ‘Big Five’ deals. Four kWh consumption model contracts represent just 1.1% of ESCO sites: one is a 60 site ESCO deal between Ascot at Vodafone Greece initiated back in

2011; another is MediPower’s deal to provide energy to 150 off-grid and temporary cell sites in Italy; a third is a 100 site ACME Power contract in India; the fourth is a new community power plus telecom ESCO play run by Yoma Micro Power in Myanmar which has 10 sites so far. Distributed Power Africa, GreenWish Partners and OMC resisted our attempts to categorise their contract structures, so we call them ‘others’ (three contracts, representing 7.1% of the total). Just one ESCO contract structure remains unknown

– that of Pace Power – although we suspect it’s a fixed energy deal as almost all the other ESCO contracts in India are.

ESCO business models increasingly similar: The reality is that the majority of ESCO contracts adopt broadly similar principles: the client MNO or towerco needs to make energy opex a predictable (preferably reduced) cost, while the ESCO and its investors need their revenues to be predictable, with the opportunity to create enough margin to generate a healthy return on capital invested (ROCI). Some ESCO price models provide for a flat fixed rate regardless of energy consumption, but the majority see sites grouped and priced in tiers according to site load. We categorise both flat rate and tiered pricing structures as fixed energy models.

Figure seven: ESCO sites by business model


Fixed energy model

Guaranteed savings

kWh consumption variable model

Other[5]

Undisclosed

1.1%

1.4%

57.9%

32.9%6.7%

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Aktivco provides more than just an ESCO contract – we provide a full service including security, refuelling, O&M as well as power. We don’t sell energy by the kWh – we sell a full service inclusive of maintenance – Richard Thomas, Chairman, Camusat


The calibration of these tiers, as well as the fees themselves, provides scope to customise contracts to meet client needs. This win-win hybrid fixed/load-based tariff model incentivises the ESCO to improve their margin by optimising energy efficiency, while the client retains the incentive to reduce their energy consumption, for example by reconfiguring indoor sites to use outdoor equipment, or by using more energy efficient active equipment. Guaranteed savings – a model for towercos: Market leading ESCO IPT PowerTech preaches the virtues of the guaranteed saving model as ideal to meet the needs of power-as-a-service towercos, who seek to capture on their own balance sheets some of the value created through energy efficiency. All the live examples of the guaranteed savings model are derived from the IHS ‘Big Five’ initiative in Nigeria. While IHS has not revealed much about the detail of the business model, third parties suggest the model it works as follows: IHS agrees a monthly fee for a target level of diesel consumption per month, below their current level of consumption (hence ‘guaranteed savings’), and the ESCO makes margin on savings against that target. For example, if the target was 1,800L of diesel per month, and the ‘Big Five’ partner creates efficiencies such that the site only needs to burn 900L of diesel, then the resultant savings are shared. TowerXchange understands that the towerco, ESCO and technology equipment partners all have ‘skin in the game’, but that the towerco still deploys the capex<

Figure eight: ESCO contracts by business model


Fixed energy model

Guaranteed savings

kWh consumption variable model

Other[6]

Undisclosed

1.4%

69%

9.5%

9.5%

7.1%

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Under a guaranteed savings model, we sell the equipment to the MNO or the towerco who then pays a fixed rate for us to install and maintain the equipment. We guarantee that we will deliver the savings promised, any deviation from this will be absorbed by IPT PowerTech. This gives the MNO or towerco not only clarity on the capex to install the system but also provides predictability in opex. With IPT PowerTech providing, deploying and maintaining the equipment, it avoids the blame game between equipment vendor and contractor that can so often occur in the management of power on cell sites – Khaled Habbal, VP & COO, IPT PowerTech


Community power

The kWh consumption business model is seldom used by pure-play telecom ESCOs, as their client MNOs and towercos require more certainty about their energy costs. We expect to see more variable kWh consumption, or power purchase agreement (PPA), models used as telecom ESCOs extend their footprint beyond the tower to provide power to adjacent community businesses and homes.

The principle of using a telecom tower as the

‘anchor’ of a business plus community power model is already exemplified by OMC in India and by Yoma Micro Power in Myanmar. Many other telecom ESCOs have the stated intent provide community power, but it remains early days and the majority of telecom ESCOs 30,375 sites provide power just to the cell site systems, perhaps extending to include the MNO’s retail outlet and/or a charging station. One knowledgeable commentator emphasised to

TowerXchange that “70-80% of a healthy ESCO’s revenue should come from the telecom anchor, with sale of power to communities being icing on the cake.” Unfortunately, politics and regulation often prove to be inhibitors of community power initiatives, with pricing expectations unrealistically associated with the cost of grid power rather than with the cost of kerosene, which is often the energy source being replaced. Another challenge is simply the lower density of power users around remote cell sites, which means the economics don’t always stack up to extend telecom ESCOs into full blown community power propositions<

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We are developing the GreenWish Villages, a concept inspired by our ESCO proposal to the telecoms sector. My vision and commitment is to develop ancillary services on the back of our clean power solutions around connectivity points at marginal costs – Charlotte Aubin, Founder, GreenWish Partners

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70-80% of a healthy ESCO’s revenue should come from the telecom anchor, with sale of power to communities being icing on the cake


ESCO economics

High energy opex: Energy costs in emerging, volatile grid markets generally vary between US$500-1,000 per site per month, with India at the low end (due to scale and low labour and material costs) and logistically challenging African markets at the high end (due to scarcity, therefore expense, of labour, and the high delivered cost of equipment and diesel). A cell site powered 24/7 by dual diesel gensets can easily burn 28,000 litres of diesel per annum – that’s a lot of refuelling truck rolls, a lot of exposure to risk of theft, a lot of damage to the carbon footprint and, depending on the (volatile) delivered cost of diesel, that’s a lot of opex! This

“ “A cell site powered 24/7 by dual diesel gensets can easily burn 28,000 litres of diesel per annum – that’s a lot of refuelling truck rolls, a lot of exposure to risk of theft, a lot of damage to the carbon footprint and, depending on the (volatile) delivered cost of diesel, that’s a lot of opex!

is compounded by the compressed replacement cycles of diesel gensets run that intensively (sub-three year lifecycles are the norm). While battery hybridisation provides some good quick wins, batteries can need replacing even more frequently that gensets, with battery replacement typically required every 24-36 months, again exacerbated by theft. The latest generation of hybrid power systems can cut diesel consumption between 60% and 100%, depending load characteristics, solar irradiance, and on how well designed (“dimensioned”) the power system is to meet the specific energy requirements of the site, but at what capital cost?

Improvement capex: Estimating the price of a hybridising a cell site is a bit like asking the price of a top flight football player – it depends on your requirements. If you think you need a Neymar-equivalent, you’re going to pay a substantial premium for a plug and play containerised hybrid power system. The good news is that the total cost of ownership (TCO) is reduced by very low maintenance requirements for such high quality systems. At the other end of the scale, you can assemble a hybrid power system from anything from low-cost to premium components: the range extending from a low-end capital outlay of US$10-13,000 per site in India, rising to US$20-40,000 in Myanmar and SSA, inclusive of delivery and installation. Figure nine provides a comparison of how costs break down in India, based on a power system with 6kW solar capacity and 750AH of battery capacity, compared with a broadly similar site in SSA (4.5-6kW solar with 1,000AH battery capacity and a 21KVA genset). ESCOs don’t just deploy capex into hybridisation. There is also great return on investment to be found in connecting off-grid sites to the grid (although grid extensions can be phenomenally expensive!) Even grid connected, reliability remains a factor, with many electricity grids in emerging markets categorised as “unreliable” as they provide less than 16 hours of usable electricity per day – not just due to downtime but also due to power surges, and loss of phases<

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Figure nine: India vs SSA: Where does the capex go to hybridise a cell site for the ESCO model? (Assuming you’re not using an all in one, plug and play solution)

India example: 6kW solar, 750AH battery capacity: total capex $11,179

SSA example: 4.5kW solar, 1,000AH battery capacity: total capex $38,650

Source: Industry sources, TowerXchange presentation

Battery bank

Foundation + OD Pad

OD Rack, pole and fabrications

MPPT

Electrical works

Warehousing, freight and survey

RMS

Supervisory manpower

Battery, cabinet and accessories

Solar system

Hybrid cabinet (core, controllers, solar

chargers, rectifiers, AC&DC dist.)

Genset, controller and fuel tank

Installation materials

In-country logistics and installation

$3,251

$1,091

$2,482

$1,443

$1,046

$681

$800$385

$14,800

$3,700$7,900

$8,500

$3,000$750


InvestibilityConcept proved: Telecom ESCOs are coming of age – the business model has achieved ‘launch velocity’ and the volume of new contracts and new sites is increasing year on year. Telecom ESCOs are no longer a hypothetical business model toyed with by companies looking for some nice pictures to put in their Corporate Social Responsibility report! TowerXchange has identified 20 ESCOs operating over 30,000 cell sites, plus a further six credible, aspiring ESCOs – that’s a market scale indicative that we are beyond proof of concept. If we exclude companies that are primarily technology vendors or managed service providers, and focus on the bona fide ESCOs, TowerXchange has identified 18 investible ESCO platforms, many with proven cash flows and well-structured, long term contracts with credit-worthy counterparties.

Highly investible management teams: It is also important to note that a small but growing band of proven ESCO CXOs are emerging. We’re starting to see significant talent being attracted into ESCO management teams; people many with decades of experience raising and structuring long term investments in renewable energy and/or telecom infrastructure, others with ‘hands dirty’ experience of driving the installation and maintenance of complex cell site portfolios – many off grid or on unreliable grid connections – for leading towercos, managed service providers and MNOs. Perhaps more importantly, seasoned ESCOs are

recognising the need to invest in people – local people – combining local knowledge and cultural awareness with high levels of technical competency, and building ‘employers of choice’ to compete for scarce engineering and technical skills. Access to low cost capital: For all the positive signs emerging from the telecom ESCO market, there remains one fundamental challenge to be overcome from an investibility point of view: can ESCOs access capital at a low enough cost compared to towercos? With towercos owning the energy equipment at 53% of the world’s cell sites, resolving this equation is critical. Towercos have years, sometimes decades of proven track record. Their business models are perceived to offer lower risk and higher margins than ESCOs, majny listed towercoss have very healthy valuations, and they have easy access to low debt in low interest markets. This all adds up to towercos currently being able to access lower cost capital than the majority of ESCOs. Consider this example: an ESCO seeking to deploy an average of US$10,000 per Indian cell site might have a typical blended cost of capital of 14% (assuming 30% equity, 70% debt financing). That cost of capital must be reflected in the ESCO’s end price to the customer. But that customer could be (or could become) American Tower India, which has an estimated cost of capital of just 2%. This illustrates how often makes sense for the towerco to self-finance the capex (or at least a significant portion of that capex), leaving an ESCO partner with just responsibility for deploying

and maintaining the power systems. And if the ESCO is only responsible for deploying and managing equipment, then it starts to look like a managed services deal, which may be less attractive to investors. The ESCO business model, and individual ESCO investment opportunities, must make sense through a lens of asset management. Financial metrics like return on assets, return on invested capital, and return on equity will be critical. How do ESCOs overcome this barrier? ESCOs may need to drive to scale by partnering with MNOs that lack access to the low cost of capital which some towercos benefit from. And ESCOs need patient, long-term investors prepared to invest with realistic expectations in terms of IRR, perhaps aided by cleantech subsidies or carbon credits. Such capital can be found, but the pool of prospective investors remains shallow. Hopefully this report will help unlock the flow of capital!<

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We are currently exploring supplementary finance options to reduce our cost of debt and expand our network, so we’d love to connect with other members of the TowerXchange community to identify long term investors interested in the ESCO market – Partha P Chatterjee, CEO, Bhaskar Solar

$


Critical success factorsThe importance of boots on the ground: Whether an ESCO has origins as a managed service provider with a substantial installation and maintenance resource, or whether the ESCO is a purely financial vehicle partnering with a managed service provider, “boots on the ground” are critical to the success of ESCOs. But just having headcount and a fleet of off-road vehicles isn’t enough to meet this requirement. ESCOs typically deploy advanced technologies to cell sites – field engineers used to topping up fuel tanks, changing air conditioning filters and replacing batteries won’t have the required skillset if the project, for example, requires swapping out AC for DC diesel gensets. Similarly, complex hybrid systems require talented engineers in the NOC. The pressure on monitoring and field engineering skills can be relieved by ‘plug and play’, remotely managed solutions such as those offered by GRIDSERVE, Eltek, Ascot and Flexenclosure. However, the fact remains that an ESCO needs to recruit, upskill and retain a

“

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The solutions we offer to the market are much more advanced than what is typically on today’s cell sites. Our equipment is IP controlled and remotely monitored, which means our technicians need a level of competency and skills way beyond oil changes. Our field technicians are using their laptops to configure controllers and communicate with different elements of sites. Without the right training, support and information refreshment, we won’t achieve the necessary talent level, so we have no option to outsource - Ofer Ahiraz, CEO, Energy Vision

substantial and highly skilled workforce – and the scarcity of those skills exacerbates the problems of staff turnover (and inflated remuneration expectations).

Fragmentation of O&M market: ESCOs that don’t have ‘boots on the ground’ need to find strong local O&M partners. The business of refilling diesel and maintaining cell sites remains a fragmented market, with services often contracted out to small local service providers whose cash flows are too ‘lumpy’ to be considered investible and scalable. MNOs overcame the challenge of fragmentation by outsourcing O&M to tier one OEMs, adding ‘layer cake’ but reducing complexity. The sensitivities of the ESCO financial model are unlikely to accommodate ‘layer cake’. Towercos have addressed this same problem of fragmentation by increasingly consolidating maintenance contracts into fewer companies – one African towerco rationalised from

eight local service providers to two national service providers in just two years. Were ESCOs to replicate this consolidation of maintenance contracts, like the towercos, they could double down on their investment in their service partners, improving performance and financial stability. Credit worthiness remains key: One critical contractual concern is the credit worthiness of the off-taker. It is notable that early ESCO contracts in Africa have been with tier one MNOs, despite interest in the model from the continent’s 50+ tier two to three MNOs. Similarly, Africa’s ‘Big Four’ tower companies have yet to conclude a sales and leaseback with a tier two or three MNO due to concerns over their ability to meet monthly lease payments over a ten year contract. However, towercos do take tier two and three MNOs as secondary clients – leasing them space on towers acquired from tier one MNOs. ESCOs need predictable cash flows from long-term partners: in the near term they should probably replicate the towercos’ strategy of focusing on the most credit worthy counterparts. Long contract duration: Contract duration is critical for ESCOs, given that the hybrid renewable technologies they deploy have longer return on investment cycles than the incumbent diesel-oriented solutions. While simpler ESCO sites may require only a few thousand dollars of investment to upgrade energy storage systems, upgrading an off-grid cell site running twin diesel generators to a solar-battery hybrid can cost anything from US$10-40,000. Any ESCO contract length less than seven years will therefore have to be priced at a substantial premium, if indeed such a short term were investible at all,


while contracts of more than 15 years often incur too much uncertainty to be palatable to MNO and towerco anchor tenants. Referring to figure ten, of the ten ESCO contracts whose duration was disclosed to TowerXchange, seven had a ten-year duration, one was for twelve years, another for nine years, and one was described as “ten to fifteen years.” Scale: Only one telecom ESCO has yet broken through the 5,000 site barrier, a nominal point predicting when an ESCO can start to unlock significant economies of scale in terms of overhead and administration costs. Given that a significant proportion of the larger portfolios of cell sites in emerging markets have been acquired by power-as-a-service towercos, in order to achieve a breakthrough in scale, ESCOs are either going to have to persuade one of those power-as-a-service towercos to partner with them, or they must painstakingly rollup smaller site portfolios from the MNOs, or they could seek

to acquire smaller ESCOs. Another route to scale would be to develop a compelling business case to not just acquire energy equipment in emerging markets where the majority of cell sites are off-grid or unreliable grid connections, but to also provide backup power solutions for cell sites that are on-grid. Partnering with MNOs: ESCOs report an ongoing battle to negotiate investible ESCO contracts with MNOs. Too many MNOs see ESCOs as a glorified managed service provider as opposed to a strategic partner that is deploying US$millions of their own capex, and taking substantial risk out of the MNO’s balance sheet. ESCO contract negotiations that squeeze margins to an unrealistic level may ultimately prove uninvestible, hindering the ESCO’s ability to upgrade sites swiftly and achieve KPIs. MNOs also need to empower ESCOs to make their own technology partner selections, and not limit them to using the MNOs’ own preferred suppliers.

Engaging with towercos: Despite the aforementioned challenges, ESCOs have made remarkable headway with MNOs in the last two years, but they have struggled to make a compelling case to partner with many emerging market towercos. Decision makers at many power-as-a-service towercos feel energy has become one of their own core competencies, a critical part of their value proposition to MNOs, and a source of improved margins as the towerco deploys capex to reduce opex. As a result, many emerging market towercos remain reluctant to hand over energy equipment to ESCOs. Their reluctance is compounded by the fact that many towercos have access to lower cost capital than ESCOs. The key to winning hearts and minds at towercos could lie in ESCOs demonstrating that an emerging market towerco with an uncluttered, vertical real estate-only business model could be valued at a higher multiple than a towerco encumbered by the complexity of providing power-as-a-service<

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Our first challenge is to make MNOs and towercos realise it is in their own interest to sign long term contracts. Investing in solar panels and batteries requires substantial upfront capex, and equipment lifecycles can be in excess of 20-30 years. While contracts in the energy sector are typically 15-25 years, in telecoms a minimum duration of 10-15 years is required - Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia

Figure ten: ESCO contract duration (where disclosed) Source: TowerXchange

Aktivco+Millicom, ChadAktivco+Orange, Burkina FasoAktivco+Orange, Côte d'Ivoire

Aktivco+Orange, NigerApplied Solar+Various, India

Ardom Towergen, IndiaCCE+various, India

Energy Vision+Airtel, GabonHYBRICO+Tigo, HondurasVoltalia+MNTI, Myanmar

2yrs 4yrs 6yrs 8yrs 10yrs 12yrs 14yrs 16yrs


Differentiating the power-as-a-service towerco from other towercos The original tower company business model evolved in the mid-nineties as a pure ‘vertical real estate’ business: the towerco controlled just the land under the tower and owned the tower structure itself. Power systems remained the property and the responsibility of the towercos’ tenants. But when the towerco business model was adapted for emerging markets, first India, then Africa, towercos assumed responsibility for, and ownership of, shared power systems. And that model was carried into China when China Tower Corporation was created in 2015, Power-as-a-service towercos own the energy equipment at 2,329,927 sites worldwide. ‘Vertical real estate’ towercos own 633,966 sites worldwide. On the ‘vertical real estate’ towerco sites the energy equipment is still owned by MNOs<

ESCOs and towercos: where they are, and aren’t, competing for the same sites

Power-as-a-service towercos and ESCOs are seldom in direct competition in response to specific RFPs. MNOs put out an RFP for an ESCO partner, or they seek to monetise their towers – there are no known examples where an MNO has explored both partnerships simultaneously, putting ESCOs and towercos in direct competition. However, there is significant overlap in ESCOs’ and towercos’ addressable markets.

Power-as-a-service towercos already own the energy equipment on 53% of the world’s cell sites, although that statistic is somewhat distorted by the sheer scale of China Tower Corporation, which provides power-as-a-service across its 1.89mn site footprint. Nonetheless, with the energy equipment on more than half the world’s towers owned by

power-as-a-service towercos, the importance of ESCOs convincing these towercos to partner with them is clear. The current situation of power-as-a-service towercos owning the energy equipment at 53% of the world’s cell sites, versus ESCOs’ 0.7%, is a little misleading. First of all, very few ESCOs existed when many of those sites were acquired by towercos. But more importantly, towercos and ESCOs meet subtly but importantly different needs. Imagine for a moment that you have plotted every cell site in the world on a hypothetical scale, with the lowest operational complexity, on-grid, urban, developed market towers on the left; and the highest operational complexity, off-grid, rural, emerging

market towers on the right. On such a scale, you would generally find the developed market, ‘vertical real estate’ towercos nestled comfortably on the left, and the ESCOs most comfortable on the right. As such, the ESCO represents the perfect companion business model to the ‘vertical real estate’ towerco, which considers the deployment and management of vertical real estate as its core competency, and lease-up to multiple tenants as its core revenue “ “ESCOs offer a solution in areas that towercos cannot; we don’t see ESCOs

as competitive to towercos, rather we see them as complementary - Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA

Vs


growth driver. The vertical real estate towerco (American Tower notwithstanding) prefers not to dilute its business model with the complexities (and perceived risks) of providing cell site energy. In the middle of this infographic would be the emerging market towercos that consider power-as-a-service a core competency and a critical differentiator. Companies like IHS Towers, Eaton Towers and Helios Towers in Africa; Indus Towers, edotco, Tower Vision, Apollo Towers, OCK and Irrawaddy Green Towers in Asia – and American Tower’s outposts in India and Africa. Power-as-a-service towercos are prospective customers of ESCOs, indeed ESCOs count Indus Towers and American Tower India among their clients, but power-as-a-service towercos also effectively compete with ESCOs for some opportunities, exemplified by edotco recently taking over the power systems at their 1,250 cell sites in Myanmar, which were formerly managed by a leading ESCO. ESCOs were able to win their first contracts in Africa by securing portfolios that power-as-a-service towercos didn’t want. For example, Africa’s first ESCO of scale only became possible when the sale of Airtel’s sites in Gabon to a towerco proved impossible for regulatory reasons, opening up an opportunity for Energy Vision to take responsibility for the power systems – now extended to include all the passive infrastructure O&M – for the sites. However, Orange’s recent deals illustrate that ESCOs are no longer a secondary target if an MNO cannot attract a towerco partner. Orange has signed ESCO

contracts with GreenWish in DRC, where Orange was already a co-locating tenant on many Helios Towers; with Aktivco in Burkina Faso, where Orange was already co-locating with Eaton Towers; and most recently with Aktivco again in Côte d'Ivoire, where Orange were already working with IHS. The Côte d'Ivoire deal was especially significant as Orange wasn’t just a co-locating tenant on towerco towers – they had handed over the majority of their towers to IHS[7] – proving that even where the MNO has forged a deep partnership with a towerco, there can still be room for an ESCO. The ESCO model is increasingly seen by MNOs as complementary solution to towerco partnerships at sites the towercos don’t want (often rural sites where lease-up potential is limited). MNOs also see ESCOs as an excellent benchmark for their towerco

partners’ operational performance and value for money. Any competitive tensions between ESCOs and power-as-a-service towercos are eased by four factors. 1. Power pass through leaves a gap for an ESCO partner: There are different contract and business model variants within the power-as-a-service towerco category: full service, where the towerco owns the power systems and pays for the fuel, and power pass through, where the power systems are owned/managed by the towerco, but the electricity and diesel bill is passed through to the tenants. The pass through model still leaves a gap in the value chain for an ESCO to take over power systems and create value through energy efficiency.

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The Côte d'Ivoire deal was especially significant as Orange wasn’t just a co-locating tenant on towerco towers – they had handed over the majority of their towers to IHS – proving that even where the MNO has forged a deep partnership with a towerco, there can still be room for an ESCO


2. Towercos generally don’t want remote cell sites, ESCOs do: As we’ve noted already, an emerging market towerco considers tower lease-up as its primary revenue driver – it makes a margin on energy efficiency gains yes, but its focus is co-location sales. It’s easier to lease-up a tower to multiple MNO tenants in a densely populated urban area than it is to lease-up a tower in a rural area with a smaller population where there is less ARPU to be generated by prospective tenants. Towercos are disinclined to build or buy towers where there isn’t the potential to add a second tenant within 12-18 months. In contrast, ESCOs don’t care about adding tenancies – in fact the economics of renewable energy work best on lower load, single tenant sites. It’s not difficult to envisage a model

wherein a power-as-a-service towerco provides a full service at the readily leased-up (easier to refuel) sites in urban and suburban locations and along major transport routes, then the MNO switches partners to an ESCO for the more remote rural sites. 3. Towercos generally don’t want small portfolios, ESCOs do: Towercos seek economies of scale, and prevailing opinion seems to be that those economies of scale really start to kick in at around 500 sites. Towercos prefer to acquire larger portfolios, or to build in larger countries, to unlock those economies of scale. For example, towercos have now acquired 38% of the towers in Sub Saharan Africa, including most of the tier one MNOs’ towers in the largest markets. What’s

left? Apart from the assets of tier three MNOs who, frankly, no-one prioritises because they often can’t be trusted to pay their bills, what’s left among the tier one MNOs are smaller cell site portfolios in less populous / less wealthy countries. For example, MTN has partnered with towercos in Nigeria, Cameroon, Côte d'Ivoire, Uganda, Ghana, Rwanda and Zambia, but there are still opportunities for ESCOs to work with MTN in Benin, Guinea Conakry and Afghanistan. 4. ESCOs can de-risk emerging market towercos, making them more attractive to investors: Emerging market towercos have had a tough time convincing institutional investors of their value. Recent prospective IPOs have faltered as a result. Even though emerging market, power-as-a-service towercos are doing a good job managing power – they are improving uptime, achieving service level agreements, creating efficiencies and profit margins – not all institutional investors are convinced that power-as-a-service revenues are as predictable and attractive as lease-up revenues. This creates downward pressure on towerco valuations. Is it time for emerging market towercos to consider selling their energy assets, and transferring their power-as-a-service teams, to ESCOs, thus simplifying their residual business as a more familiar ‘vertical real estate’ business? This is quite a contentious suggestion: frankly TowerXchange think most power-as-a-service towercos are doing a great job. And this opportunity has yet to crystalise into any actual transactions. But if there is a need to manage investor perceptions and to de-risk emerging market towercos by passing on energy risk, to partner with an ESCO is clearly one option<

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We’ve initiated dialogues with many emerging market towercos about the idea of simplifying their business model by selling their energy assets - their entire power-as-a-service business - to an ESCO such as Voltalia. Doing so could make their business model less complex and less risky, and therefore more attractive to institutional investors - Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia


Growth of towercos comparedto growth of ESCOs

When we compare adoption of the independent towerco business model with adoption of the ESCO business model in MEA, albeit with the ESCOs lagging the towercos by six years, the pattern is remarkably similar. See figure eleven for a comparison of the transfer of Middle Eastern and African (MEA) and site structures to towercos, using 2009 as year zero, with the transfer of power systems to ESCOs, using 2015 as year zero. It is immediately apparent that the first four years of the ESCO industry in MEA almost precisely mirror adoption of the towerco model six years

Figure eleven: Comparing towerco growth in MEA from 2009 with ESCO growth six years later

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When we compare adoption of the independent towerco business model with adoption of the ESCO business model in MEA, albeit with the ESCOs lagging the towercos by six years, the pattern is remarkably similar


60,000

50,000

40,000

Site

s

30,000

20,000

10,000

20092015

20102016

Towerco sites

ESCO sites

20112017

20122018

20132019

20142020

20152021

20162022

20172023

20182024


previously. We start from a low base of pre-existing towercos and ESCOs, then almost 10,000 sites are added in the ‘launch year’ (that launch year being 2010 for towercos, 2016 for ESCOs). Growth slows the subsequent year as stakeholders assess proof of concept, before year three sees the beginning of a steady pipeline of asset transfers.

Readers may notice that the number of sites owned

by towercos in MEA doubles in year six, driven by Airtel and MTN selling huge portfolios of sites in many of their largest SSA markets. Could we see similar growth in year six for the ESCO industry, which would be 2020? While Orange seem increasingly committed to bringing more and more ESCO RFPs to market, both alongside power-as-a-service towercos and in new markets, we don’t anticipate Orange transferring tens of thousands

of sites to ESCOs in a single year like Airtel and MTN did with towercos. There is also no clear indication, yet, that a second MNO is initiating a group-wide policy of ESCO partnerships, hence why we forecast the ESCO growth curve remaining healthy, but dropping below that of the towercos from year six (2020). The other lesson we learn from a comparison of the growth of ESCOs with the growth of towercos in MEA is that growth of the towercos begins to plateau from year seven (2015). There is still healthy organic growth, but most of the sites in SSA that met towerco investment criteria had been acquired by year seven. At that time the Middle Eastern tower market remained dormant, so inorganic growth all but stopped. The uptick in towerco growth in 2018 is primarily due to the opening of the previously dormant Middle Eastern tower market, and the carve-out of Gyro Towers from Telkom South Africa. While any market growth primarily driven by capitally intensive asset transfers will be ‘lumpy’, and ESCO market growth will plateau at some point, both the SSA and MENA ESCO markets are effectively ‘open for business’ – there are already 1,920 ESCO sites in MENA with a healthy pipeline for more. As such, TowerXchange anticipates a slower, but steadier growth pattern for the ESCO market in MEA, plateauing only beyond the timeline shown in figure eleven, when ESCOs approach what TowerXchange feel is an addressable market of 125,280 sites in MEA<

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If you look at the towerco model in Africa, within five years of its entrance, close to 40% of towers were outsourced to towercos. When it comes to the ESCO model, Orange are being the pioneers and I think that they will have converted their portfolio and outsourced what they can within two years. Other MNOs will then follow, if the ESCO model creates value for one MNO, it will create value for others – Charlotte Aubin, Founder, GreenWish Partners


Quantifying the addressable marketfor ESCOs – a regional breakdown

In seeking to quantify the addressable market for ESCOs, let’s take one final look at the current (or “addressed”) ESCO market on a regional basis. 17,800, or 52.3% of sites contracted to ESCOs are in Sub Saharan Africa, with a further 1,920 (6.3%) in the Middle East and North Africa. Both markets have seen exponential growth in recent years. India is home to the ‘old growth’ ESCO market, with most contracts pre-dating TowerXchange commencing following the market in 2014. Despite local stakeholders suggesting there are closer to 10,000 ESCO sites in India, TowerXchange has only been able to identify 6,414 ESCO sites (21.1% of total ESCO sites), with the total Asian count raised to 8,825 by the addition of sites in Myanmar and a small portfolio in Indonesia. 2,040 ESCO sites have been identified in CALA (6.7%) and 1,710 in Europe (5.6%).

What do we mean by “addressable market”?

While it is tempting to simply say “there are 300-350,000 off-grid or unreliable grid towers in the world, that’s the addressable market for ESCOs,” to do so ignores two key factors. One, many of those sites are already served by power-as-a-service towercos with finite appetite to partner with ESCOs; and two, as this study illustrates, the ESCO model can also be applied to on-grid sites: 5,778 (19% of) ESCO sites to date are on-grid.

So instead TowerXchange define the ‘addressable market’ for ESCOs in terms of identifying glass ceiling for the ESCO model as we know it today, based on MNO or towerco appetite to partner with ESCOs, and based on local tower market dynamics and grid conditions in 2018. All of these factors are variable: the appetite of MNOs and towercos will shift as decision makers change or as ESCOs become more proven; the ESCO business model may evolve, for

example becoming more attractive for on-grid sites; wireless networks will inevitably densify and expand, while towercos will acquire more towers; and investments in electricity grids may extend electrification and improve reliability. Thus our measure of the addressable market is both a snapshot of sites that could be served by ESCOs today, but also differentiates opportunities addressable in the short-to-medium term, from more medium-to-long term opportunities. Our definition of the “addressable market” should not be confused with our forecast. The addressable market is not the ‘low hanging fruit’, quite the opposite: here we are endeavouring to quantify all the sites which could possibly be served by the ESCO model as it is today, if ESCOs hypothetically had access to the vast capital and human resources required to address all these opportunities. In short, we’re asking “how many fish are in the sea?” Not “How many fish will ESCOs catch?”<

Figure twelve: ESCO sites by geographical market


SSA

MENA

India

Myanmar

Indonesia

CALA

Europe6.3%

21.1%

7.8%

6.7%0.1% 5.6%

52.3%


Middle East and Africa (MEA): Sub-Saharan Africa (SSA) is a prime target market for ESCOs because 41%[8] of the region’s 146,947 telecom towers are either off grid or on unreliable grid connections (where grid power is usable for less than 16 hours per day). In the Middle East and North Africa (MENA) grid power is as bad as SSA in some countries, but much better in others. There are a total of 271,489 towers in MENA. ESCOs currently own the power systems at 17,800 of the 418,436 towers in MEA. While the 251% growth of the ESCO market in MEA has been impressive in the last three years (see figure thirteen), current penetration of just 4.3% of MEA sites indicates

Figure thirteen: Launch velocity: 17,600 MEA cell sites contracted by ESCOs since Q216 Source: TowerXchange

July2017

August 2017

September 2016

August 2016

July2016

Undisclosed date

April2018

July2018

August2018

August2018

August2018

Aktivco secures contract with Millicom

Chad (500 sites)

GreenWish Partners secures contract with Orange DRC (then 250

sites, now 300)

Econet carves out Distributed Power Africa

(then "Econet Power") initially managing 1,380 sites

in Zimbabwe (now 1,600)

IHS ‘Big Five’ initiative POs issued to partners Biswal, IPT PowerTech, Makasa

Sun+Ascot, M-P Infrastructure and Uppercrest (then 12,000

sites, now 10,000)

Energy Vision secures contract with Airtel

Gabon (280 sites deployed to date)

Ascot supplies 200 sites in Sudan for Sudatel under ESCO model

Aktivco secures contract with Orange Niger

(500 sites)

Aktivco takes on an existing ESCO contract with Orange

Burkina Faso (site count undisclosed, estimated as 300)

Aktivco secures contract with Orange Côte d'Ivoire

(site count undisclosed, estimated as 500)

IPT PowerTech secures contract with Orange Guinea

Conakry (1,500 sites)

IPT PowerTech secures contract with Alfa in Lebanon (1,600 sites)

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In Africa, all MNOs are focussed on finding ways to access the 20-30% of the population that they are yet to connect, most of which live in rural and remote areas. With typical high sites costs being around US$80-100k to build with an annual opex of around $1500-2000 (depending on the country), the revenue that could be generated in such rural and remote areas would not be sufficient to cover costs – Kadri Hakim, Co-CEO, ieng Group


there is a long runway for continuing growth. So where could that growth come from? We’ll start by explaining how we arrived at the figure of 125,280 addressable ESCO sites in MEA.

As illustrated in figure fourteen, MTN has sold around 40% of their 57,000 sites to power-as-a-service towercos, including the towers in their largest markets, with the exception of from South Africa. The relative reliability of the electricity grid in South Africa means ESCOs are unlikely to get a contract to manage MTN’s ~10,500 sites in that country, while the quality of grid in Cyprus means MTN’s opco in that country is also excluded from the ESCO addressable market. This leaves a total of around 23,000 MTN sites to be included in the addressable market for ESCOs. Addressable MTN markets for ESCOs include Benin, Togo, Liberia, Congo Brazzaville, Botswana, Sudan and South Sudan, Guinea Bissau, Guinea Conakry, Syria, Iran, Afghanistan and Yemen. 25% of Orange’s 33,000 MEA sites are either owned or operated by power-as-a-service towercos, or leased from towercos or from other MNOs, and as such they are excluded from our ESCO addressable market. Orange already has ESCO contracts for around 3,200 sites across Niger, DRC, Burkina Faso, Côte d'Ivoire and Guinea Conakry. Orange also has live ESCO RFPs for Egypt and Madagascar, plus multiple other undisclosed countries. So potential ESCO target Orange opcos include their businesses in Egypt, Madagascar, Iraq, Jordan, Mali, Senegal, Guinea Bissau, Sierra Leone, Liberia, the Central African Republic and Botswana, with Tunisia and

Figure fourteen: The addressable market for ESCOs in MEA


Already under ESCO contract 17,800MNO sites addressable by ESCOs in short to medium termMTN 23,000Orange MEA 20,000Airtel 4,500Zain 8,337Etisalat / Moov 10,000Other MEA MNOs 20,000

Towerco sites addressable by ESCOs in medium to long term (exc SA)IHS Towers 12,860American Tower 9,246Helios Towers 6,485Eaton Towers 5,000Other MEA towercos 5,852

IHSTowers 12,860

MTN 23,000

Orange MEA

20,000Airtel Africa 4,500

Other MEA MNOs 20,000

Etisalat / Moov ~10,000

Zain 8,337

17,800 contracted

American Tower9,246

Helios Towers

6,485

Eaton Towers

5,000

Other MEA towerco sites

5,852

39,443 towerco sites[9]


Morocco and perhaps secondary targets. This adds up to ~20,000 Orange sites as an addressable market for ESCOs.

Airtel Africa has sold 69% of their ~15,000 sites to power-as-a-service towercos, leaving just under 5,000 sites as an addressable market for ESCOs. Airtel has had success with their maiden ESCO project with Energy Vision in Gabon, but they also discontinued an ESCO RFP in Madagascar, so Airtel’s appetite for the model remains questionable. Vodafone, and the Vodacom and Safaricom opcos in which they own stakes, are supported by a strong power management team at Vodafone Procurement Company. So while these entities have sizeable site portfolios, TowerXchange does not have grounds on which to forecast ESCOs winning substantial contracts from Vodafone and related entities, so we have not included any in our addressable market. Millicom has been more enthusiastic about adopting lean business models, partnering with towercos in Ghana, DRC and Tanzania, and with ESCO Aktivco in Chad. However, with a power-as-a-service towerco or ESCO partner in every African market in which Millicom operates, TowerXchange has not included any Millicom African sites in the addressable market for ESCOs. With 22,212 sites and 47.4mn subscribers across eight countries in MENA, Zain would be an attractive client for ESCOs, and the MNO is known to be exploring the ESCO model. Zain has agreed the sale of their 2,292 towers in Kuwait to IHS, and is in

exclusive negotiations to sell 8,263 towers in Saudi Arabia to the same power-as-a-service towerco. Perhaps the most attractive target Zain opcos for ESCOs might be Iraq[10] (4,482 sites), Lebanon (1,313) and (country risk notwithstanding) Sudan (2,542). Similar to Zain, Etisalat has explored the ESCO model, where the most obvious need might be found in Afghanistan, although an ESCO could also be an option in Egypt where the withdrawal of subsidies has increased the cost of diesel. Etisalat also owns a 53% stake in Maroc Telecom / Moov, which operates in nine SSA countries. Moov has no deep towerco partnerships, and is believed to be in the early stages of examining the ESCO model. Beyond these tier one MNOs are several more layers of prospective customers for ESCOs, including highly attractive prospective MNO partners that are strong in one or a small number of countries (e.g. Ooredoo, Unitel, Globe, TELMA, mCel); successful challenger MNOs who could make great ESCO clients (e.g. Africell, Viettel, Cell C); State-owned MNOs in strong market positions; and a long tail of tier three MNOs with offering variable credit quality. Excluding MEA countries where the grid is widely available and reliable, TowerXchange estimates a further 20,000 sites in the region addressable by ESCOs. It should be noted that there are significant barriers to be overcome in several markets we have identified as target ESCO markets. In some the regulation of distributed energy generation is sub-optimal, while there may be difficulties

raising capital for others due to trade sanctions, in others simply because perceived country risk often exceeds reality. In addition to a core addressable market of 85,837 MNO cell sites in MEA, TowerXchange adds a second tier target of a further 39,443 MEA cell sites owned by power-as-a-service towercos. These are considered second tier targets because there is no indication of near-term appetite from the African towercos to partner with ESCOs. This 39,443[11] total includes parts of the IHS Towers and American Tower portfolios, and the entire portfolios of Helios Towers, Eaton Towers and 13 smaller independent towercos[12]. The count excludes the 10,000 IHS Nigeria sites already contracted under the ‘Big Five’ initiative, as well as 10,284 towerco sites in South Africa (2,575 of which are owned by American Tower), where the grid is relatively good. India: Now let us take a look at India, courtesy of an in-depth analysis shared by ESCO guru Manoj Uthup, and illustrated in figure fifteen. Of the 464,364 towers Manoj tracks in India, 107,014 are monopoles (most of which are urban lampposts recently deployed by Jio on good grid connections). Urban lampposts are not good target sites for ESCOs, so we have excluded those from our addressable market. The #1 ESCO target sites in India include 3,000 sites for which BSNL are believed to be tendering for an ESCO partner. Also included in the top target group are 98,149 towers owned by ATC India, Tower Vision, RCOM/Reliance Infratel/RJio, Indus


Towers and Bharti Infratel in the states where the grid is particularly unreliable – typically with less than eight usable hours per day. The Indian states with the most unreliable grids are Jharkhand & Bihar, Uttar Pradesh, Haryana, MP & Chhattisgarh, Assam & North East, and parts of Odisha. The #2 ESCO target sites are a further 29,744 sites in those same states owned by secondary target clients: GTL Infrastructure, Ascend and the residual BSNL / MTNL sites – for one reason or another, these companies are less likely to award ESCO contracts as imminently as the tower owners in the #1 target group. The #3 target are a further ~60,000 sites where the grid is slightly more reliable – usable for an average of 8-16 hours per day. Finally, the #4 target are on-grid sites: TowerXchange analysis has also shown that typically 19% of an ESCO’s portfolio are on-grid, so we will add 19% of India’s 166,457 on-grid macro sites, adding a further 32,819 sites to the addressable market. Finally, we deduct the 6,414 sites that are already under ESCO contract in India, noting that the actual figure of ESCO contracted sites in India may be as high as 10,000 sites due to a number of smaller ESCOs not revealed in our research. While India represents 57% of the total addressable market for ESCOs, the Indian telecom market is going through a period of substantial restructuring which may slow the pipeline of opportunities. Why have ESCOs not expanded as one might have hoped in India? One reason is that India’s electricity grid is improving and being expanded on a daily basis, enabling an increasing proportion of cell sites

Figure fifteen: The addressable market for ESCOs in India

Source: Manoj Uthup, with presentation by TowerXchange

Already under ESCO contract (inc in the near term prospect section) -6,414BSNL 3,000Near-term prospects, sites in states with <8 hour usable gridBH&JH 21,086Haryana 6,914UP East 18,721

UP West 14,576MPCG 19,561Assam & NE 8,005Orissa 9,286

Medium term prospects sites 29,744Sites with 8-16 hours usable grid ~60,00019% of on-grid sites in India 31,627

BH&JH 21,086

Haryana 6,914

UP East 18,721UP West

14,576

MPCG 19,561

Assam & NE 8,005

Orissa 9,286

3,000

-6,414[13]

29,744

~60,000

31,627


to be connected to the National grid. Another reason is that the cost savings generated by ESCOs have sometimes been smaller than initially hoped – while energy opex, particularly diesel consumption, has been successfully reduced, implementation costs and costs in terms of management time have been higher than anticipated, reducing aggregate savings to as low as 10-12% in some cases.

India’s ESCOs had not been created in time to catch the nexus of India’s new cell site build

from 2008-11, at which time the cost of hybrid solutions, particularly PV, was much higher than today, leaving the Total Cost of Ownership (TCO) unattractive over the longer terms required for ESCO contracts. While the cost of solar has significantly reduced today, consolidation among India’s MNOs has stifled investment in new sites. While on the one hand the consolidation from nine to four/five MNOs in India has destabilised a number of ESCO contracts with bankrupt or merging operators, it remains to be seen whether MNO consolidation will motivate India’s towercos, who own 71% of the country’s towers, to consider monetising their power assets by selling them to ESCOs. Myanmar: If there is a risk that the ESCO market missed the optimum window to flourish during peak rollout years in India, the time is now for ESCOs in Myanmar! The entry of fourth operator Mytel is reinvigorating a build-to-suit market in Myanmar that had previously seen the country increase its tower stock from 1,500 to 15,000 between 2014 and 2018. A significant proportion of cell sites in Myanmar still run on diesel, with energy opex believed average US$600-800pcm, driven up by delivery costs to remote sites. IPT PowerTech already operates the power systems for Ooredoo Myanmar, while in early 2018 Voltalia signed a 171 site ESCO deal with MNTI, a new towerco serving Myanmar’s fourth MNO Mytel.

The IPT and Voltalia deals notwithstanding, the

majority of other ESCO-type activity in Myanmar seems to be limited to equipment financing and managed services. However, there is a growing opportunity for ESCOs as the Myanmar tower rollout extends beyond the initial focus on dense urban areas, where the grid is relatively reliable, to rural areas where uptime will be a greater challenge. It should be noted that new MNO Mytel’s primary backers Viettel have successfully disrupted

BSNL ESCO opportunity Shortly prior to the publication of this report, TowerXchange picked up, but were unable to confirm, rumours that BSNL has a tender out for an ESCO partner to run 3,000 sites in India. While BSNL’s sub-10% subscriber market share means they are India’s fourth ranked MNO, their subscriber base is growing, and they have survived market restructuring largely unscathed – frankly, the government-owned MNO has too many government employees to be allowed to flounder. Of greater significance, the BSNL cell sites are highly coveted and valuable. The portfolios includes some of India’s oldest and strongest cell sites, many of which are in prime locations where it would be difficult to secure a permit for a competitive site nearby, making them highly attractive to towercos. As such, the BSNL infrastructure is more investible than BSNL as a retail entity –an ESCO contract with BSNL would be a big win<

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The Indian telecom market is undergoing a period of unprecedented consolidation – everyone is trying to survive or merge… This inevitably contributes to a degree of indecisiveness in the market, as decision makers hold off commitments awaiting confirmation of the new market structure. By the end of 2018-19, this phase of consolidation will largely be over, and the decision makers’ focus will revert to forging long term relationships to optimise operating costs – Partha P Chatterjee, CEO, Bhaskar Solar


other mobile markets by grabbing market share in rural areas, as exemplified by their success in Mozambique and Cambodia – a similar approach in Myanmar could further shift market dynamics in favour of the ESCO model. Around 35% of Myanmar’s sites are off-grid, with a further 50% on unreliable grid connections. TowerXchange exclude the 1,436 sites owned by power-as-a-service towerco edotco, the 2,200 sites already operated by IPT, and the 171 sites under ESCO contract with Voltalia from our addressable market in Myanmar. It is also unlikely that power-as-a-service towercos Apollo (1,800 sites) and Irrawaddy Green Towers (2,500 sites) would be near-term potential ESCO clients, leaving an addressable market in Myanmar of 5,859 off-grid and unreliable grid towers. Afghanistan, Bangladesh, Cambodia, Pakistan and Indonesia: Across the rest of Southern and Southeast Asia, four countries offer the right combination of challenging grid conditions and credit-worthy MNOs and towercos as prospective customers to attract ESCOs: Afghanistan: 7,000 towers, around 60% of which are off-grid, with the majority of the balance on unreliable grid connections. Afghanistan could be a great target market for an ESCO with sufficient tolerance for operational risk. With plenty of credit-worthy prospective MNO customers, including Afghan Wireless, Etisalat, MTN and Roshan, there is confirmed appetite, although no formal RFPs, to bring ESCOs into Afghanistan.

Bangladesh: 30,000 towers. While the grid is relatively good, there are a couple of hundred prime potential solar sites, and managing cell site energy across the country is complicated during the country’s notorious season. However, Bangladesh seems committed to migrate to a towerco business model, with regulator the BTRC having just issued four towerco licenses[14], and power-as-a-service is a key differentiator for first movers edotco, which already operates almost a third of the country’s towers. Cambodia: 9,200 towers, 20% of which are off-grid. While TowerXchange has not identified any telecom ESCOs in Cambodia, some cell sites do draw power from mini-grid and distributed generation projects. Cambodia is another edotco market, although power is a pass through with edotco Cambodia, giving ESCOs a slightly better window of opportunity with the towerco in Cambodia than elsewhere in edotco’s footprint. Pakistan: 34,300 towers and an unreliable grid combine as the main plus points for ESCOs interested in Pakistan. In September 2018, regulatory issues forced the cancellation of edotco’s acquisition of Pakistan’s largest tower network, 13,000 Jazz towers, leaving the structure of the Pakistani tower market uncertain. Local investor Dawood, which was to have co-financed edotco’s acquisition, also has an EPC / IPP subsidiary in REON Energy Solutions, which would seem optimally placed to secure any ESCO contract.Only around 5% of the sites in Pakistan are off-grid.

Even in relatively good grid Asian countries,

TowerXchange have heard reports of small ESCO-type businesses serving remote islands in countries like Indonesia. All this adds up to a total of 9,500 Asian sites to be added to those already identified in India and Myanmar in our ESCO addressable market. China: TowerXchange has not identified any addressable market for ESCOs, nor any telecom ESCO projects, in China. While renewables are increasingly used to provide cell site energy, the electricity grid is so reliable and ubiquitous that there has been no need for those hybrid power systems to be delivered under an ESCO model. With the advent of China Tower, which provides both tower and backup power systems, the likelihood for telecom ESCOs to emerge in China has fallen from ‘slim’ to ‘none.’

It is also notable how relatively little investment in telecom ESCOs originates in China, despite the country’s appetite for investment in emerging market telecom infrastructure. Foreign exchange is strictly controlled in China, and funds must be repatriated within six months to be eligible for tax refunds. Given the long-term nature of ESCO investments, and the concentration of ESCO opportunities in emerging markets that lack foreign currency reserves, any Chinese-financed ESCO would be exposed to considerable foreign exchange risk. So while TowerXchange would not be surprised to see Chinese capital, or more likely Chinese technology, behind an ESCO, expect such ventures to be of limited scale, and to include international partners.


Central and Latin America (CALA) and Europe: We have identified an addressable market of ~3,000 sites for ESCOs in Europe and the Americas. The presence of a handful of ESCO pioneers, led by ENERTIKA which claims to have 3,500 sites in CALA and Europe, suggests there may be pockets of addressable market in these regions.

The majority of ESCO operated sites in CALA are in Central America and Mexico. New entrant ESCO HYBRICO reports a healthy pipeline of additional opportunities beyond their current 40 sites in

Honduras. In addition, MNOs from markets like Peru, where coverage obligations are pushing MNOs to extend networks beyond the reach of the grid, complain that towercos have limited appetite to build such sites, indicative of potential opportunities for ESCOs to partner in network extensions. TowerXchange have heard unconfirmed of an abortive RFP process for an ESCO in the Caribbean. There are also scattered opportunities for ESCOs in Europe. 20% of European towercos that responded to TowerXchange’s survey provide power-as-a-

service, but none would call it a core competency – could they be persuaded to partner with ESCOs? Europe’s leading towerco Cellnex is already a client of both ENERTIKA and MediPower. In the majority of cases power costs remain a pass through for towercos, or remains the responsibility of the MNO. While TowerXchange research revealed that 75% of Europe’s tower portfolios are less than 1% off grid, there are pockets of opportunities for ESCOs among the 22% of portfolios have 1-5% of towers off-grid, and among the 3% that are between 6-10% of sites off grid. Energy is typically no more than 12% of opex in Europe (compared to 50-60% in Sub-Saharan Africa). As shown in figure sixteen, TowerXchange has identified a total addressable market for telecom ESCOs of 389,920 sites, broken down as:< 30,375 sites already contracted by ESCOs, representing 7.8% penetration into the addressable market< 85,837 MNO-owned sites in the Middle East and Africa addressable in the short to medium term< 94,735 sites in India addressable in the short to medium term< 15,359 sites in the rest of Asia, broken down as Afghanistan 7,000, Myanmar 5,859, Pakistan 2,000, Bangladesh 200, Cambodia 200, and Indonesia 100< Around 3,000 cell sites in CALA and Europe, particularly Central America and the Caribbean< 39,443 towerco-owned sites in the Middle East and Africa addressable in the medium to long term< 121,171 further sites in India addressable in the medium to long term<

Figure sixteen: Breakdown of the 389,920 site addressable market for telecom ESCOs in 2018


85,837

15,359

121,371

39,4433,000

94,735

30,375

Already contracted by ESCOs

MEA, short to medium term

India, short to medium term

Rest of Asia

CALA and Europe

MEA, medium to long term

India, medium to long term


TowerXchange’s forecasts the telecom ESCO market to grow to 67,300 sites by 2024

TowerXchange has identified active RFPs for over 10,000 ESCO sites, representing most of the remaining sites expected to come from early adopters of ESCO partnerships. The next tranche of fast follower ESCO contracts is more difficult to predict as those deals may be contingent upon new MNOs and towercos deciding to partner with ESCOs. However, there are no shortage of prospective clients in the pipeline, and an increasing appetite to explore ESCOs as the model is increasingly proven. While the leaders of the five most investible ESCOs are all targeting adding 10,000 sites by 2022, they are not all targeting the same 10,000 sites. While multiple ESCOs will respond to RFPs in attractive markets, ESCOs are increasingly focused on a specific region. Our forecast also considers two factors which would mitigate the speed of growth. One, ESCO partnerships are complex alliances with significant change management implications – these deals

Figure seventeen: TowerXchange forecasts ESCOs will have 67,300 cell sites by 2024 Source: TowerXchange

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Forecasting the pipeline of ESCO contracts is complicated as many MNOs are still studying the model, but we anticipate a huge volume of opportunities coming to market, particularly from markets with lots of off-grid or bad grid towers in Africa – Richard Thomas, Chairman, Camusat

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 8,825 17,800 3,750 30,3752019 13,000 23,400 4,000 40,4002020 13,500 26,900 4,750 45,1502021 14,500 32,400 5,500 52,4002022 15,250 36,400 6,000 57,6502023 16,000 40,400 6,500 62,9002024 16,750 43,800 6,750 67,300

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024


will take longer to close than some might hope. Two, ESCO contracts will be lost as well as gained. For example, we have already seen one ESCO partnership in Myanmar replaced with a towerco power-as-a-service deal, while the future of the IHS Big Five initiative is reportedly uncertain. Combine these factors with the anticipated continuing slower growth in the Indian ESCO market, where the telecom industry seems too preoccupied by high level consolidation to invest much management bandwidth in ESCOs, and it all adds up to a “two steps forward, one step back” forecast. TowerXchange predict that the telecom ESCO market will expand from 30,375 in Q318, achieving its 50,000th contracted site in 2021, finishing 2022 with 57,650 sites worldwide. Figure seventeen illustrates our forecast, concluding with the size of the ESCO market having more than doubled to 67,300 sites by 2024. Of the 36,925 ESCO sites TowerXchange forecasts being added over the six years between 2018 and 2024, we forecast 70.4% will be in from MEA, 21.5% in Asia, and 8.1% in the rest of the world.

Potential for upside on our forecast: It should be noted that TowerXchange’s forecast is on the low side of the opinions we solicited – the high was that ESCOs would run 70,000 cell sites in Africa alone by 2022, and almost 100,000 worldwide. We agree that the addressable market in the medium term is sufficient to support growth of that magnitude, but we think the complexity of negotiations and contract churn will slow the market. The greatest potential for upside on our forecasts could come from another of the larger MNOs or towercos following Orange MEA in partnering with ESCOs in the majority of their opcos. Orange are the most committed to the ESCO model, with five signed contracts, and multiple further RFPs live. The continuing transfer of Orange sites to ESCOs is already built into our forecast, so upside would have to come from a new party, for example Indus Towers (with over 47,000 bad or off grid sites post-merger with Bharti Infratel) or MTN (23,000 potential sites). We cannot forecast such a transformational transaction taking because there is no indication that it is likely to, but it is not impossible<

Consolidation and fragmentation to continue in ESCO market The 20 active ESCOs identified by TowerXchange in this report will not all reach scale, if scale is defined as owning the energy systems at 10,000+ cell sites by 2024. In order to unlock economies of scale and drive down the cost of capital for ESCOs, consolidation is inevitable. TowerXchange would already categorise six of the 20 active ESCOs as likely prospective buyers / consolidators, ten as more likely sellers / consolidation targets, and four likely to be long-term holds. In addition to the six active ESCOs we expect to be consolidators, we have identified a further four potential large-scale ESCO consolidators which have not yet announced ESCO contract wins. The opportunity to win an ESCO contract, deploy capex, improve performance and sell to a consolidator within a three to five year window will attract ESCO entrepreneurs to bid on RFPs. The localised nature of many opportunities, and the localised nature of the required ‘boots on the ground resource’ will also ensure the ESCO market sustains and extends a ‘long tail’ of sub-1,000 site local ESCOs. But over the coming six years, TowerXchange forecast that over 40,000, or 60%, of ESCO sites will be consolidated into three to four larger portfolios, with perhaps a further 25 smaller ESCOs sharing the remaining ~27,000 ESCO sites between them<

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Generally speaking, in markets where we have a small number of towers, our plan would be to hand the full portfolio over to an ESCO, whereas in our larger markets it will most likely be a subset of towers - Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA

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The ESCO market is quite fragmented, and not all the players will be sustainable in the long term. Consolidation among ESCOs is as inevitable as it has been among MNOs and towercos - Partha P Chatterjee, CEO, Bhaskar Solar


Who’s who: what you need to know about the leading ESCOs and their partnersWe categorise stakeholders in telecom ESCOs into four categories:

Current or prospective ESCOs

Prospective anchor tenant clients of ESCOs

Prospective operational partners of ESCOs

Prospective equipment suppliers to ESCOs

Prospective investors in ESCOs The lines between these categories are blurred. For example, many would-be anchor tenants opt to provide power-as-a-service in-house. While some managed services providers are creating their own ESCO subsidiaries, others are working with ESCOs as their field maintenance and operational partners. Many energy equipment companies offer leasing options and vendor finance that function similarly to the ESCO model. Even the line between investor and ESCO can be blurred, in particular with some energy utility and oil and gas giants seemingly yet to commit to whether to bid directly for ESCO contracts, or to invest in first movers, perhaps with a view to future acquisition.

With these blurred definitions in mind, here is an A-Z of the principle stakeholders we see in the emerging ESCO ecosystem.

ACME Group: Energy equipment and service provider established in India in 2003. ACME has equipment installed on over 150,000 cell sites worldwide, including over 3.8 GWp of solar PV projects across 13 regions of India. ACME is a strong advocate of lithium-ion energy storage, with their own manufacturing facility at Rudrapur, Uttarakhand. ACME has around 100 owned cell sites in India under ESCO contract, on a PPA model. It also has operations in Africa under the name REIME providing O&M and managed services alongside network rollout and fibre services.

--------------------------------------------------------------------------------Airtel: Airtel has sold over two thirds of their ~15,000 African sites to various power-as-a-service towercos, leaving 4,500 sites as an addressable market for ESCOs. Airtel was an ESCO pioneer in partnering with Energy Vision in Gabon, but they also discontinued an ESCO RFP in Madagascar, so Airtel’s appetite for the model remains questionable. Airtel’s Indian towers are owned and operated by either Bharti Infratel or Indus Towers.

Aktivco: Aktivco is a dedicated long-term investment vehicle in energy as a service, which leverages the operational capabilities of parent company Camusat. Aktivco has 2,000 towers under ESCO management in Africa; over 500 sites for Millicom Chad, another 500+ for Orange Niger, and Aktivco are taking over a contract in Burkina Faso where Orange is increasing the number of sites. Aktivco also recently won another contract with Orange in the Ivory Coast. Aktivco is targeting 10,000 sites by 2022. Camusat builds its own energy systems but sources components from long-term partners, deploying a standard core control system to which modular extensions are added according to variables such as grid availability, the power consumption of the site, and levels of solar irradiance. Aktivco’s contract structure includes a full service including security, refuelling, O&M as well as power, and their contracts have to date all been of a ten year duration.

--------------------------------------------------------------------------------ALKAN CIT: Egyptian headquartered managed service provider with a footprint in 12 countries. Most recently celebrated being awarded a managed services contract with Huawei for Orange Mali. Considering offering an ESCO model, but no known contracts to date.

--------------------------------------------------------------------------------American Tower: The world’s largest towerco outside of China, American Tower’s Indian operation will own 77,846 sites upon the completion


of announced acquisitions from Vodafone and Idea. American Tower has ESCO contracts with several partners in India. American Tower operates 11,098 sites in Africa, but provides power-as-a-service only for the 8,520 sites they own outside South Africa, with a further 723 sites in the process of being acquired in Kenya. American Tower has no known ESCO contracts in Africa.

--------------------------------------------------------------------------------Applied Solar Technologies: AST has 4,000 cell sites under inflation-linked fixed energy ESCO contracts spread across four circles in India. 30% of their sites are on grid, 30% on unreliable grids, 40% off grid. Their clients include Indus Towers, Bharti Infratel, American Tower, Idea and Ascend, with contract duration varying between 10-15 years. Also has a substantial managed services contract for almost 6,000 BSNL sites, again in India. AST expects to add 2,000 MNO owned sites in India by year end, and also has a 5 site pilot with IHS Nigeria.

--------------------------------------------------------------------------------Apollo Solar: Manufacturer in the USA of the leading pure solar remote energy systems. Worldwide telecom installations since 2012 have demonstrated outstanding uptime. Integrated remote monitoring provides real time alarms of any actual problems while displaying current status of every site to eliminate unnecessary site visits. Accurate usage of energy is reported for multiple tenants. No longer only a pure solar provider, Apollo Solar’s new internal rectifier features smart control of the generator to minimise fuel consumption.

Ardom Towergen: Ardom, a passive infrastructure O&M company that commenced business in January 2011, moved into the ESCO space by entering into a ten year, fixed energy cost contract with American Tower India in May 2014. Ardom manages around 14,000 sites spread over 12 telecom circles of India under O&M managed services agreements. It acquired another Indian ESCO Quanta TowerGen in March 2017 for an undisclosed fee. TowerXchange estimates that Ardom Towergen has around 500 sites under ESCO contract in Bihar, MP, UP(E), UP(W) , Assam and North-east telecom circles .

--------------------------------------------------------------------------------Ascot: Established in 1973 and with power units in over 50 countries, the Ascot brand is synonymous with high quality, reliable, long lasting diesel gensets, hybrid power units and power plants. Perhaps less well-known is the fact that Ascot is a pioneer of the ESCO business model, running 320 units in Saudi Arabia for STC in partnership with Nokia, 200 sites in Sudan for Sudatel, 30 sites in Indonesia for Tower Bersama, and 1,500 sites in Nigeria for IHS Towers, in partnership with Makasa Sun. Ascot was behind what may have been the first telecom ESCO – a 60 site project for Vodafone Greece, initiated in 2011 and still running today.

Contract structures vary from straight fixed energy contracts in Saudi Arabia and Sudan, to a kWh model within defined ranges in Greece. The IHS ‘Big Five’ initiative, in which Ascot participates in Nigeria, involves different levels of capital commitment from the various participants, with

partners paid according to fuel savings against target.

--------------------------------------------------------------------------------Ausonia: See MediPower.

--------------------------------------------------------------------------------Bhaskar Solar: Trading since 2002, Environ Solar operates under the brand name Bhaskar Solar. Funded by SREI Infrastructure Finance, who readers may recognise as the controlling shareholders of Viom Networks prior to its acquisition by American Tower. Bhaskar Solar has not disclosed to which of its 3,500 Indian cell sites and rooftops it provides a full ESCO service, but TowerXchange believes the figure to be around 800 sites. Bhaskar Solar’s model is a fixed energy contract. Pan-India player, albeit with a focus on the unreliable grids in Eastern and West-Central India. Customers include Indus Towers, Idea Cellular and American Tower. Bhaskar Solar has preliminary engagements in Nigeria and is working on opportunities in Myanmar and Bangladesh. Technology agnostic.

--------------------------------------------------------------------------------Bladon: The Bladon 12kW Micro Turbine Genset (MTG) is a cost effective, reliable, quiet and clean alternative to traditional diesel gensets for telecom tower power applications. The MTG is ideal for an ESCO seeking to stabilise price per kWh by keeping their opex low and predictable. Low noise and emissions allows the MTG to be deployed in sensitive areas including residential locations and rooftops without expensive enclosures or exhausts.


Field trials have shown Bladon’s MTGs can run for up to 8,000 hours between service intervals, reducing site maintenance visits by 90%. The MTG’s embedded telemetry enables remote configuration and preventative maintenance enabling ESCOs to employ their resources across a wider tower estate without increasing maintenance costs.

--------------------------------------------------------------------------------Bharti Infratel: See Indus Towers.

--------------------------------------------------------------------------------Biswal: 13 year old turnkey telecom infrastructure provider from Nigeria. Provides equipment and managed services. One of IHS Nigeria’s original ‘Big Five’ partners, Biswal is believed to operate around 2,000 cell sites. Other clients include MTN, Airtel and Huawei.

--------------------------------------------------------------------------------Caban Systems: Developers of a state of the art lithium-ion energy storage system ideal for telecom applications, providing the perfect balance between cost, performance and lifecycle. Readily combined with renewables and remote monitoring systems, Caban Systems offers an intelligent, cost-effective, clean, dependable, and modular energy storage system to keep communities powered round-the-clock. Caban Systems are keen to offer their solutions on an ESCO-type contract structure with a fixed monthly fee where they install, maintain and deliver an end-to-end service. They have a pilot operating under such contractual conditions in CALA, and have an appetite to offer similar terms worldwide.

Cambridge Clean Energy: Has 464 Indian cell sites under ESCO contract in Uttar Pradesh, Odisha, Delhi NCR and Rajasthan for a range of tenants rumoured to include American Tower India, Indus Towers and Vodafone India. Provides services under a business model structure they call Energy Management Solution as a Service (EMSaaS™), structured as distributed micro-grids, ring-fenced in specific contracts and Special Purpose Vehicles to assure project finance is contained and asset backed. TowerXchange considers EMSaaS™ a variant on the fixed energy model. Contracts have a ten year term. Under the full EMSaaS™ model, Cambridge Energy Resources deploys their own capex and guarantees power availability under a service level agreement, while an EMSAAS™ light option is offered under which the customer retains asset ownership. Cambridge Clean Energy undertook several projects in Africa (Uganda, Kenya, Tanzania, Burundi, Rwanda and Ghana), but these were equipment sale plus managed services rather than full ESCO deals. Cambridge Energy Resources is an opco of Cambridge Clean Energy, which is in turn majority controlled by Amadeus Capital. Technology agnostic.

--------------------------------------------------------------------------------Camusat: One of the world’s leading multi-country managed service providers, with 2,500 direct employees managing over 10,000 sites in 35 countries, Camusat has carved out a new investment vehicle Aktivco, which it is using as a dedicated ESCO unit, with Camusat serving as the operational partner.

Cooltech: Shanghai Cooltech Power Co. Ltd is a leading Chinese diesel genset manufacturer established in 2002 and listed on the Shenzhen Stock Exchange. Cooltech focuses on both the Chinese and oversea telecom industry and has developed a range of smart hybrid renewable energy systems, governed by intelligent control systems, designed to deliver reliable energy to remote cell sites. Cooltech are reportedly in negotiations concerning several prospective ESCO opportunities across Asia, and they expect to close their first ESCO contract before the end of 2018.

--------------------------------------------------------------------------------CREI: See ieng.

--------------------------------------------------------------------------------Cummins: Leading manufacturer of prime and backup power diesel gensets, engines, filters and alternators. Cummins has a global support network, and the balance sheet and expertise to potentially partner with ESCOs.

--------------------------------------------------------------------------------Cysalys: Designer and supplier of hybrid energy solutions for off-grid or unreliable grid cell sites. Believed to be developing an ESCO proposition.

--------------------------------------------------------------------------------Delta Electronics: The number one provider of power solutions worldwide, Delta was founded in 1971 and follows a corporate mission “to provide innovative, clean, and energy-efficient solutions for a better tomorrow.” Delta offers the most energy efficient power products in the industry, including


switching power supplies with efficiency over 90%, telecom power up to 98%, and PV inverters up to 98.7% efficiency. Delta have also developed the world’s first server power supply certified as 80 Plus Titanium with over 96% efficiency.

--------------------------------------------------------------------------------Distributed Power Africa: Distributed Power Africa (DPA) is a dynamic renewable energy solution company carved out of Zimbabwe’s biggest MNO, Econet Wireless Limited. DPA offers solar solutions at “zero installation cost” to commercial and industrial customers on a long term lease agreement in African markets – Zimbabwe, South Africa, Mauritius, Kenya, Ghana and Nigeria. DPA is also managing the passive infrastructure of all 1,600 of Econet’s cell sites in Zimbabwe.

--------------------------------------------------------------------------------DPC: Dynamic Power Company (DPC) is a leading professional power supply manufacturer, listed on the Shanghai Stock Exchange in 2004. DPC has over 3,000 employees and production capacity of 6,000 rectifiers and 1,000 gensets systems per day. DPC group has created hundreds of different power products covering the entire range of power requirements; very large systems, medium power indoor systems, compact rack-mounted systems, wall-mounted type, remote DC powering solutions, modular outdoors systems, mini outdoor power cells, hybrid power system et cetera. Over 500,000 DPC systems within 2,400,000 rectifier modules are operating on MNO and towerco networks globally. DPC telecom customers include China Tower, China Mobile, China Unicom, China Telecom, Telenor,

E.CO, Sprint, Megafon, America Movil, Baidu, Tencent and Alibaba.

--------------------------------------------------------------------------------Eaton Towers: One of Africa’s ‘Big Four’ power-as-a-service towercos with 5,000 sites across five countries: 700 sites in Burkina Faso, 1,200 in Ghana, 1,200 in Kenya, 600 in Niger and 1,300 in Uganda. Eaton Towers has yet to agree any partnerships with ESCOs. In a recent TowerXchange interview, Eaton Towers COO Pankaj Kulshrestha expressed concerns that ESCOs dependent on third parties for “last mile operations” were only adding another layer in the value chain, calling on ESCOs to own the complete ecosystem end to end.

--------------------------------------------------------------------------------Econet: Leading MNO in Zimbabwe, with a footprint in Zimbabwe, Burundi and Lesotho. Has carved out its own ESCO business, Distributed Power Africa, which manages around 1,600 sites in Zimbabwe, of which 46 are off-grid. The others can be considered on-grid or unreliable grid depending on prevailing energy availability in the country.

--------------------------------------------------------------------------------edotco: Innovative towerco originally carved out of Axiata but now increasingly independent. Provides power-as-a-service selectively across tower portfolios in six countries (Bangladesh 9,738, Cambodia 3,170, Malaysia 9,075, Myanmar 1,436, Pakistan 696, Sri Lanka 3,366). Pioneer of process and technology innovation, edotco does not yet have any ESCO partnerships.

Eltek: Eltek’s renowned and innovative power solutions have been deployed in over one million cell sites over the last 10 years. Eltek can support the full range of telecom power requirements, with their latest innovations including the Super High Efficiency (SHE) rectifier, Rectiverter, and Multi Site Monitor (MSM), that can support ESCOs, towercos or MNOs in achieving their ROI goals. As a Norwegian company, Eltek can offer vendor financing through the ECA system in Norway. Eltek has provided power solutions for telecom networks globally for over 40 years and became part of the Delta Group of companies in 2015.

--------------------------------------------------------------------------------Enatel Energy: Enatel offers an expansive portfolio of fully customisable DC power systems and industrial battery chargers, designed to meet every power conversion requirement. Solutions offer flexibility and scalability by way of rack-mount, hot-pluggable combinations of modular AC-DC rectifiers, DC-AC inverters and DC-DC converters with advanced monitoring and control.

--------------------------------------------------------------------------------ENERTIKA: Delivering savings of up to 60% across 3,500 sites, ENERIKTA is the leading ESCO for Europe and Central and Latin America. ENERTIKA operates cell sites in Spain, Mexico, Guatemala and Nicaragua. Created in 2008, ENERTIKA has over 50 employees in offices in Spain, Central America and MENA. ENERTIKA provides ‘Energy as a Service’, which most closely resembles the fixed energy business model. Their client roster includes MNOs Telefónica and Tigo, and towercos


Cellnex and Torrecom. ENERTIKA manages the full energy value chain, from energy purchase and the implementation and management of energy assets (clean power supply, heating and cooling) through to their ‘WATTABIT’ remote management platform. ENERIKA is able to cater to both ageing networks with infrastructure whose energy consumption is affected by obsolete systems, and new installations where they can maximise energy efficiency from day zero.

--------------------------------------------------------------------------------Energy Vision: Pioneers of the ESCO model in sub-Saharan Africa, Energy Vision signed the continent’s first ESCO contract of scale with Airtel Gabon, based on a fixed energy business model with a nine year term. Energy Vision charges one price, inclusive of all capex and opex, for on-grid sites, and a different fixed monthly price for off-grid sites. There is no diesel and electricity pass through. While around 40% of Energy Vision’s sites in Gabon are off-grid, and a further 10% on unreliable grid connections, half the sites are on good grid connections – typically in urban or suburban locations. Energy Vision has now taken on all 280 allocated sites in Gabon successfully delivering against a 99.99% uptime service level agreement (12 month average). For the last six months, Energy Vision has also been awarded responsibility for management of all passive elements of the sites – towers, fences, structures et cetera. Energy Vision is technology agnostic, and has solar hybridised 100% of their off-grid sites (with CDC batteries and diesel only used for backup). Energy Vision has reduced CO2 emissions by 3,088 tons per year, reduced fuel

consumption by 1,157m3 per year, equating to a 68% fuel and CO2 emission reduction. Energy Vision continues to support network growth with new sites to be built.

--------------------------------------------------------------------------------Engie: Engie is one of the world’s largest energy conglomerates, with over 150,000 employees in 70 countries worldwide. With a deep commitment to leading the global transition to sustainable energy, Engie is still formulating its strategy with regard to telecom ESCO, but it has the resources and balance sheet to become a major player.

--------------------------------------------------------------------------------Environ Solar: see Bhaskar Solar.

--------------------------------------------------------------------------------Etisalat: UAE’s leading MNO with a presence in Saudi Arabia (Mobily), Egypt (Etisalat Misr), Pakistan (Ufone) and Afghanistan in addition to a 53% stake in Maroc Telecom (which itself has a presence in 15 African markets) and a presence in further Asian markets. Etisalat sold their towers in Nigeria to IHS before the MNO’s financial difficulties precipitated their exit from the market. Etisalat is considering the ESCO model, with Afghanistan and Egypt thought to be potential first markets.

--------------------------------------------------------------------------------Flexenclosure: Flexenclosure provides sustainable Internet infrastructure, designing and manufacturing intelligent power management systems for the ICT industry. The company provides systems that are fully integrated, modular, factory

tested for reliability, adaptable to local conditions and quick to install. eSite x10 is the world’s first telecom site power system purpose-built for outdoor telecom sites. It is a patented, sealed tamper-proof outdoor rectification unit with passive convection cooling, no filters, no moving parts and it requires no maintenance. Fully integrated in to eSite x10 is eSite Tools, a remote management system that captures all site data to enable KPI reporting, alarm management, energy optimisation and the highest level of sustained network performance. eSite x10 offers the lowest total cost of ownership and is the perfect long-term ESCO solution. Flexenclosure is headquartered in Stockholm, Sweden and has additional offices in Malaysia, Mexico, Myanmar, Nigeria and South Africa. Customers include ACS, Airtel, Apollo Towers, CenturyLink, Globe Telecom, IHS Towers, Millicom, MTN, Vodacom and Zain.

--------------------------------------------------------------------------------GreenWish Partners: Experienced independent power producer (IPP), developer of and investor in clean power solutions, with ambition to run ESCOs covering 10,000 African towers by 2020. Recent US$270mn equity raise gives GreenWish substantial capital to deploy. Has signed an ESCO contract with Orange and partners Sagemcom in DRC where they are running 300 sites, the majority of which are off-grid, the balance on unreliable grid connections. GreenWish does not categorise their contract structure as either a fixed energy or kWh price model, preferring to customise the structure to optimise capex and opex for each partner. GreenWish reports a healthy pipeline of over 1,000 potential additional sites to add to their portfolio during 2018. Vision expands beyond telecom energy


to connecting “GreenWish Villages” – partnering to provide value added services including cold storage, distribution, water purification and especially social and commercial digital services. Technology agnostic.

--------------------------------------------------------------------------------GRIDSERVE: The innovative 12kW(dc) Solar Energy Centre “SEC12” is a plug and play hybrid power solution designed for deployment on thousands of telecoms BTS cell sites. It can reduce opex by up to 95% and push out service intervals from monthly to up to every 18 months. GRIDSERVE has a healthy balance sheet, and strong network of funders, enabling them to access the required capital to deliver lease-hire or consumption models, as well as traditional capital purchases.

--------------------------------------------------------------------------------Helios Towers: Another of Africa’s ‘Big Four’ towercos, Helios has 6,485 sites across four countries: 3,495 sites in Tanzania, where 80% of sites are now grid-connected, 1,767 sites in DRC, including 430 solar hybrids, 384 sites in Congo Brazzaville and 839 in Ghana. Helios Towers has not yet partnered with ESCOs. Helios Towers’ decision makers are keeping an open mind whilst suggesting that ESCOs have yet to make a compelling argument to persuade them to relinquish control of energy, which they consider to be a core competency.

--------------------------------------------------------------------------------Huawei: Huawei is a leading global ICT solutions provider with solutions, services and products in use in more than 170 countries and serving more than one-third of the world’s population.

Huawei’s portfolio of technology capabilities extends across the telecommunications ecosystem from end to end – including a comprehensive range of energy solutions and services. Huawei energy products address diverse requirements, and are deployed with more than 310 operators and towercos using more than 2,000,000 power sets. Huawei enables efficient telecommunications through hybrid power and brand new integrated, intelligent site solutions. Solutions that leverage digital information and power electronics technologies. Equipment that can be deployed quickly on-site to lower maintenance costs, simplify management and reduce power consumption and carbon emissions. Huawei telecom energy solutions have evolved with modern communications equipment to ensure integrated, compact sites and provide Multiple Input Multiple Output (MIMO) techniques for users. These solutions help overcome high power consumption, difficulties in expansion and complex management. They also ensure that networks are “green”, secure, reliable and require the lowest possible opex.

--------------------------------------------------------------------------------HYBRICO: One of the few ESCOs serving the Central and Latin American market, HYBRICO has an energy-as-a-service solution for both off-grid and bad-grid mission critical sites in the market. Using a fixed energy contract structure that requires no up front capex from the client, HYBRICO guarantees 99.95% uptime by leveraging their own hybrid energy solutions. HYBRICO's offers end-to-end services from design, engineering, manufacturing,

civil works, installation and commissioning to O&M, supported by their proprietary HY-NET monitoring and control system and NOC. HYBRICO currently has a 40 site 12-year energy-as-a-service contract with a Central American MNO (11 off-grid, 19 bad-grid and 10 pole solutions). The systems have been up and running for 6 months, and are delivering the expected performance. The project is expected to be extended to 180 more sites in the coming months. HYBRICO is in conversations to extend the project to other opcos within their current client’s footprint, with positive dialogues ongoing with several other MNOs from the CALA region.

--------------------------------------------------------------------------------ieng: Founded in 2007, ieng Group now has over 1,500 staff across 17 operations in the Middle East and Africa. Clients include MTN, Airtel, Zain, Ooredoo, Djezzy, American Tower, Eaton Towers, IHS, Apollo Towers, IGT and Helios Towers. ieng has plans to bid for and self-finance ESCO projects under the CREI brand, leveraging installation services from partners Eki.Struct and power solutions from GreenPole. CREI has been involved in pilot projects in Afghanistan and Myanmar, while they are also participating in a number of RFPs.

--------------------------------------------------------------------------------IFC: The ESCO model of improving energy efficiency for the telecom sector through renewable energy/energy efficiency solutions for off-grid and unreliable-grid mobile tower sites in developing countries is well aligned with IFC’s climate change


objectives. IFC has made several early stage investments in ESCO providers such as Applied Solar in India and Yoma in Myanmar and energy equipment suppliers such as Flexenclosure and Fluidic. IFC continues to test such projects because of the significant development potential these projects can bring. Whilst IFC has invested in several small pilot projects, IFC is inclined to fund larger projects that would encompass thousands of towers to deliver substantial development impact in developing countries.

--------------------------------------------------------------------------------IHS Towers: The largest of Africa’s ‘Big Four’ towercos with 22,860 towers in five SSA markets (2,284 in Cameroon, 2,518 in Côte d'Ivoire, 15,503 in Nigeria, 841 in Rwanda and 1,714 in Zambia), and an operation soon to launch in Kuwait upon the closing of an announced deal with Zain. Between 2016-17 IHS started its ‘Big Five’ initiative, initially partnering with five different companies managing 12,000 sites in Nigeria. Multiple sources suggest that a 2,000 site contract has been cancelled, leaving 10,000 sites unevenly distributed among IPT PowerTech, Makasa Sun+Ascot, M-P Infrastructure and Biswal. IHS has deep engineering expertise and resources internally, and has retained a significant number of sites’ power systems under their own management for benchmarking purposes. The IHS ‘Big Five’ initiative is described by some project participants as an ESCO scheme, others outside the project complain that IHS is in part deploying its own capital and thus suggest it should

not be categorised as an ESCO. Unconfirmed reports suggest that the contract structure provides for a fixed monthly payment for diesel consumption, with the Big Five partner making margin on reductions in diesel consumption. IHS is looking to triple the power load on selected cell sites and sell energy to adjacent communities, while also exploring connecting several nearby towers to micro grids, a project ESCOs may be able to help them with.

--------------------------------------------------------------------------------Indus Towers: Joint venture Indian towerco co-owned by Bharti Airtel, Vodafone and Idea, in the process of merging with Bharti Infratel to create a 163,000 site giant. Both Indus and Infratel have a deep commitment to increasing the proportion of zero-diesel sites in their network, and both have been pioneering partners of ESCOs, albeit that those partnerships seem to be relatively static, perhaps reflecting management’s focus on consolidation.

--------------------------------------------------------------------------------Intelligent Energy: Fuel cell innovator which previously signed a huge 15,000 site, ~US$100mn ESCO-type contract to buyout both the energy assets and O&M contracts of Indian towerco GTL Infrastructure. Unfortunately, the contract was never executed, perhaps related to the ongoing restructuring of GTL Infrastructure, which is struggling with debt.

--------------------------------------------------------------------------------IPT PowerTech: The world’s largest ESCO, IPT PowerTech operates the energy equipment at 9,800 cell sites across four countries, and is reporting a

further ~10,000 sites in their pipeline. Around half the sites in IPT’s pipeline are in the Middle East, the other half in Africa. Established in the 1990s, IPT is also a managed service and energy equipment provider with a presence in 11 countries in Africa, South East Asia and the Middle East, and with more than 4,500 experts on board. IPT has signed a ‘Guaranteed Savings’ contract with Africa’s largest towerco IHS, for which IPT currently manage energy equipment at 4,500 sites under the ‘Big Five’ initiative – IPT’s contract having been enlarged and extended. IPT also manages power at 2,200 cell sites in Myanmar; 950 for MNO Ooredoo, plus a further 1,250 for towerco PAMEL, on which Ooredoo is the anchor tenant. Grid extensions mean an increasing proportion of Myanmar’s sites are grid-connected, although frequently that grid remains unreliable. At time of writing, IPT told TowerXchange that 15% of their Myanmar sites were on good grid connections, 50% on unreliable grid and 35% off-grid, although grid availability is adversely affected by Myanmar’s rainy season (May-October). IPT recently secured a contract to manage power at 1,500 sites for Orange in Guinea Conakry, with a further 300-500 sites to be added in the coming three to five years. Around a third of their sites in Guinea Conakry are off-grid, with most of the balance of sites on unreliable grid connections, some with as little as 6-12 hours of usable grid power per day, which means solarisation is expected to be widespread.


IPT’s most recent contract win was for 1,600 Alfa sites in Lebanon, where the majority of sites are on unreliable grid connections: typically 18-21 hours of usable grid in Beirut, falling to 6-12 hours in rural areas. The main difference between Lebanon and IPT’s sites in Africa is that there is a schedule in Lebanon making it predictable when the power will be on or off, which means they can be a lot more scientific when designing systems. IPT uses two contract models: in Myanmar, Guinea Conakry and Lebanon IPT offer what they call the “T-ESCO” model – a variant of the fixed energy model wherein the monthly fee is defined by kWh energy consumption within predefined bands. In Nigeria IPT offers the ‘Guaranteed Savings’ model under which they supply both equipment and service, a risk-free approach to optimising opex and capex, which they generally feel is more appealing to towercos. IPT has deployed their own capital to date, but is increasingly open to outside financing, and has attracted considerable interest from prospective debt and equity investors. IPT is inheriting significant legacy equipment in Guinea Conakry which it will upgrade and replace with its own equipment over time, whereas in Lebanon most of the equipment was already supplied by IPT. IPT buy third party engines but manufacture their own gensets, controllers and RMS.

Lineage Power: See Pace Power.

--------------------------------------------------------------------------------Mahindra Powerol: Leading genset manufacturer and Indian managed services giant with around 35,000 Reliance sites under an O&M managed services contract. No known ESCO contracts, but believed to be interested in opportunities in this space.

--------------------------------------------------------------------------------Makasa Sun: Established in 2004, Makasa Sun is a civil engineering, infrastructure maintenance and support services company with operations spread across telecommunication infrastructure turnkey build and maintenance, construction and dredging. One of IHS Nigeria’s ‘Big Five’ partners, Makasa Sun is partnering Ascot in the provision of DC gensets to at least 1,500 Nigerian cell sites.

--------------------------------------------------------------------------------Mantrac: Mantrac is an authorized Caterpillar dealer, distributing Caterpillar’s renowned primary and backup power systems from a substantial support footprint including offices in Egypt, Nigeria, Kenya, Uganda, Ghana, Tanzania, Sierra Leone, Iraq, Russia, the UK, UAE and Lebanon. Mantrac offers asset-leasing as opposed to pure ESCO models.

--------------------------------------------------------------------------------MediPower: Established in 2003, MediPower is the ESCO offering of leading Italian genset manufacturer Ausonia. MediPower has developed DC and hybrid energy gensets specifically to serve remote and off grid cell sites. MediPower owns and

operates gensets at 150 off-grid and temporary cell sites in Italy for customers such as Vodafone, TIM, Wind-3, INWIT and Cellnex. Their total portfolio was once as large as 250 sites, but has been reduced due to grid extensions. MediPower contracts have been continually renewed, and they have never been fined for failing to achieve an SLA. MediPower’s business model is structured around a monthly fee paid by the customer to get energy produced by MediPower’s own fleet of generators (AC Gensets, DC Gensets and Hybrid Power System designed and produced by Ausonia). Depending on specific customer agreements, different tariffs are available, adjustable according to site power consumption and noise level requirements. Full service is provided including maintenance, remote monitoring amd control, ensuring 24/7 availability. MediPower is in advanced discussions with several international MNOs and towercos in order to achieve their energy requirements and cost savings targets, supported by the resounding successes the Ausonia solutions are achieving at global level. If ESCO opportunities in new markets materialise, MediPower will launch new country-based opcos. The implementation of their business model in a new country is quick and easy to achieve, as the technological framework behind it is ready to be replicated and immediately deployed.

--------------------------------------------------------------------------------MEKTA IPS: METKA IPS results from the combination of resources and expertise of METKA


and International Power Supply (IPS), building on the strong technical expertise of IPS in the R&D and precision manufacturing of power electronics and energy conversion technologies, backed by the project execution capability and know-how of METKA, as a leading international EPC contractor, in addition to its robust financial resources. Through this joining of forces, METKA IPS is well positioned to meet the challenges of the rapidly growing hybrid and off grid power market, serving the needs of customers around the world with affordable and efficient solutions suitable for a wide range of applications, including telecoms and mini-grid. Leveraging further on METKA’s strong financial position, the joint venture can offer an expanded array of services, including options for vendor financing and payment flexibility. METKA IPS has developed the award-winning Exeron solution, “the opex killer for off-grid telecom towers”.

--------------------------------------------------------------------------------Millicom: Breakthrough challenger MNO with a reputation for innovation. Has opcos in Chad, Ghana and Tanzania in Africa, plus Bolivia, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Paraguay, often trading under the brand name Tigo. Millicom’s first African ESCO project went live in Chad in July 2017, where their partners are Aktivco+Camusat. Millicom also have multiple ESCO projects in the CALA region.

--------------------------------------------------------------------------------Mitsui: Japanese industrial group with over US$106bn of total assets, with an appetite to invest in ESCO and mini grid projects, in particular in

Africa and Asia. Has an active investment in OMC and a strategic alliance to cultivate global ESCO and mini grid markets with OMC.

--------------------------------------------------------------------------------M-P Infrastructure: M-P Infrastructure is an established turnkey telecom network infrastructure solution provider with over 2,000 staff in seven countries. M-P Infrastructure is one of IHS Nigeria’s ‘Big Five’ partners, operating just under 2,000 sites for the towerco in the South-West, South-East and North-Central regions of the country. The solution aims to stabilise uptime and reduce opex by as much as 50%, and includes total hybrid power output approaching 4MW.

--------------------------------------------------------------------------------MTN: Leading MNO in Africa and the Middle East with B2C services in 22 countries. While MTN has partnered with towercos in most of their tier one and two markets, selling over 20,000 sites, the ESCO model is under consideration for utilisation in many of MTN’s tier three markets, which are often considered too small to attract towerco investment, but where MTN remains keen to simplify their business model. TowerXchange estimates that MTN retains ownership of power systems at around 23,000 cell sites in Benin, Togo, Liberia, Congo Brazzaville, Botswana, Sudan and South Sudan, Guinea Bissau, Guinea Conakry, Syria, Iran, Afghanistan and Yemen. MTN’s ~10,500 sites in South Africa are not felt to be prime targets for ESCOs.

NEC: NEC Group focuses on solutions for society and businesses that utilise the strengths of ICT to create the social value of security, safety, efficiency and fairness that is necessary for people to live more prosperous lives. NEC are a global leader in providing both active and passive infrastructure to ICT companies around the world. NEC seek to develop and support opportunities for safe cities, energy, cyber security, telecommunication solutions, retail, managed services, cyber defence and cloud (both public and private) amongst others in sub-Sahara Africa. NEC have a robust hybrid power solution starting from the small telecom towers to large MW power applications. NEC are the leaders in battery and integration technology to provide the lowest total cost of ownership for their customers with the highest uptime and managed services. NEC design their products to last the duration of ESCO contracts with performance guarantees. As a US$30bn company with extremely strong financials, NEC are essentially technology providers with several financing options for ESCO customers.

--------------------------------------------------------------------------------OMC Power: OMC Power is the largest mini grid operator in India, with 100 mini grids, serving around 150 telecom towers and 13,000 off-takers. OMC is the pioneer of its unique and innovative ‘ABC’ model, under which OMC serves power to A “Anchor” loads, small and medium rural “Businesses” and rural “Communities”. Along with its investor Mitsui, OMC is exploring opportunities in the Asian and African markets.


Orange: Orange has been the primary driver of growth in the African ESCO market over the last 12+ months. Orange had signed five ESCO contracts for a total of around 3,200 sites at time of writing (September 2018); with GreenWish in DRC, with Aktivco in Niger, Côte d'Ivoire and Burkina Faso, and with IPT PowerTech in Guinea Conakry. Orange has live ESCO RFPs in Egypt and Madagascar plus other undisclosed countries. In the interview with Nat-sy Missamou, Orange’s Director of New Business Models for Network Infrastructure, which you can read later in this report, he indicates intent to hand over full portfolios of towers in smaller markets to ESCOs, subsets of towers in larger markets (where towercos are present). Orange identified that towercos had no appetite to buy or build towers with no lease-up potential, leaving Orange in need of an alternate partner to help them reduce cost of operations for rural towers and nearby shops, as well as for fixed network sites with no mobile equipment.

--------------------------------------------------------------------------------PACE: Has 400-500 Vodafone India sites under ESCO contracts, under subsidiary Lineage Power, plus as many as 30,000 more under O&M managed services contracts, albeit a significant proportion of these were for Reliance. Pace also provides energy equipment finance in Myanmar, although TowerXchange haven’t (yet) classified that activity as an ESCO. Established in 2003, PACE has over 2,500 employees and has grown into a leading equipment manufacturer and O&M service provider to towercos and MNOs both in India and overseas, with a presence in 15 African countries.

Polar Power: Polar Power was the first company in the telecom industry to introduce and incorporate DC generators into hybrid power systems. Founded in 1979, they manufacture and sell DC generator, solar and lithium battery powered hybrid systems with over 10,000 units deployed in telecoms. Polar Power’s Prime Power DC Generators provide very low fuel consumption, low maintenance with 3,000-hour oil change interval and long generator life; while their Backup DC Generators provide compact, lightweight, minimum fuel storage providing long reserve.

--------------------------------------------------------------------------------Power HF: Power HF is a world class manufacturer of engines and diesel gensets, with a particular focus in telecom on turnkey service provision and innovations in hybrid generation, energy storage and fuel cells. Power HF have produced over two million engines, have annual production capacity for 150,000 engines and 45,000 gensets, and is the largest exporter of gensets in China. Power HF has been serving the telecom industry since 2006, and produces gensets from 10-2,000 kVA, with embedded fuel and remote monitoring systems. Power HF telecom customers include Reliance, Vodafone, Telenor, Safaricom, ZTE, Eaton Towers, edotco, IGT and Ooredoo to name a few.

--------------------------------------------------------------------------------QTE: Pan-African managed service provider with offices in South Africa, Uganda, Kenya and Tanzania. QTE provides turnkey solutions from site acquisition and civil works to power products, O&M.

QTE is believed to be responding to selected ESCO RFPs, and was rumoured to have been shortlisted to win the Airtel Madagascar ESCO contract before the process was revoked.

--------------------------------------------------------------------------------Quanta Towergen: Had around 500 sites under ESCO contract in India at the time of their acquisition by Ardom in 2017. The terms of the transaction were not disclosed.

--------------------------------------------------------------------------------REON Energy Solutions: Established in 2012, REON is Pakistan’s fastest growing and largest national solar installer for commercial and industrial clients and a clear market leader amongst solar companies providing solutions to telecom operators with over 25% market share. REON is the renewables division of Dawood Hercules Corp, which was to be a joint venture partner with towerco edotco in a deal to acquire 13,000 Jazz towers, although the transaction was recently cancelled. While no formal telecom ESCO has yet been established in Pakistan by REON, they are already working with edotco as their energy partner with supply and services of solar, DC power system, standby gensets and storage for new sites roll-out.

--------------------------------------------------------------------------------Sagemcom: One of the many capabilities of French high-tech giants Sagemcom is their operational footprint – with a presence in more than 20 African countries – to provide managed and power services for telecom infrastructure. Sagemcom is deploying


and maintaining hundreds of hybrid energy units as the operational partner of GreenWish in their 300 site ESCO in the DRC for Orange, and manages thousands more sites in several other countries. Sagemcom, through global frame agreements, is a leader of power solutions and managed services both for MNO and towercos in Africa, and is also a leader in minigrid roll-out for rural electrification.

--------------------------------------------------------------------------------Sunco: Sunco got to the brink of securing a 500 site ESCO deal with a major MNO in CALA before the deal collapsed due to lack of executive sponsorship at local opco level. Sunco is now clean energy investor, increasingly focusing on utility scale, government and energy access projects.

--------------------------------------------------------------------------------SunFunder: SunFunder is a solar energy finance business with a mission to provide financing for solar assets in emerging economies, including inventory, working capital, construction, and structured finance loans. SunFunder is a well-positioned financial intermediary that has been operating since 2012. SunFunder has already completed one transaction with an African ESCO and has another in progress.

--------------------------------------------------------------------------------Tiger Power: Developers of PowerCamp, a modular, containerised plug and play solar power system with integrated lead crystal batteries and a long-term energy storage concept based on hydrogen, all supported by comprehensive analytics. While not

strictly an ESCO, Tiger Power offers a range of asset based leasing and project financing.

--------------------------------------------------------------------------------Tillman Global Tower Solutions (GTS): In June 2016 Tillman GTS announced intent to deploy US$500-700mn of capital into telecom ESCOs. Tillman GTS is a joint venture between Tillman Global Holdings, Sanjiv Ahuja’s renowned telecom infrastructure investor with experience in Africa, Asia, Europe and the Americas, and Global Tower Solutions, which has a proven track record in identifying and executing solar solutions for telecom tower businesses. Tillman GTS was created to offer both utility scale ground mounted solar solutions, and to either finance or operate ESCOs with O&M partners.

--------------------------------------------------------------------------------Total: Oil and gas giant with a deep commitment to renewable energy, Total has been considering offering a telecom ESCO proposition, but are not believed to have any contracts yet. Total have thousands of ‘boots on the ground’ in fuel logistics and lubricant sales, as well as strong relationships they can leverage with MNOs. Given Total’s balance sheet, they may be able to reduce the cost of capital for ESCOs thus may profile as prospective future investor in, or acquirer of, first mover ESCOs.

--------------------------------------------------------------------------------TowerPower: TowerPower combines solar, smart energy storage, and IoT-enabled software intelligence to shift telecommunications towers away from expensive and polluting diesel

generators while guaranteeing 99.9% uptime to their anchor customers. TowerPower’s vision extends beyond towers to community power applications, and they propose an Energy as a Service (EaaS) model through which they design, finance, purchase, install, and deploy energy equipment, charging a fixed monthly fee per tower for energy usage and energy asset management.

--------------------------------------------------------------------------------Uppercrest: Originally one of IHS Nigeria’s ‘Big Five’ partners in a quasi ESCO arrangement, but is now working more directly with Huawei.

--------------------------------------------------------------------------------Vertiv: Vertiv provides a complete range of services to help customers improve the operating performance of their critical infrastructure, deliver capacity expansion and optimise energy costs. For example, Vertiv believes overall operator power needs are increasing and Vertiv recommends surveying tower sites to frame these needs and identify those sites requiring a power distribution upgrade. Ensuring energy efficiencies are factored into such solutions is vital. To this regard, Vertiv can support telecoms customers by providing Energy Savings as a Service, (ESaaS). It also currently offers financing models to selected customers and is investigating offering ESCO services in some developing markets. Headquartered in Columbus, Ohio, USA, Vertiv employs around 20,000 people and does business in more than 130 countries.

--------------------------------------------------------------------------------Voltalia: US$180mn turnover distributed renewable


energy player with a vision to supply power to 10,000 cell sites in the medium term, spanning Sub-Saharan and North Africa, Latin America and Southern and Southeast Asia. Voltalia has an installed base of 524 MW of solar, wind, hydro and biomass projects in 30 countries, and setup a business unit two and a half years ago to serve renewable energy requirements in telecom. Voltalia focuses on minimised Levelised Cost of Energy (LCoE), which most closely resembles the fixed energy business model, under which Voltalia deploys their own capex. Voltalia recently signed their landmark first telecom ESCO contract with MNTI (one of Mytel’s towerco rollout partners from Myanmar), covering an initial 171 sites, of which 100 were deployed by September 2018. Diesel costs remain a pass through on that initial contract, which has a ten year duration. Voltalia is also exploring opportunities to install large solar farms to provide telecom power under a private PPA at a rate lower than the price of the grid. Technology agnostic.

With over 500 MW of installed power generation capacity, recognised industrial capabilities, over €900mn of assets on its balance sheet and a very long-term reference shareholder, Voltalia can afford to take a longer term more industrial view than private equity-backed competitors.

--------------------------------------------------------------------------------Yoma Micro Power (YMP): YMP builds, owns, operates and maintains (BOOM model) micro power

plants that have telecom tower customers as anchor loads. Unlike most telecom ESCOs, YMP builds its power plants in its own land site and not inside the cell site. YMP achieves economy of scale with larger power plants that also provide electricity to the nearby villages. YMP has built 10 pilot micro power plants last year in Myanmar and is now scaling up to 250+ sites within the next several months, with a goal to build a few thousand over the coming years. YMP is providing power to both MNOs directly as well as to towercos in Myanmar. YMP builds its plants and distribution mini-grids only in off-grid areas. YMP enters into long term PPAs to provide energy within defined brackets.

--------------------------------------------------------------------------------Zain: Zain has over 22,000 cell sites across eight countries in the MENA region. Zain is finalising agreements to sell 2,292 towers in Kuwait and 8,263 towers in Saudi Arabia to power-as-a-service towerco IHS but is exploring potential ESCO partnerships in other markets. Iraq, Lebanon and Sudan may be the more likely countries where Zain could seek ESCO partners.

--------------------------------------------------------------------------------ZTE: ZTE Corporation has become the most successful Chinese enterprise in terms of global communication energy products and integrated power solution provision. ZTE’s energy product department has worldwide service capabilities, and has been continuously innovating to meet market and customer requirements, providing the world’s best green and high-efficiency energy solutions.

The products and solutions provided by ZTE Energy include green and reliable high-efficiency power supply solutions, data centre solutions, hybrid energy solutions, energy solutions for government and enterprise clients, and vehicle energy solutions. By the end of 2017, ZTE Energy products had been used by more than 300 operators in over 160 countries. Over 1,260,000 units of ZTE power supply systems have been providing stable power for operators and enterprise clients. ZTE has provided 650MW in renewable energy for telecom operators and clients from other industries<

Are you aware of any ESCO providers or projects not covered in this study?

TowerXchange would love to hear from you if you are involved in an ESCO project not covered by this study. We would also love to hear from investors with an appetite to put capital to work in ESCOs – we’re happy to introduce you to selected companies referenced in this report, and would love to feature a short profile of your company in a future “Guide to investors interested in ESCOs”. Contact the report author, Kieron Osmotherly, Founder and CEO of TowerXchange, at [email protected]<


Market research data used in TowerXchange’s ESCO report 2018

Site count Grid availability Contract structure Site owner

Esco SSA MENA India Myanmar CALA Europe Indonesia Total sites On-grid Unreliable Off-

gridUnknown

grid Fixed kWh Guaranteed savings Other Unknown

model Towerco MNO Unknown client

ACME Group 100 100 50 50 100 100

Aktivco 2000 2000 600 600 800 2000 2000

Applied Solar Technologies 4000 4000 1200 1200 1600 4000 4000

Ardom Towergen 500 500 350 150 500 500

Ascot* 1700 320 60 30 2110 150 1350 610 520 60 1500 30 1530 580

Bhaskar Solar 800 800 560 240 800 800

Biswal 2000 2000 400 1600 2000 2000

Cambridge Clean Energy 464 464 232 232 464 464

Distributed Power Africa 1600 1600 1554 46 1600 1600

ENERTIKA 2000 1500 3500 3100 400 3500 1500 2000

Energy Vision 280 280 140 25 115 280 280

GreenWish Partners 300 300 30 270 300 300

HYBRICO 40 40 29 11 40 40

IPT PowerTech 6000 1600 2200 9800 346 5364 4090 5300 4500 5750 4050

Pace Power 400 400 400 400 400

MediPower 150 150 150 150 50 100

M-P Infrastructure 2000 2000 400 1600 2000 2000

OMC Power 150 150 150 150 150

Voltalia 171 171 38 21 112 171 171

Yoma Micro Power 10 10 10 10 10

Percentages 52.30% 6.30% 21.10% 7.80% 6.70% 5.60% 0.10% 19.00% 29.70% 48.00% 3.30% 57.90% 1.10% 32.90% 6.70% 1.40% 63.10% 36.00% 0.90%

*1500 of Ascot’s sites in SSA are in partnership with Makasa Sun under IHS’s Big Five initiative Source: TowerXchange research, industry sources, research conducted July-September 2018


Orange pioneers the ESCO model in Sub-Saharan Africa

TowerXchange: Please can you explain more about Orange’s footprint and history of sharing and outsourcing passive infrastructure?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: Orange has a footprint in 22 markets across the African and Middle Eastern region, owning a total portfolio of around 33000 radio sites. Of these sites, 34% are shared with half under towerco ownership or management and another half where Orange is hosted directly by another MNO (figure one).

We work with towercos in Cameroon and Cote d’Ivoire (where we have a management contract in place with IHS Towers) and in the DRC (Helios Towers), Madagascar (Towerco of Madagascar) and Niger and Burkina Faso (Eaton Towers).

In general, in markets where towercos are present, they manage the vast majority of our sites in the country (figure two)

TowerXchange: When and why did Orange start studying the ESCO model as an outsourcing strategy?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: We started assessing the model several years ago, seeing it as an opportunity to lower our cost of operations. Whilst towercos present one opportunity there are certain limitations of working with them. Towercos only have an appetite for towers with sharing potential, this means that

Read this article to learn:< The number of sites owned, leased and shared by Orange across its African & Middle Eastern markets

< Why Orange started studying the ESCO model

< ESCO projects signed and RFPs issued by Orange

< Details of the MNO’s DRC ESCO agreement and to what extent other agreements will follow the same structure

< How the ESCO landscape has changed

With five ESCO contracts signed and another two RFPs live, Orange has been leading in the adoption of the ESCO model in the telecom space. TowerXchange speak to Nat-sy Missamou, Orange MEA’s Director of New Business Models for Network Infrastructure to understand the MNO’s perspective on ESCOs and how they are fitting into their passive infrastructure strategy.

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA

Keywords: Africa, Botswana, Best of TowerXchange, Burkina Faso, Cameroon, Central African Republic, Cote d’Ivoire, DRC, ESCOs, Egypt, Energy, GreenWish Partners, Guinea Bissau, Guinea Conakry, Infrastructure Sharing, Jordan, Liberia, Madagascar, Mali, Morocco, Niger, Opex Reduction, Orange, Sagemcom, Senegal, Sierra Leone, Tower Count, Tunisia


even in markets where towercos are present there are towers they have no interest in buying, managing or building, which remain Orange’s responsibility. Plus we also need to power things other than mobile towers, in Cote d’Ivoire, for example, we have sites for our fixed network which do not have mobile equipment on them and so do not make sense for towercos. On top of this we have shops and other forms of infrastructure which require power but are outside of a towerco’s remit.

ESCOs offer a solution in areas that towercos cannot; we don’t see ESCOs as competitive to towercos, rather we see them as complementary. In markets where towercos operate, they still remain our biggest partners, managing the vast majority of our sites.

TowerXchange: In which markets is Orange examining the ESCO model and how advanced are you in this?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: Orange has signed five ESCO contracts to date, in the DRC, Niger, Guinea Conakry and Burkina Faso. In addition to this we have two further RFPs live in Egypt and Madagascar. We are also studying opportunities in other markets. Generally speaking, in markets where we have a small number of towers, our plan would be to hand the full portfolio over to an ESCO, whereas in our larger markets it will most likely be a subset of towers.

TowerXchange: With the DRC being the most advanced of your projects, please can you shed a bit more light on the details of your ESCO agreement

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: In the DRC we signed a contract with GreenWish Partners and Sagemcom for them to take over management of power on 250 of Orange’s sites in the country, [Editor’s note: Since going to press this figure has been extended to 300 sites and datacentres] with Sagemcom responsible for field operations. This figure includes towers but it also includes shops and the provision of energy to houses. The contract

Figure one: Ownership of the 30,000 physical sites used by Orange in MEA

ESCOs offer a solution in areas that towercos cannot; we don’t see ESCOs as competitive to towercos, rather we see them as complementary.


was signed in July and GreenWish-Sagemcom has now taken over management of all sites. They are working to upgrade equipment based on its level of performance and so it will be an ongoing process over the duration of the project.

TowerXchange: Did you carry out pilot projects prior to deciding on a winning bidder?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: Sagemcom have the experience of operating a large number of towers across the African continent and Orange have worked with them previously and so as such, we did not deem it necessary to carry out a pilot project. Pilot projects would slow down the process and Sagemcom have proven experience in carrying out the works already, including for some towercos.

TowerXchange: Is the agreement very similar to that in the other markets in which you have signed contracts?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: When it comes to setting the terms of the contract, that is something which is decided upon by Orange, and generally speaking the details of the contract are very similar, country to country and RFP to RFP. We don’t ask for the bidders to come up with alternative agreements, rather they must differentiate based on price and their ability to execute the project. It is up to the bidder to decide on what technology they will use, but we have tended to find that most bidders are using very similar suppliers.

Figure two: Breakdown of tower ownership across Orange’s 18 markets in MEA

TowerXchange: Can you share some details into the typical length of agreement that you are offering to ESCOs?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA:

The ROI on the project is typically 6-7 years and so we don’t give any less than that to enable the ESCO to invest in the project. If you shorten the terms of the contract you end up having to pay more as a fixed fee. Whilst the shorter limit of the contract duration is 6-7 years, the upper limit is around 12-

Markets where Orange uses over 1000 towers

Markets where Orange uses under 1000 towers


15 years. One never knows what is going to happen and so committing to a longer period doesn’t make sense.

TowerXchange: To what extent does the ESCO take over management of the existing energy equipment on site, versus install new equipment?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: It varies; in some instances the energy systems in place are performing well and so the ESCO just takes over the equipment, whereas in others the systems are reaching the end of their lifespan or are performing sub-optimally and so it makes sense to replace them. It really depends on the quality of the equipment in place. Ultimately however, the upgrade of energy systems will be a rolling and continuous process, rather than the just one major upgrade project from the start.

TowerXchange: Do you see a role for ESCOs in carrying out additional site activities and services beyond power?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: Some ESCOs who are participating in our RFPs also have experience in building towers as well as carrying out O&M. When a company carries out additional works beyond the power we term them an “ESCO plus”; i.e. ESCO plus tower and it is something which we are looking at.

Figure three: Orange’s ESCO contracts and RFPs across MEA

BAHRAIN

123456

ESCO contract signed with Greenwish

Partners

ESCO contract signed with Camusat’s

Aktivco

ESCO contract signed with IPT PowerTech

Confirmed live ESCO RFP

Orange opco present

No opco present



TowerXchange: Have you seen the types of companies approaching you change from when you started studying the ESCO model?

Nat-sy Missamou, Director of New Business Models for Network Infrastructure, Orange MEA: When we first started looking at the ESCO model, the majority of interest was from the large power companies, players such as Engie, Total, etc. Over time we have started to see the number of companies with an interest in the space starting to expand, and have increasingly seen companies with a background in telecoms and towers reaching out to us.

We now see technology companies, pureplay ESCOs, different types of investors and O&M contractors all submitting bids in our RFPs; often in partnership with each other to either bring a better cost of finance or greater experience in the sector to the bid. It remains to be seen which types of companies will predominate in the long run and each have their pros and cons; for example the big power companies have access to good solutions and good sources of financing but on the flip side they can be a bit slow to react, with a lot of internal processes and decision making to go through which makes it harder for them to follow Orange’s timelines.

The very nature of an RFP process is that it is a competitive bid and so we remain open to studying proposals from a broad spectrum of companies and make our selection based on the most competitive offer, which usually comes down to price, optimised power solutions and their ability to execute the works in the field <

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Camusat’s ESCO Aktivco contracts 2,000 cell sites in one year – and targets 10,000 by 2022Group Chairman Richard Thomas explains their vision, business and operational model

TowerXchange: Please re-introduce Camusat and Aktivco for any readers not already familiar with your vision and achievements. Richard Thomas, Chairman, Camusat: There are now two big businesses within the Camusat Group; Camusat, which designs, builds, manages and powers cell sites with an operational footprint in 35 countries; and our new business with Aktivco, a dedicated long-term investment vehicle which offers energy as a service. When Camusat Group refinanced in 2016 we created an organisation and a balance sheet ready to help telecom clients that were asking us to help them develop a different operational model – they wanted to rid themselves of the challenges of managing power, and for us to take on the capital costs of investing in hybrid energy equipment. And so we created our ESCO Aktivco to meet the needs of our customers, and we commenced the first Aktivco venture at the beginning of 2017. We have now assembled a new dedicated financial team with the specific know-how required to define and refine our ESCO business model, while Camusat provides the necessary operational capabilities and footprint.

TowerXchange: Congratulations on Aktivco winning ESCO contracts in several countries in Sub-Saharan Africa! What can you tell us about this part of your business? Richard Thomas, Chairman, Camusat: Aktivco is the largest ESCO in Africa. Today we have contracts to bring around 2,000 towers under ESCO

Read this article to learn:< The transitional phase between contracting and re-capexing the sites: auditing every piece of energy equipment< Aktivco’s procurement philosophy: testing innovations and seeking long term partners< How Aktivco strike the right balance between standardisation and customisation< The addressable market for telecom ESCOs: the impact of grid availability and grid prices< Aktivco’s forecast for the growth of the telecom ESCO segment in the next four to five years

Aktivco is Africa’s largest Energy Services Company (ESCO), with end-to-end management contracts for 2,000 cell sites across four African countries, in which Aktivco will be deploying their own capex to upgrade to hybrid power systems. Leveraging the reputation and operational capabilities of parent company Camusat, Aktivco has won contracts with Millicom in Chad and with Orange in Niger, Burkina Faso and Ivory Coast. In this exclusive interview, Camusat Chairman Richard Thomas explains how they won those contracts, and how they will execute them.

Keywords: Aktivco, Africa, Africa Insights, Batteries, Burkina Faso, Business Model, Camusat, Chad, Deal Structure, ESCOs, Energy, Energy Efficiency, Energy Storage, Hybrid Power, Ivory Coast, Millicom, Niger, O&M, Off-Grid, On-Grid, Opex Reduction, Orange, Procurement, Renewables, Solar, Unreliable Grid, Who’s WhoRichard Thomas, Chairman, Camusat


management in SSA. With Millicom we have over 500 sites in Chad. With Orange we have over 500 sites in Niger, and we are taking over a contract in Burkina Faso where Orange is increasing the number of sites. Also, we have recently won another contract with Orange in the Ivory Coast. TowerXchange: What are your growth objectives for Aktivco and how substantial do you think is the pipeline to secure future ESCO contracts? Richard Thomas, Chairman, Camusat: We have already achieved our target for 2018, and are targeting 10,000 ESCO sites in the next four years. Forecasting the pipeline of ESCO contracts is complicated as many MNOs are still studying the model, but we anticipate a huge volume of opportunities coming to market, particularly from markets with lots of off-grid or bad grid towers in Africa. Fuel management and energy efficiency remains a huge issue, and MNOs are increasingly finding that when they outsource to towercos, those towercos don’t always invest substantially in the long-term payback energy management innovations that can most significantly reduce energy opex, particularly when fuel costs are a pass through. In contrast, an ESCO like Aktivco has an obligation to push further into energy efficiency, in particular renewable energy, to decrease diesel consumption, because our goal is also to reduce carbon footprints. So we foresee MNOs increasingly externalising

their energy systems to partner with companies like Aktivco not just for network maintenance, but where we invest the capex necessary to optimise energy efficiency. We deliver a higher global power availability than what MNOs have been using until now. This translates into an increased turnover for MNOs, as well as better customer satisfaction. TowerXchange: How have you differentiated Aktivco from competitive ESCOs in order to win these contracts?

Richard Thomas, Chairman, Camusat: Camusat’s managed services reputation for excellence

and capacity on the ground are key – we have a footprint of over 1,500 direct employees in Africa. All our energy systems are built by Camusat engineers – so we have huge backup and R&D resources such that we can control the complete system from day one and avoid any risk of uptime deterioration when transitioning to the ESCO model. TowerXchange: What can you tell us about the timeline and the process of taking over existing sites, extracting value from the remaining lifecycle of existing energy equipment, and the process of upgrading?

ESCO site


Richard Thomas, Chairman, Camusat: Our capex deployment has to be thoroughly evaluated as we’re investing heavily into these sites. So we typically work over a transitional period of 12-18 months to undertake a complete audit, carefully checking every genset, every battery bank – all the power systems, and rethinking the entire network. After the audit we start to re-capex the first batch of sites, replacing legacy power systems with our new solar hybrid energy systems. We often find that the client wants to plug additional legacy sites into our portfolio that had been outside the original contract. And while we’re upgrading the legacy sites, we can also use our systems on any new rollout sites. With regard to your question about extracting value from the remaining lifecycle of existing energy equipment, of course we use that legacy equipment during the transitional period, but we want to plug in a reliable system as quickly as possible, and the lifecycle for solar hybrids is very long. TowerXchange: Where do you find is the optimum balance between standardisation and customisation of the equipment you deploy? Richard Thomas, Chairman, Camusat: We start with a standard core control system and add modular extensions, such as the quantity of batteries and solar panels, according to variables such as grid availability, the power consumption of the site, and levels of solar irradiance. It varies by country, but we tend to end up with 10-20 different typologies.

TowerXchange: What equipment does Aktivco / Camusat supply directly, and what do you source from third parties? Richard Thomas, Chairman, Camusat: We undertake our own system engineering, but we don’t make our own components. Being an ESCO changes your procurement philosophy. We’re not just looking for suppliers, we’re looking for long term partners who share our vision. Of course price is a factor, but we measure total cost of ownership over a longer period now, and that means that maintaining long term relationships is of paramount importance. Our procurement philosophy is also driven by on-the-ground realities in emerging markets; like everything else in the Camusat Group, success is delivered by finding the right balance of finance and operational considerations. We trial third party components rigorously in our test centre in Romania, where we do all our design engineering – it’s also where we also have our global NOC. For example, we’re engaged in significant discussions regarding batteries at the moment. TowerXchange: What is your current preference in terms of energy storage technologies?

Richard Thomas, Chairman, Camusat: There’s no easy answer to that question. We are examining the

performance of many different kinds of battery, and the choice of what to deploy depends on several variables from lifecycle to load, target fuel consumption and capital cost of course. One constant is that we’re looking for long lifecycles from all our equipment as our contracts have a minimum ten year duration. TowerXchange: What proportion of your 2,000 ESCO sites are on grid, unreliable grid or off-grid? And is the ESCO proposition largely limited to the ~300,000 off grid and unreliable grid sites worldwide, or can it be scaled to include the further 4.1mn on grid sites? Richard Thomas, Chairman, Camusat: Around 40% of our sites are off grid, 30% on grid, 30% on unreliable grid connections. As to the question of the addressable market for ESCOs, much depends on country’s grid price. If grid power is expensive then it can make sense to deploy hybrid systems. Another factor is whether it is economical to connect off grid sites to the grid, and whether that grid is being extended. Other factors include site loads – renewables are a more attractive option for sites with smaller loads In the end, a unique business case must be built for every site, whether off grid, on grid or on an unreliable grid connection.

TowerXchange: Appreciating that the nuances of ESCO contract structure are confidential,


should we categorise Aktivco’s contracts as more closely resembling a fixed energy or a per kWh consumption model? Or are they something totally unique? Richard Thomas, Chairman, Camusat: Aktivco provides more than just an ESCO contract – we provide a full service including security, refuelling, O&M as well as power. We don’t sell energy by the kWh – we sell a full service inclusive of maintenance. MNOs know the current operating costs of their network, and they are looking for partners who can deliver a better service for a lower price. We believe we can provide that through our full service, inclusive of relieving them of the headache of managing energy. TowerXchange: What have you learned when negotiating these contracts that could be transferrable to other MNOs or towercos considering partnering with ESCOs? Richard Thomas, Chairman, Camusat: The importance of contract duration is one transferrable lesson: a five to seven year contract is not bankable because the capex we need to deploy is so substantial. To date we’ve found it easier to negotiate win-win contracts in countries with a significant number of bad grid and off grid sites: reducing the fuel consumption of cell sites running on dual diesel

gensets tends to provide adequate margin for both MNO and ESCO. TowerXchange: It seems like MNOs such as Orange and Millicom are pioneering ESCO partnerships in SSA, yet 60% of ESCO sites worldwide are owned by towercos rather than MNOs. Some emerging market towercos see provision of power-as-a-service as one of their core competencies, others are sceptical that ESCOs can access the same low cost capital towercos can. How can we overcome such objections? Richard Thomas, Chairman, Camusat: Towercos started acquiring cell sites in Africa seven or eight years ago. Now the pace of their acquisitions have slowed as perhaps they have acquired most of the sites that meet their investment criteria. Whether the African towercos consider us partners or competition remains to be seen, but ESCOs’ investment criteria are generally quite different from theirs. The towercos are looking at the ESCO model and they are starting to talk to us. We believe that together MNOs, towercos and ESCOs could make a great team, with the towerco managing passive infrastructure and us managing energy. Due to the operational complexities around energy, some of the North American towercos seem wary of entering the African market, preferring to focus

on building and buying towers in North and South America where the grid is good. Perhaps those towercos should consider a partnership with an ESCO as an interesting option to enable an entry into Africa. TowerXchange: TowerXchange research has identified 30,285 cell sites where the energy equipment is owned and operated by ESCOs – how long do you think it will take to achieve 50,000 ESCO cell sites? And what proportion of those would you hope to have in Aktivco’s portfolio? Richard Thomas, Chairman, Camusat: We think there will be a big shift toward new business models for telecom infrastructure in the coming four to five years, and I’m optimistic that an increasing number of MNOs, and towercos, are going to push toward the ESCO partnership model. We’re looking beyond our current combined model of energy services, security, refuelling and maintenance of passive infrastructure – we think there will be opportunities for proven partners like the Camusat Group to manage active equipment as well. The speed of growth of the ESCO market will depend a lot on the availability of capital. But we’ve contracted 2,000 African cell sites in a little over a year, and we see opportunities beyond Africa too. We’ve already hit our growth target for this year, and we’re on a good trajectory to achieve our target to operate 10,000 cell sites within four years, so perhaps that is also a good timeline to forecast the entire ESCO market reaching 50,000 sites by 2022<


Keywords: Africa, Americas, Ascot, Asia, ESCO, Energy, Energy Efficiency, Europe, Off-Grid, Greece, Hybrid, IHS Towers, Indonesia, Off-Grid, Saudi Arabia, STC, Sudatel, Sudan, Tower Bersama, VERIZON, Vodafone

How Ascot revolutionisedgenset technology: “Winners never quit and quitters never win”Ten years of learning from mistakes, taking hybrid technologies from Sudan to the USA

TowerXchange: For our readers who may not be familiar with Ascot, please tell us about the company. Dr Michele Greca, CEO, Ascot: I am pleased to introduce Ascot Industrial SrI, an Italian company with a presence in 59 emergent countries in Africa, Middle East, Asia Pacific and the Americas; a long, winding and successful path that started 30 years ago and carried out with the passion, enthusiasm and determination of the whole team. Since 1986, Ascot has been one of the world’s leading suppliers of customised high efficiency energy products, hybrid power plants and diesel and gas generators. TowerXchange: Why is Ascot considered the pioneer of the advanced tailor-made AC generators and the “father” of hybrid technologies? And how does it fit today into the telecom ecosystem? Dr Michele Greca, CEO, Ascot: We entered the telecom market in early 2003 by chance as we were engaged in a big EPC power project in Sudan.

We were summoned for consultancy by “Mobitel” (today Zain) as their off-grid generators were not functioning at all due to the high operating temperatures. Immediately, as we were approaching their telecom site in the desert, we identified the harsh environment as the key reason why generators failed, even before seeing them. In fact, using a standard generator in the desert is like going off road with a city car instead of using a 4x4 car.In order to solve the problem, we analysed several

Read this article to learn:< Ascot’s journey in revolutionising energy solutions < Ascot’s new E3 program for the telecom industry

< Who are Ascot’s landmark customers worldwide?< Ascot’s experiences as ESCO pioneers – and why the ESCO model is the future

Dr Michele Greca, CEO, Ascot

Ascot is an Italian manufacturing company that operates internationally in the power energy sector. Ascot is mainly focused on the production of diesel generating sets, hybrid technologies and power plants designed in accordance to the customer’s specifications and varying climate conditions. Its products are manufactured in Italy and made of the highest quality European materials. To-date, it has more than 34,000 installations worldwide across multiple sectors including telecoms and oil and gas. Read on to find out how it has stepped up to client challenges to deliver innovative and proven solutions that keep off-grid and unreliable grid sites running.


factors and discovered the inefficiency of the entire power system that was designed by just adding components which were immediately available in the market off the shelf, without any specific engineering study; the telecom site was made of one or two diesel generators with a separate fuel tank of 1000 litres, separate ATS and with service intervals to be done every week as the generators needed to function 24/7. Furthermore, in order to install the entire system, civil works were required to build three platforms to allocate the fuel tank and the two generators plus all the cabling and piping connections. In March 2003, Ascot made the first revolution in the telecom industry by starting to offer a plug-and-play box capable of functioning for up to 41 days without stopping independently from fuel, oil and service interval – we called it the first SWAP “from standard DGS to advance tailor-made DGS.” This began a new era: an all-in-one box housed the diesel generator, the 1300 litres fuel tank to guarantee fuel for 41 days, the integrated control panel and ATS to prevent the sand from blocking the contactor, the automatic lube oil system to avoid the weekly service interval and the automatic dummy load to prevent the damage of the engine when the load was so low after peak to start the air conditioning of the indoor shelter.

The systems were all ready to work as a plug-and-play solution in 30 minutes, situated on two concrete slabs removing costly and laborious civil works. The high-quality products were the result of Italian design and engineering coupled with German

technology. Above all, as the result of extensive R&D, Ascot designed the first Remote Management System (RMS) to control the performance of the diesel generator. With this SWAP, the telecom operators made a substantial reduction in capex costs as the civil works together with the additional cost of transportation, procurement of components and installation were reduced to minimal, while the opex got a huge reduction as the service interval, 5x less

(one visit in 41 days compared to a minimum of five visits in the same period for the standard DGS). The Ascot products were the most demanded products all over Africa as unique solutions. It took ten years for our competitors to understand what was inside the Ascot magic box and to try and copy our inventions, while advertising it as something innovative.On June 27, 2007 Ascot made the second telecom

The first ASCOT hybrid deployed in Sudan, where it replaced an existing dual generator system and achieved 68% fuel saving (2007)


revolution designing the first hybrid in the world of the telecom; we call it the second SWAP “from advance tailormade to hybrid.” On that date, I personally visited Khaled Pervez in Bahrain and at that time he was managing the whole network of Zain in Africa and his big concern was the huge fuel consumption of the diesel generators operating in his network; while I entered into his office he said to me “Mike, as you are the power specialist, please find an engine with low fuel consumption.“ While I was trying to explain that

the fuel consumption is directly linked to power, he stopped me saying “Ok, then please invent a diesel generating set that gives power even when the engine is switched off.” At that moment a project done some years before related to the construction of huge battery chargers (900 KW – 2000 Amps DC) to charge the mega batteries of the submarines came to mind: then the idea of creating a hybrid system was born. We just needed to replicate the technology of the chargers on a smaller scale.

On November 7, 2007 the first prototype of hybrid units was deployed in Sudan replacing existing gensets running 24/7 with the first Ascot Hybrids. Despite the great result achieved in Sudan, Khalid Pervez considered the Ascot Hybrid as a prototype and not a product ready to be mass deployed in the market so he challenged Ascot again requesting to deploy another twelve samples for all their operations in Africa. It was a painful journey and a lot of money was invested in the project. We learned on the field and each single hybrid was followed by an Ascot engineer that fixed errors in real-time and reported to Ascot factory; an online guidance between field and company that brought the project in three years to an advanced stage until October 2010 when Vodafone group entered into a deal with Ascot.

In October 2010, Vodafone Group’s innovation center (Johannesburg) was searching for a proven hybrid solution with at least three years testing on field and apparently Ascot was the only choice. After six months testing in Durbans (South Africa), they adopted the Ascot Hybrid at group level and a FWA was signed and Ascot started the first massive deployment of hybrids in Tanzania, Kenya and South Africa. In 2011, the world of telecoms started to talk about hybrid and Ascot already had five years of proven experience ahead of any other company. From 2011 to 2014, Ascot continued to deploy hybrid solutions to the market becoming the pioneer of the hybrid solution and once more, as it had happened

Hybrid LPG installation in USA


in the first SWAP, all the biggest competitors started to attempt to copy Ascot’s solutions without great results, as they could attempt to copy the concept but never the spirit and the soul with which the hybrid was born. Today many hybrids are available in the market, but no one has fifteen years of field-proven experience and results that make the real difference between one hybrid and another. Today we sell actual performance and not just promises and we have solid performance tables built on real numbers and tracked via our RMS. Over the last two years Ascot Hybrids have been installed in North America, where we received

recognition as an approved supplier to VERIZON USA, recognising our leadership in innovative technologies – the culmination of a long journey from Sudan to USA, developing our H-CUBIC DC Genset for LPG, NG and diesel configurations. TowerXchange: Based in Italy, the company has expanded globally to serve customers worldwide. Specifically, what have been some of your activities for Asia? Dr Michele Greca, CEO, Ascot: The innovative telecom products became the Ascot trojan horse and thanks to them, the Ascot brand became recognised worldwide thanks to the recommendations of our satisfied customers. In addition, I was motivated to

personally kick start each and everyone of our 59 current operations and today with an active park of 34,000 installations worldwide, I am proud to have contributed to emissions reduction worldwide.Ascot Hybrid power systems in telecoms have a successful and documented track record, capable of reducing fuel use by up to 78% against customer baseline at sites with 2kW loads and up to 98% when adding an alternative energy source such as PV panels or wind.

Activities in Asia started in early 2011 with Tower Bersama in Indonesia and continued in the Philippines. We also went on to become the best products in Myanmar with Ooredoo and Telenor both choosing Ascot as their preferred partner in the country.

TowerXchange: What do you see MNOs and towercos struggling with the most when it comes to their energy requirements? Dr. Michele Greca, CEO, Ascot: The MNOs and towercos must consider the energy requirements as the heart of their system, as without power they cannot run the show. They must trust companies that have a proven reputation in the market and with clear commitment to performance. They must be able to put precise numbers in their P&L, numbers that only proven products can guarantee.

TowerXchange: We understand Ascot is launching a new program for the telecom industry which is very exciting. Can you share the details with us and how this concept came about?

Indonesia 2010 with Tower Bersama


Dr. Michele Greca, CEO, Ascot: Yes, the new Ascot E3 program for telecoms acts at two levels: one is represented by telecom operators and tower operators, the other one is what we can consider “corporate social responsibility,” so it is about people (mainly villages). We called it E3 because the keywords are:

EMPOWERMENT: For tower operators, more products, tools and models to maximise efficiency and increase savings; for people it means energy ready for utilities and fitting with their demands.

ENVIRONMENT: For tower operators, products and system based on hybrid technologies, batteries and fuel reduction; for people it stands for silent batteries, able to reduce environmental pollution (low carbon emissions).

ECONOMY: For tower operators, a product to reduce costs for fuel, maintenance and using also natural Gas/LPG; to people it means energy for utilities, at the right price for value considering they are mainly generated using renewables sources (sun and wind).

When I initially became involved in emerging markets, it was purely for business reasons. Over time, it became a passion, and now it is our mission to serve these populations in developing areas and bringing innovative and green technologies. The strategic alliance with operators is a wonderful extension of Ascot’s mission to provide the power needed to develop communities while simultaneously respecting the environment and saving money for operators.

Today, when I see one of our products powering villages or telecom sites in an off-grid scenario, I feel proud to have contributed to the development of humanity. As they are ‘born’ in an Ascot factory, I like to think of our products as children who have left for an important humanitarian mission, and from time to time I like to visit them to make sure that they continue to serve the world to the best of their ability! TowerXchange: Looking forward, how do you think energy and network requirements will evolve, whether from a business case, regulatory or operational perspective? Dr. Michele Greca, CEO, Ascot: The ESCO model will be the future. The goal of telecom operators is to generate profit from phone calls and to gain more market share; to do so they need to have a reliable network operating at lower opex.

The phone call tariff and the revenues generated by the operator have a direct impact on the opex, in fact only with lower expenditure and reliable service operators will be able to decrease the call tariff and acquire more subscribers or simply generate more revenue. In this context, the traditional model and focus of low initial capex is shifting to capex+opex. All in all, this leads us to one word only and that word is ESCO.

TowerXchange: Ascot has been a pioneer of the ESCO business model. What can you tell us about your ESCO projects?

Dr. Michele Greca, CEO, Ascot: Ascot have been running ESCO projects since 2010. We have 30 units on an ESCO contract in Indonesia for Tower Bersama - those units have been running so well since 2010 that we haven’t had to swap out any batteries! We had another early stage ESCO project for Vodafone Greece for 60 sites - that is still running today as well. We also run 320 units in Saudi Arabia for STC in partnership with Nokia, and 200 sites in Sudan for Sudatel. Ascot are partners with Makasa Sun in the IHS ‘Big Five’ initiative. Each of five partners were awarded ten year contracts for an initial 1,500 sites. Makasa Sun wanted to invest in high quality products, so they chose Ascot, and our systems have performed well and we’re being awarded more sites. Most MNOs are moving toward an ESCO model to provide power to their cell sites. It’s a win-win model as long as you have a good client, and are prepared to invest in good products, and invest in educating and training your service team to ensure good O&M. If you choose the right technology partner, a partner prepared to guarantee their product and guarantee their ability to provide local support and spare parts to ensure their equipment runs for the ten year contract duration (and beyond), then everyone can invest in, and generate a healthy return, from a telecom ESCO project. All partners in an ESCO should have some ‘skin in the game’. Ascot are prepared to invest 10-25% in an ESCO project - we have confidence in the quality of our products and service


Ausonia: the field-proven efficiencyin powering sites through Hybrid Solar DC Gensets, even in OPEX modelItalian firm discusses solutions for off-grid and remote sites in Africa and beyond

TowerXchange: Could you please introduce yourself, your role and background?

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: I have over 13 years of experience in the power business, including business development and sales in different geographical areas (EMEA, Americas, Asia and Oceania). I joined Ausonia in 2012, when the CEO, Massimo Ombra, asked me to help him launch the new Hybrid and High Efficiency DC gensets portfolio recently designed by the company to meet the needs of the telecom industry in lowering opex and TCO.

Over the years, we have worked with tens of MNOs and towercos across the globe and came to understand their specific power needs to identify the right energy solutions for their sites. As a result of our efforts and partnerships with our clients, we have one of the most acclaimed portfolios of AC and DC genset solutions in the telecom industry, with thousands of installations in different countries and strong references, even among the ESCO community.

TowerXchange: For those that might not be familiar with Ausonia, please tell us about the company and the customers you work with.

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: If you ask any power specialist working in our home market (Italy), they will certainly know Ausonia. In fact, we were the

Read this article to learn:< Ausonia’s history, experience and footprint in Africa< Beyond energy products, the creation of Ausonia’s ESCO< How to improve energy efficiency in off-grid and remote sites< Clever solutions to reduce total cost of ownership (TCO)

With 85 years of experience in the power business and thousands of installations across the globe, Italian company Ausonia offers a wide portfolio of energy solutions to help African MNOs and towercos reduce fuel consumption and maintenance costs. To cater to the evolving demands of the industry, Ausonia has also created its own energy service company (ESCO) known as MediPower, to provide energy-as-a-service, based on the opex model. With both capex and opex solutions available and against the backdrop of various regional market drivers, Ausonia looks to continuously adapt its offerings to best serve its customers.

Keywords: Africa, Ausonia, Batteries, Capex, DG Runtime, Energy, Energy Efficiency, ESCO, Hybrid Power, Medipower, O&M, Off-Grid, Opex Reduction, Outdoor Equipment, Rectifiers; ROI, Site Surveys, Site Visits, Unreliable Grid, Uptime, Who’s Who, Wind


first company in Italy to manufacture generating sets and we are constantly expanding our footprint in the local market. On top of this, the know-how and experience we have accumulated over many years of business helped the company achieve a high level of specialisation and quality, such that our products today are widely requested by different industries and customers.

We are very active in sectors where power is a critical issue. Our gensets are used to power drilling stations for the oil and gas industry from Sub-Saharan Africa to Central Asia, to ensure backup power to hospitals, airports and industrial sites from South East Asia to Latin America. We even serve NATO with gensets for their military applications.

In the telecom industry, Ausonia has a long history of success, with thousands of generators installed worldwide. We receive positive feedback year-on-year since 2003 by our controlled ESCO known as MediPower, which uses Ausonia gensets to perform their services under the Power Lease Agreements signed with all the MNOs operating in Italian territory (Vodafone, TIM, Wind 3).

The capability to develop, design, manufacture and offer energy solutions to our customers, starting from a basic capex offer to a pure opex business model represents a unique value proposition in the telecom market. This gives new potential customers a strong sense of confidence, as they see us not only as a manufacturer of power solutions, but also as the first user of our own products.

TowerXchange: Specifically, what is your footprint in Africa and what are some key issues and challenges your clients face in this region?

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: Ausonia started looking at Africa in the seventies, when the company was strengthening its focus on the nearest export markets. We approached various customers in the region, from Morocco to Egypt, to the Sudan, from Ethiopia to Nigeria and Zimbabwe, and we realised their power requirements were very specific and could not be standardised.

Since then, we have delivered generators to companies in Sudan, Zimbabwe, Ethiopia, Egypt,


Mozambique, Morocco, Tunisia, Libya, Algeria, Liberia, Gabon, DRC and many other countries. Today we are in discussions with major regional players in the telecom industry for the supply of generators to power their off-grid and poor-grid sites.

At this time, the main concern is around the opex of their traditional power solutions and everyone is trying to understand what would be the best energy solution to be deployed on each site, with the ability to achieve the lowest capex and the highest opex reduction. Within this context, Ausonia is an ideal energy partner as we have the skills and expertise to design customised and efficient energy solutions in line with their technical and financial needs, supporting them also with local maintenance teams and warranty.

Additionally, our energy solutions can be equipped with anti-theft devices which help our customers in reducing the risks connected to robbery of fuel, batteries and other components of the power systems, thereby further increasing their savings on the capex replacements and making our proposals more attractive. TowerXchange: Would you be able to share one or two examples of how you’ve helped clients address their energy/uptime requirements?

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: In several countries we experienced situations where many customers tend

to “oversize” their power systems compared to the real power consumption of their equipment on site. We conducted several site surveys with our technicians and found that in some cases the customer could get to the target of improving efficiency and reducing opex by simply replacing the existing genset with a new one of smaller capacity or by installing a variable speed DC genset.

In other cases, we helped the customer to hybridise the site by adding rectifiers and batteries or by totally replacing the existing set up with a brand new hybrid power system, integrating a variable speed DC genset with deep-cycle batteries in an all-in-one product.

We also helped customers in solving critical problems with the very high costs related to refuelling and maintenance of off-grid and remote sites. In those cases, customers used to go to the sites once a month, with employees or contractors literally carrying heavy fuel canisters on their shoulders while climbing hills and mountains, or accessing sites only after having paid mandatory fees to local gangs. On these types of sites, in some case we have deployed our Dual Variable Speed DC Generators system, which has been able to reduce fuel consumption up to 63%, reducing the number of site visits by 88% and dropping down the TCO by 51%, with a payback period of only 11 months, guaranteeing a power availability rate close to 99.99%. In some other cases, we have deployed our newest Hybrid Solar DC Gensets range, being

able to integrate different energy sources inputs (Solar, Grid & DG) into one single product with small footprint, excellent operational savings and with even an integrated DC cooled cabinet, housing the telecommunications equipment on racks and further reducing the CAPEX investments of our customers.

TowerXchange: What do you think is the Ausonia advantage?

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: There are multiple advantages in selecting Ausonia as an energy partner. On top of what I said earlier about our history and know how, our products offer several configurations of energy solutions which, thanks to a significant reduction in the fuel consumption and to different capacities of integrated fuel tanks, can extend the refuelling intervals up to three to four months.

Moreover, our high efficiency solutions can be configured to require preventive maintenance after as many as 2,000 running hours, equivalent to more than 80 days, allowing customers to schedule only four or five site maintenance/refuelling visits per year, with great savings in yearly opex.

Additionally, our power units can be controlled and managed remotely through a dedicated web-based system, which can be integrated to the network operation centre (NOC) of the customer for managing alarms tracking, ticketing and escalation.


Last but not least, thanks to the scalability of our modular solutions, we can deliver systems to power multi-tenant sites, in which a new operator can be added and billed singularly for its energy consumption.

Considering all this, if our customers compare our DC gensets solutions with the traditional solutions installed around the globe, they realise that the payback period is often less than one year and the product lifetime typically goes over five years, making it an excellent investment, even looking at short-term business plans.

TowerXchange: Lastly, what is the vision for the company, and for Ausonia’s presence in the African region moving forward?

Giuseppe Taranto, International Sales – Telecom Business Leader, Ausonia: Being a proactive and flexible company, we see great opportunities of growth in Africa, especially in countries where telecom players need to urgently go through a renovation of their power assets, or where the network expansion is mandatory to comply with local strategies or simply to follow the indications given by the local regulators.

In Africa different scenarios are possible. We see opportunities in supplying our energy solutions directly to the MNOs or to local and regional towercos. But there is also increasing attention and study towards the power lease offers (energy-as-a-service), in which Ausonia Group can play a direct

role by offering its local presence in the market, as well as partnering with local managed service providers (MSPs) who want to add something more to their current service offerings.

The market in Africa is changing fast and new

scenarios and players are emerging, and this naturally lends to new energy requirements which Ausonia is ready to follow closely, by adapting our energy solutions portfolio to new power demands, more specific technical requirements and efficient technologies


Keywords: Asia, Asia Insights, Bhaskar Solar, Community Power, ESCOs, Energy, Energy Efficiency, Environ Solar, Fixed Price, IFC, India, Nigeria, O&M, Off-Grid, On-Grid, Opex Reduction, Pass-Through, SLA, SREI Infrastructure Finance, Solar, Unreliable Grid, Uptime

Bhaskar Solar: Making theESCO model scalableA view from the inside of India’s 10,000 cell site telecom ESCO market

TowerXchange: Please introduce the TowerXchange community to Bhaskar Solar. Partha P Chatterjee, CEO, Bhaskar Solar: Environ Solar, operating under the brand name Bhaskar Solar, has been in renewable energy services since 2002. Our vision is to touch every life with sustainable and renewable energy solutions – to connect every unit, both residential and commercial, across the country, with a focus on scalability and sustainability. Our initial focus was to create investible revenue streams through the transformation of households to solar energy, and we have subsequently diversified to become a systems integrator and EPC solution provider. We partnered with the Photovoltaic Market Transformation Initiative (PVMTI) of the IFC and SREI way back in 2002-2003 which helped establish solar solutions as an alternate energy source in un-electrified areas, replacing diesel and kerosene. Bhaskar Solar is deploying solutions across various segments, for example we were the first energy services company in India to provide solar solutions to rural banks and ATMs. We see telecom towers as another segment in need of reliable power, and have identified this segment as an area for potential scale. Our experience in telecoms started with a project for the Department of Telecommunications (DoT). We did a pilot project with the DoT and BSNL in 2009-10 and were the first to convince the DoT to adopt the solar+diesel+genset+battery hybrid model to optimise opex and reduce carbon footprints. Indus

Read this article to learn:< Bhaskar Solar’s vision to connect every household and installation with renewable energy solutions< The scale and business model of Bhaskar Solar< The importance of ESCOs being technology agnostic

< Why growth of telecom ESCOs has slowed in India

Partha P Chatterjee, CEO, Bhaskar Solar

Pioneers of renewable energy in India, Bhaskar Solar currently has around 3,500 Indian cell sites, large solar firms and rooftops, 500+ bank branches, 200+ irrigation and water treatment plants. Thousands of other installations including rural households and institutes are also under operation. TowerXchange spoke to the CEO, Partha P Chatterjee about his vision for the future of both Bhaskar Solar and of the telecom ESCO market in India and beyond.


Towers and Idea Cellular were our early customers subsequent to which we added other customers like ATC and Viom Networks (earlier Quippo and now acquired by ATC).

TowerXchange: Are your sites concentrated in a particular region of India, and do you have ambition to expand?

Partha P Chatterjee, CEO, Bhaskar Solar: Our headquarters are in Eastern India, but Bhaskar Solar are not limited by geography – we are a pan-India player. However, with the towercos focusing on the good grid sites, like most India’s ESCOs we’ve been somewhat focused on off-grid sites or locations with erratic grid availability. The provinces where the grid is most unstable tend to be in Eastern and West-Central India (West Bengal, Bihar, Jharkhand), as well as Uttar Pradesh, Northeast, and few small pockets in the West.

TowerXchange: Please describe your contract structure and business model. Partha P Chatterjee, CEO, Bhaskar Solar: We use a simple contract structure to provide our customers with assurance of power supply at a fixed rate that includes energy, O&M, management of the NOC, site security et cetera or/and components thereof. Our rates are also linked to uptime SLAs. TowerXchange: Appreciating you cannot disclose your actual pricing, how do the economics compare to tower leases?

Partha P Chatterjee, CEO, Bhaskar Solar: The towercos usually have two components of their revenue; tower lease or rental charges and energy charges. While tower lease charges factor in site security and O&M costs, energy is typically a pass through cost for the towercos, though these are increasingly being converted into fixed energy models. We help the towercos to optimise both on tower lease charges by optimising O&M, security and energy infrastructure capex and also energy costs through various efficiency measures. Energy management remains our core competency as we have both monitoring and control technology for optimising energy usage and the cost thereof. We

usually offer a 10-20% optimisation opportunity for the towercos. This gives the towercos (who own around two thirds of India’s towers) a timely opportunity to make an arbitrage on energy efficiency at a time when MNO consolidation is putting their core revenues under pressure. Lease rates in India are typically around US$500pcm per tenant and energy cost per tenant also is around US$500pcm. We can improve upon these numbers if towercos and MNOs outsource energy management to us. TowerXchange: Do you see community power as an opportunity for Bhaskar Solar? Partha P Chatterjee, CEO, Bhaskar Solar: We focus on scalability and sustainability. I’m not sure if the community power model can be scaled as fast as the segments we’re focusing on. To date we have found the provision of community power services too variable, while the regulatory environment is less than ideal. TowerXchange: How is your business financed? Do you have an interest to attract more capital? Partha P Chatterjee, CEO, Bhaskar Solar: Our key funders are SREI Infrastructure Finance. We are currently exploring supplementary finance options to reduce our cost of debt and expand our network, so we’d love to connect with other members of the TowerXchange community to identify long term investors interested in the ESCO market.

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We usually offer a 10-20% optimisation opportunity for the towercos. This gives the towercos (who own around two thirds of India’s towers) a timely opportunity to make an arbitrage on energy efficiency at a time when MNO consolidation is putting their core revenues under pressure


TowerXchange: Please describe the energy equipment on your cell sites - what is the blend of DG, batteries and renewables? Are you technology agnostic? Partha P Chatterjee, CEO, Bhaskar Solar: We have been technology agnostic since day one. Bhaskar Solar is solution rather than product focused – we work solutions around customer requirements to resolve their pain points. We have no commitment to a given technology, component or brand, so can optimise TCO by selecting solar, wind, fuel cell, lithium-ion et cetera, delivering reliability and leveraging long term support from our suppliers. We take responsibility for our sites; for example Bhaskar Solar was the first ESCO in India to offer five year warrantees and TCO, which we offered before the market had achieved the proof of concept of solar which we have today. TowerXchange: What is your personal view of the telecom ESCO market in India - it seemed to make a great start a couple of years ago, but has grown slowly since – are we right, if so what must be done to reinvigorate the market? Partha P Chatterjee, CEO, Bhaskar Solar: The Indian telecom market is undergoing a period of unprecedented consolidation – everyone is trying to survive or merge. The tower portfolios of Idea Cellular, Vodafone and even potentially Indus Towers are all on the block. This inevitably contributes to a degree of indecisiveness in the

market, as decision makers hold off commitments awaiting confirmation of the new market structure. By the end of 2018-19, this phase of consolidation will largely be over, and the decision makers’ focus will revert to forging long term relationships to optimise operating costs. Growth in the Indian ESCO market also stalled because people previously didn’t understand technology evolution – there were initial doubts whether to back PV, fuel cell, lithium-ion et cetera. While all those solutions have their use cases, solar has emerged as the way forward in the majority of circumstances. TowerXchange: What do you think is the key to ESCOs forging partnerships with towercos? Partha P Chatterjee, CEO, Bhaskar Solar: The sheer scale of installation and maintenance is a challenge across towercos’ increasingly diversified portfolios, which creates opportunities for ESCOs to create greater efficiencies than towercos can achieve in-house. While towercos are proactive in driving their partners’ efficiency, through remote monitoring, control and SLAs, there is a threshold of efficiency towercos cannot push beyond without ESCO partners to help them optimise the longer term payback technology solutions they need to bring their costs down even further. We feel the focus of towerco energy efficiency programmes is now shifting. Originally their focus was on replacing diesel, but with the cost of grid

power going up, they’re increasingly seeking to offset the cost of the grid, leveraging renewables to bring down TCO, so good grid sites are becoming part of our addressable market. TowerXchange: What is the scale of the Indian telecom ESCO market today? Partha P Chatterjee, CEO, Bhaskar Solar: ESCOs are operating a little under 10,000 cell sites in India in total. The ESCO market is quite fragmented, and not all the players will be sustainable in the long term. Consolidation among ESCOs is as inevitable as it has been among MNOs and towercos. Most of the ESCOs are striving to scale up and prove to the financial partners that we can achieve deliverable results, rather than constantly needing more funding. TowerXchange: What is your vision for the future? Partha P Chatterjee, CEO, Bhaskar Solar: I will reiterate our vision to touch every life with sustainable renewable energy solutions, from households, businesses, and telecommunications to energy utilities. We have the necessary strength in-house, and the right partnerships, to scale and meet the requirements of our target markets in India. We are already engaged in Africa, having started working in Nigeria, and we’re exploring opportunities in Myanmar and Bangladesh


Energy Vision: progress updatefrom the first ESCO of scale in SSAEnergy Vision plans to operate thousands of sites in the coming years

TowerXchange: Please introduce Energy Vision to our readers. Ofer Ahiraz, CEO, Energy Vision: Founded three and a half years ago, Energy Vision is an Energy Services Company, or ESCO, focusing entirely on the African telecoms market. Our vision is simple: to offer MNOs and towercos reliable energy at a reasonable, predictable, fixed monthly price. We deploy the capex to modernise sites’ power systems to the latest technology including RMS, and undertake maintenance, upgrades and refueling to offer -48VDC to power telecom equipment against predefined Power Availability (PA) and Service Level Agreements (SLAs), depending on the site priority/category. We are vendor agnostic, so have the freedom to select the best, most reliable and cost effective technical solution for the specific use case, country or environment. We measure total cost of ownership (TCO) over a ten year period. TowerXchange: First please give us some context by introducing the structure of the mobile and tower markets in Gabon. Ofer Ahiraz, CEO, Energy Vision: In Gabon there were four MNOs, led by fixed line incumbent Gabon Telecom, which trades under the Libertis brand, which is being privatised and is consolidating networks with MOOV, now also owned by Maroc Telecom. Their main competitor is Airtel Gabon, joined by Azur, a new small operator.

Read this article to learn:< Energy Vision’s simple proposition: reliable and environmentally friendly energy at a reasonable, predictable, fixed monthly price< The current progress of SSA’s first ESCO project of scale< How the project staffed and financed< What were the critical success factors?< Which solutions technology agnostic Energy Vision chose to deploy

Between 2011-2016, MNOs in Africa seeking to reduce operational complexity had preferred strategic partnerships with tower companies to ESCO partnerships. But when the tower sale process of one operator in Gabon faltered, they sought an alternative strategic partner: pioneering ESCO Energy Vision. Africa’s first ESCO project of scale, Energy Vision is currently operating and managing 280 towers, 40% of which are off grid. Over two years into the project, TowerXchange reconnected with our old friend Ofer Ahiraz, CEO of Energy Vision, to learn how they are progressing.

Keywords: Africa, Africa & ME Insights, Airtel, Ausonia, Azur, Batteries, Business Model, DG Runtime, Debt Finance, ESCOs, Eltek, Energy, Energy Efficiency, Energy Storage, Energy Vision, Fixed Price, Flexenclosure, Gabon, Gabon Telecom, Hybrid Power, Insights, KPIs, Logistics, Market Overview, Moov, NOC, O&M, Off-Grid, On-Grid, Opex Reduction, Outdoor Equipment, RMS, ROI, SLA, Site Management System, Site Visits, Skilled Workforces, Solar, Spare Parts, Tower Count, Unreliable Grid, Warehousing, Who’s Who

Ofer Ahiraz, CEO, Energy Vision


There are around 1,000 cell sites in Gabon, most of which are in the main cities, with the usual blend of rooftops and light towers in urban areas. While Airtel did try to sell their towers, 100% of the country’s towers remain owned by the MNOs. Very few towers are shared. 4G has been launched and there is reasonably good coverage and QoS in the main cities. Gabon was the first country in Africa to have mobile coverage; they’ve been pioneers in Digital TV, fiber and cellular coverage. The country has near 100% economic coverage. TowerXchange: What have been the drivers for the MNO in Gabon to partner with an ESCO? Ofer Ahiraz, CEO, Energy Vision: The MNO we are working with were seeking to reduce opex while securing a commitment to improve power availability. Energy Vision now gives them a single point of responsibility for power availability; we have clear KPIs governing power availability with penalties if we were to fall short of our Service Level Agreement. Since we started we have managed to deliver power availability (PA) of 99.99%, which is higher than our contractual commitment. This partnership relieves the MNO of the financial burden to invest in power equipment, freeing their budget to invest in their network. Our client was impressed with the level of professionalism Energy Vision showed regarding our proposed solutions, and by our fast implementation

Energy Vision site

“ “Energy Vision has delivered Power Availability (PA) of 99.99%, reduced CO2 emissions by 3,088 tons/year and reduced fuel consumption by 1,157m3 per year, equating to a 68% fuel and CO2 emission reduction!


schedule. They were also impressed by our familiarity with the country: myself and my colleague have worked in Gabon for many years – even prior to my time at Leadcom, I spent almost 20 years with Motorola and among other projects I was rolling out Gabon’s analogue cellular network. TowerXchange: What is the scale of the project? And how has it been financed?

Ofer Ahiraz, CEO, Energy Vision: The scope of project includes 280 sites and the contract has a nine year duration. The venture is financed by our equity shareholder Allied Group, a multi-billion-Euro private European trust, and we got also the support from GIEK, the Norwegian export credit agency, via our friends at Eltek.

TowerXchange: What is the current state of the project? How many sites do you have under management?

Ofer Ahiraz, CEO, Energy Vision: We have 280 sites (115 off grid and 165 on grid) running on our equipment (full hybrid outdoor systems, most with solar) connected to our NOC via a Remote Monitoring System (RMS). Energy Vision has also recently been awarded responsibility for management of all passive elements of the sites – towers, fences, structures et cetera.

Energy Vision has reduced CO2 emissions by 3,088 tons per year, reduced fuel consumption by 1,157m3

per year, equating to a 68% fuel and CO2 emission reduction! TowerXchange: It’s been three years since Energy Vision signed the first ESCO contract of scale in SSA – can you talk us through the key milestones in executing on the contract?

Ofer Ahiraz, CEO, Energy Vision: The key milestones in executing the contract were:1. Learning the network and tailoring the solutions to meet the specific requirements of the sites2. Ordering the equipment and ensuring on time delivery3. Implementing the right technology in order to achieve the KPIs and expected savings4. Building the team to provide high level maintenance and constantly monitor performance

Operational challenges


The main challenges we faced are as they would be in most projects – things over which we have no direct control such as:< Late delivery by one of our main suppliers< Logistics and customs clearance< Weather affecting access to sites during the rainy season, including bridges and trees collapsing Over our first two years, we have also learned about our suppliers and manufactures attitude and their approach toward problem solving and support. And of course we learned about the products’ performance in the field. For obvious reasons I will not get into details but it was interesting to evaluate! TowerXchange: What have been the critical success factors? And what lessons learned can be transferred to other MNOs or towercos considering partnerships with ESCOs? Ofer Ahiraz, CEO, Energy Vision: Open communication in the relationship with the customer – this has been the critical success factor not just for this ESCO project, but throughout my career. Only with a true spirit of team work and openness, without finger pointing, can the best results be achieved. And this has been our approach from the beginning. All stakeholders, from top management to project managers and field technicians, were updated, and objectives aligned to support shared goals. We had weekly update and planning

meetings, and a clear reporting structure with escalation channels. TowerXchange: Tell us about the operational environment in Gabon, for example what proportion of the sites are on good grid, unreliable grid and off grid? How spread out are the sites and what are the implications for the autonomy necessary to maximise uptime? Ofer Ahiraz, CEO, Energy Vision: Around half the sites, mostly those in the main cities, are on good grid connections, with around 40% off grid. Generally the grid is relatively good in Gabon compared to elsewhere in SSA; with enough battery backups, urban and suburban sites should not be a major problem. However, we have started with the most complicated sites in remote areas, where there is the greatest necessity to have reliable power solutions. At just over 250,000sqkm, Gabon is slightly smaller than the State of Colorado, but sites are still quite broadly dispersed, so we organise our O&M team into nine regions, each taking a cluster of towers such that they are able to reach the site in a time consistent with our SLA commitments. TowerXchange Who undertakes the installation, operations and maintenance of the power systems at the sites – what capabilities have you kept in-house and what is outsourced?Ofer Ahiraz, CEO, Energy Vision: All our O&M and NOC staff are in-house. It’s part of our vision

that our guys are local and well trained – they understand the technology, they understand ours and our client’s expectations. Yes we’ll outsource some mechanical installation labor, or outsource transportation to serious logistics companies with the right cranes and trucks to do the job, but energy management is the core competence of an ESCO, so that’s all in-house. The solutions we offer to the market are much more advanced than what is typically on today’s cell sites. Our equipment is IP controlled and remotely monitored, which means our technicians need a level of competency and skills way beyond oil changes. Our field technicians are using their laptops to configure controllers and communicate with different elements of sites. Without the right training, support and information refreshment, we won’t achieve the necessary talent level, so we have no option to outsource. This competence will be our main asset in a few years. TowerXchange: As this is the first ESCO of scale in SSA, it will be interesting to learn how it is resourced. Please talk us through your organisation chart. Ofer Ahiraz, CEO, Energy Vision: Today we have a team of 35, that will increase as we take on more sites. Each cluster has a dedicated technician and an engineer equipped with spare parts. Each of


these were formally trained by our equipment manufacturer’s experts, both theoretical training and on the job training at two or three sites. Back in the control center we have our GM, our Operational Director, who is effectively the leader of the field technician team, and our Technical Director, who oversees training, the NOC, performance stats, benchmarking and reports. When the technicians escalate an alarm or technical issue, it goes to him. We also have finance and admin, warehousing and logistics. Within the mother company, there are a further six people: myself, our CTO, two in business development, a CFO and a Supply Chain Manager. TowerXchange: It’s notoriously difficult to retain scarce skills in SSA – how are you minimising staff turnover? Ofer Ahiraz, CEO, Energy Vision: Staff retention is a challenge at every level and company. From my previous experience, by creating the right atmosphere and company’s DNA we can keep them motivated and committed to the company. We are continuously investing in and promoting our people as we believe in our people. We are very open in our communications – our team can call me anytime – we are quite informal.

We’re developing a warm, family environment. Yes people might leave, but we want to be an employer of choice – for everyone who leaves, two to three other talented people knock on our door. For our first round of recruitment in Gabon, we were still a new company in the market, but today we’re already getting good CVs from candidates who see we’re serious and committed to the market and the unique technology we used is challenging them.

TowerXchange: We understand Energy Vision is technology agnostic; what technologies are you deploying and why? Ofer Ahiraz, CEO, Energy Vision: In any project we will use at least two or three suppliers to benchmark equipment performance, diesel consumption and after-sales service. So if we have two 1.5kW sites, we have real fuel consumption benchmarks from the field to compare supplier X versus supplier Y – partner selection isn’t about slides and lab test results, but proven results on our own sites. This creates healthy competition, and if suppliers deliver good results, we will keep using them in the future. At some off-grid sites we are using Flexenclosure with their controller and DGs from Grupel, while at other off-grid sites we are using Ausonia’s all-in-one system with DC DG in one compartment and the DC system in another compartment. With the

help of the Norwegian export credit, we use Eltek systems at on-grid and bad-grid sites.

Generally we use off the shelf proven products, with some mechanical strengthening to equipment to prevent theft and sabotage. We’re using full hybrid solar and CDC batteries. We use as much solar as we can, even though Gabon is not one of the best countries in SSA for solar irradiation, and we’re satisfied with results so far. We are using RMS aggregated into our own platform in the NOC to see the total network, enabling us to integrate different suppliers in the future. TowerXchange: What has been the thinking behind deploying relatively capitally intensive, premium energy solutions? Ofer Ahiraz, CEO, Energy Vision: As a serious and responsible company, we selected tier one suppliers that are proven in tough market conditions and tough environments. We have past experience with these suppliers – they are people we know. We build configurators and evaluate ROI over a ten year period. We know where we expect our suppliers to be, and partner with them to achieve the performance goals necessary to support our business model. We are cultivating long term relationships with our technology partners – we hope they take up the


challenge to support us in our ambitious expansion plans within and beyond Gabon!

TowerXchange: Has the capital outlay and opex per site broadly matched your forecasts so far? Ofer Ahiraz, CEO, Energy Vision: I can confirm that our predictions in terms of capex and opex matched the reality. One important capex element in our TCO and business model is the battery life time, but after two years it is still too early to know how accurate our prediction was, and how accurate the suppliers’ forecasts were compared to reality. TowerXchange: What is your vision to drive expansion in Gabon and beyond? And how will you finance such growth? Ofer Ahiraz, CEO, Energy Vision: We have good relationships with the MNOs and OEMs in Gabon, and that has fast tracked our entry into the market. We’ll take some of our proven team in Gabon to ramp up in other countries like I did at Leadcom – develop a pool of local African people to support the growth of the company. In Gabon there are still two MNOs who have their own towers – they are target customers for our proposition. We believe in the potential for further deals in the Gabon market, but in parallel we’re developing discussions with different carriers in different countries.

We will synchronise raising further investment and

vendor finance with the growth of the business as we continue to increase capex.Currently we are finding MNOs more receptive to our vision than towercos, but it’s only a matter of time! TowerXchange: As one of the pioneers of the ESCO market in Africa, how would you reflect on our progress as an industry over the last two years? Do MNOs and towercos now buy-in to the merits of the ESCO business model? Ofer Ahiraz, CEO, Energy Vision: MNOs are increasingly adopting the ESCO model, whereas towercos for a variety of different reasons have not yet been as receptive. We hope that towercos

will realise soon the true benefits that ESCO can provide them. We can see in our daily work and routines how many things can be improved and optimised on every site and system. The fact that we are delivering an SLA of 99.99% is not only because we implement good technology, it is because we are maintaining and monitoring performance constantly. There are so many software parameters to be considered and tuned based on site and equipment configuration that if the power team is not 100% focussed on energy, they will never be able to achieve such a challenging SLA with such low opex. The market will continue to grow now ESCOs have proved they can do it as well if not better!<

The Energy Vision NOC


Energy Vision Powers Aheadwith Flexenclosure’s eSiteA case study

BackgroundA major pan-African mobile operator was rapidly expanding its network in the West African nation of Burkina Faso. It selected Energy Vision, a leading telecom-focussed Energy Service Company (ESCO), to deploy power systems at a large number of its new tower sites and to be responsible for ongoing site power delivery under an Energy as a Service (EaaS) contract.

The ChallengeAll the tower sites at which Energy Vision needed to provide power were new, meaning that there was no pre-existing telecom-specific power supply that could be used. And while some sites did have grid connections, the electricity supply was unreliable – certainly not good enough to maintain uninterrupted network uptime.

Given this situation, Energy Vision’s EaaS proposition was very attractive for the mobile operator. And while it is a fast-growing segment across Africa, EaaS demands the highest levels of long-term performance and reliability from site power systems if the ESCO is going to be able to guarantee generator run hours, meet uptime targets, avoid financial penalties for missed EaaS SLAs, reliably predict energy costs over the long term and maintain a meaningful return on their investment. To make the opportunity financially viable, Energy Vision would therefore need an extremely reliable state-of-the-art solution that could draw heavily on renewable power sources while significantly reducing diesel-related costs.

Read this article to learn:< The scope and challenges the Energy Vision ESCO project < Details of Flexenclosure’e eSite< How the two companies managed to work on such a tight timeframe< The use of remote monitoring in system optimisation < eSite’s competitive advantage

Having used Flexenclosure’s eSite on a previous project in Gabon, Energy Vision once again selected the system for their most recent ESCO project, completing the installation in record time to the highest standard. Flexenclosure introduce the project and the competitive advantage that eSite brings.

Keywords: Africa, Burkina Faso,

Batteries, DG Runtime, Energy, Energy

Efficiency, Energy Vision, eSite,

Flexenclosure, Installation, NOC, Opex

Reduction, Rectifiers, Renewables, RMS,

Solar, Unreliable Grid, Who’s Who


Further, Energy Vision had a very short time window within which to establish power delivery to the new tower sites if their customer was going to achieve their aggressive network rollout goals. And the challenges didn’t end there, with extreme environmental conditions and an often-inadequate road infrastructure seriously hampering access to many of the more remote sites.

Energy Vision turned to Flexenclosure for help…

The SolutionFlexenclosure’s eSite x10™ site power system was selected by Energy Vision.

eSite x10 is the world’s first telecom site power system purpose-built for outdoor telecom sites and to outdoor telecom standards. It is a patented, sealed, tamper-proof outdoor rectification unit with passive convection cooling, no filters, no moving parts and it requires no maintenance. eSite x10 offers the lowest total cost of ownership in the most challenging operational environments and is the perfect long-term ESCO solution.

As a landlocked country, standard shipping to Burkina Faso by sea and then land would have delayed Energy Vision’s required rollout schedule. But the eSites’ compact size meant that they could be air freighted instead, thus significantly accelerating time to deployment. In fact, eSite x10 is so compact that it can be carried by hand, so transport to site, however remote, is a simple operation.

eSite x10 is designed for fast and easy plug-and-play installation. All sensors are built in to the unit during manufacturing, and configuration and full testing also take place in the factory. This leaves no possibility of installation errors and maximised the efficiency of Energy Vision’s rollout teams across the country.

With each and every site being unique, Energy Vision was able to use eSite Tools – eSite’s powerful built-in remote management system – to fine tune their systems at an individual site level in order to optimise overall ongoing performance. In this way, diesel use was reduced, battery lifetime extended and the highest possible uptime ensured. And eSite Tools enabled all of this to be achieved remotely from Energy Vision’s network operations centre, further reducing OPEX through no physical site visits being required.

All the eSites were preconfigured for solar power to make best use of renewable energy – a critical

requirement for Energy Vision’s business case. And ATS functionality was also built in to each eSite, meaning that when grid power eventually arrives at any given site, the system is ready to receive it.

Having previously deployed eSite systems for another project in Gabon, Energy Vision was familiar with eSite technology. Their team also had a very good working relationship with Flexenclosure. And they knew they would get 100% focussed attention, training and support from Flexenclosure’s system specialists whenever necessary to ensure a successful rollout and ongoing power service delivery.

The Flexenclosure advantageBy working with Flexenclosure, Energy Vision was able to capitalise on a number of additional and significant eSite differentiators.

Site power suppliers have always had to factor rectifier replacements in to their financial


calculations due to regular failures. This is a major issue, especially for ESCOs managing EaaS contracts. However, eSite’s purpose built, robust and reliable rectification system is specifically designed to secure continuous site power without failure even in the most challenging environments, meaning an ESCO can trust eSite and will be able to avoid ongoing rectifier-related OPEX hits.

eSite x10 has been purpose-built from an individual component level, IP65 sealed and ruggedised to withstand operational challenges such as heat, humidity, sand, dust, electrical disturbance and accidental physical shocks – and all without the need for any on-going or on-site maintenance.

It has been tested and certified to the strictest CE and ETSI requirements and includes significant innovations including protective soft switching between the grid and connected gensets to replace mechanical ATS switching and thus protect the unit from potentially damaging input – one of the more common causes of rectifier failure at telecom sites.

eSite x10 can significantly reduce genset run hours and fuel use at off-grid sites. At bad grid or good grid sites genset run hours and fuel use are further reduced by maximising energy harvesting from any available grid power. At solar sites eSite x10 optimises the use of renewable energy. And all of this results in significantly reduced carbon emissions.

With sensors built in to the unit and calibrated in the factory, eSite x10 ensures sustained

performance from data you can trust. The system uses a substantial local data buffer to avoid any data loss. And uploaded data is stored in a secure and cost-efficient data cloud, where it can be accessed by eSite Tools for analysis and by web services for smooth integration with other systems.

It’s part of Flexenclosure’s DNA to work very closely with every customer in order to ensure that every eSite deployment is optimised for lowest ongoing

OPEX and highest overall long-term success. And having delivered projects in more than 20 African countries, Flexenclosure is extremely experienced in delivering solutions that are specifically designed to cope with the most challenging of environmental conditions.

Flexenclosure’s eSite has been a critical enabler in Energy Vision’s establishment as one of the leading ESCOs in Africa<


GRIDSERVE® develops best inclass ‘SEC12’ plug and play hybrid solution that eliminates installation and maintenance challengesHybrid energy innovator leverages unique modelling capability to forecast up to 95% opex reduction

TowerXchange: Tell us about the origins of your unique plug and play solution, and your experiences working with an African towerco? Heston Harper, CEO – APAC, GRIDSERVE: In 2016 our team won a contract with one of Africa’s largest tower companies to supply energy equipment to 2,000 cell sites in Nigeria. The dialogue started in January but negotiations dragged on and ultimately we didn’t get the purchase order until August – with a delivery deadline just four months later! It was an astronomically large order: 50 sea containers of solar modules, 130 containers of batteries, gensets from Italy… 280 sea containers in total. Despite the compressed lead time, we worked round the clock to deliver everything on time and on budget. However, after we overcame the delivery challenges, we encountered the struggles of integrators and installers in Africa. We’d send clear instructions on how to install the equipment, but they’d ignore them – I remember seeing one site where they had welded the battery to the masthead of the engine! That equipment is still running successfully on 2,000 sites in Nigeria, but the project taught us that we needed a solution to the installation and maintenance challenges of deploying hybrid power systems in Africa. TowerXchange: How have your experiences working on that large emerging market project refined your understanding of the market need for a plug and play solution like the SEC12?

Read this article to learn:< How the SEC12 has been designed to overcome the specific challenges of installation and maintenance in emerging markets< Incorporating innovations such as bifacial solar panels< Striking the right balance between ‘off the shelf’ and customisation to suit different logistical and power requirement scenarios< Why GRIDSERVE is uniquely confident in their TCO modelling and forecasting capabilities

Hybrid energy can deliver transformational opex savings in telecom, but advanced solar power systems are notoriously difficult to install and maintain. In response to some tough lessons learned in Nigeria, GRIDSERVE has developed a genuine plug and play solution that could push out maintenance visits from monthly to every 18 months. To understand the origination and specification of the unique 12kW(dc) Solar Energy Centre (SEC12), TowerXchange spoke to GRIDSERVE’s CEO – APAC Heston Harper.

Keywords: Bankability, Batteries, DG Runtime, Dimensioning, ESCOs, Energy, Energy Efficiency, Energy Storage, GRIDSERVE, Hybrid Power, Installation, Lithium-Ion, Logistics, Multi-Region, O&M, Opex Reduction, RMS, ROI, Rectifiers, Renewables, SEC, Site Visits, Skilled Workforces, Solar, Spare Parts, Who’s WhoHeston Harper,

CEO – APAC, GRIDSERVE


Heston Harper, CEO – APAC, GRIDSERVE: For decades we’ve had MNOs and managed services providers ringing us up complaining that batteries are failing in as little as two years, yet when we explore the situation we find that there might be no diesel in the fuel tank due to theft, or the air conditioning hasn’t worked for nine months, or the rectifiers are not giving the appropriate charge – yet it is always the batteries that are blamed!

The reality is that a disparate supply chain serves most emerging market cell sites, and experience of

installing and maintaining hybrid energy systems is still in short supply. When we examined those first-hand experiences, and our experiences in Nigeria, they led us to the conclusion that we needed to develop a fully integrated, containerised solution where we could optimise the selection and integration of best-in-class components. And those experiences collectively led us to design the SEC12. Typically you might find the power systems at a cell site come from a variety of suppliers for the control system, rectifier, solar array, batteries and fuel tank.

GRIDSERVE – energy efficiency is in the family “My father Brian Harper was an entrepreneur who at first specialised in the plastics needed to build petrol stations, but the oil crisis in the 1970s nearly brought his company to its knees,” his son Heston Harper, now CEO – APAC for GRIDSERVE, told TowerXchange. “He swore he would never build another business dependent on fossil fuels. So in 1977 my father envisioned some of the very first energy efficient housing concepts, and he founded Solar Energy Centre. I remember he told us he started selling solar at US$77 per Watt – now we’re selling at sub 40 cents per Watt! Solar Energy Centre became SEC – a family owned business specialising in supplying solar panels and batteries – and we supplied components worldwide for 40 years. We were the first foreign battery manufacturer to sell to NTT in Japan, and SEC still provides the batteries for all the trackside communications for Network Rail today.” “But over time solar panels and batteries became increasingly commoditised, and we struggled to maintain margins and volumes. When my father passed away five years ago, it was time to take stock, modernise and reinvent the brand. We migrated to the cloud. We transitioned to lithium ion, and ultimately we decided to launch GRIDSERVE, a plug and play, integrated turnkey power solution provider.” Toddington Harper runs the GRIDSERVE business in EMEA from Iver in Buckingham, UK, while brother Heston runs the APAC business out of Hong Kong. They’ve also headhunted David O’Connor and Ian Stamp to lead sales and business development respectively<

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Integrating and getting all these diverse components to talk to, and work optimally with each other is challenging. We wanted to be proactive not reactive to these challenges, so we came up with the concept behind the SEC12: a genuine ‘plug and play’ turnkey solution to the extent that the end user just needs to lay a concrete plinth, we send you a unit ready to plug in. There are sensors everywhere in the SEC12 which, in accordance with the level of importance, will raise any performance alarms with the local field office – for remote or onsite fix – or escalation to our NOC in Iver (UK). While the SEC12 is specified to achieve an incredibly long maintenance window, the reality is that these units will often be helicopter lifted into remote locations, so if you do need to send a maintenance team, it is essential they show up equipped with the right parts and knowledge as to what needs servicing. TowerXchange: Can you tell us more about the specifications of the SEC12 that maximise autonomy and minimise site visits? Heston Harper, CEO – APAC, GRIDSERVE: Everything is contained in one box: the remote monitoring system, air conditioning, a Vertiv control unit, atmospherics, and a double bonded, sensor-fitted fuel tank with a 600, 1200 or 1800L capacity. We use a sophisticated DC genset from a world-leading third party partner. We have strong supply relationships with LG and Samsung for their Lithium-Ion batteries, selected because they offer

the best combination of performance, cycle-life, longevity, and lifetime cost.

We can provide canopy, ground or unit-mounted bifacial solar panels. We have found that bifacial solar panels can increase yield by as much as 30%, which is why the tops of our units are now painted white to maximise albedo (“light bounce”).

TowerXchange: Why use a 12kW genset for a cell site with as little as a 1.5kW load?

Heston Harper, CEO – APAC, GRIDSERVE: We deduced that a 12kW DC generator is optimal for maintaining overall system performance and efficiencies for hybrid telecom BTS power solutions. As an example, having more power available than

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the load requires enables us to charge batteries faster than would otherwise be possible, and this means less running hours for the genset. When we combine this with solar and a relatively large battery bank it’s possible to go for days without ever turning on the genset, and the combination of all these factors is how we are able to both reduce running costs and extend maintenance timeframes so dramatically. TowerXchange: How do you simplify logistics and the customisation/expansion of the power system as the load changes? Heston Harper, CEO – APAC, GRIDSERVE: We’ve been very focused on genuinely realising the ‘plug and play’ concept – making the SEC12 an ‘off the shelf’ solution in a market that historically has been anything but ‘off the shelf’! But of course, we still had to make it customisable to suit different logistical and power requirements. The SEC12 can be made available fully containerised to transport, whether fork-lift, crane lifted or helicopter dropped to site, or it can be provided flat-packed for sites where the last mile delivery can be by donkey or even by hand. The power and energy storage capacity itself is provided in modular format – fully customisable to different and changing power requirements. TowerXchange: How is GRIDSERVE able to so confidently model and forecast the total cost of ownership of your solutions over a 10-25 year period?

Heston Harper, CEO – APAC, GRIDSERVE: Our team has an enviable track record in delivering hundreds of megawatts of large scale solar and utility scale battery projects for investors. This requires sophisticated and ‘bankable’ technical and financial modelling capabilities, which we have now also customised for the benefit of our SEC12 customers. We understand our modelling capabilities to be at the forefront of what has ever been seen in the telecom power area, and this provides invaluable business intelligence to both ourselves and our customers. We have a proprietary in-house developed model that processes gigabytes of

business intelligence including: modelling projected sunshine levels on an hourly basis throughout the year for any location on earth; albedo effects; lifetime energy storage cycles; degradation levels; generator efficiency and fuel consumption, temperature, and many other factors. These collectively enable us to size plant and forecast financial returns, yields, risks and build mitigation models. This foundation enables us to build highly predictable, bankable business models for the deployment of the SEC12. By simply entering a cell site’s load profile, grid-co-ordinates and

“

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This foundation enables us to build highly predictable, bankable business models for the deployment of the SEC12. By simply entering a cell site’s load profile, grid-co-ordinates and currency into our model, then adjusting parameters according to the client’s priorities (are you focusing on opex reduction, service intervals etc?) we can forecast a 25-year life on our kit, we can tell how long the batteries will last, and we can customise and send it ready to go


currency into our model, then adjusting parameters according to the client’s priorities (are you focusing on opex reduction, service intervals etc?) we can forecast a 25-year life on our kit, we can tell how long the batteries will last, and we can customise and send it ready to go.

Once installed, we can dial in and monitor the performance parameters, for example tracking the depth of battery cycles, enabling us to schedule predictive maintenance. TowerXchange: That confidence in modelling Total Cost of Ownership (TCO) over 10-25 years sounds particularly useful for the emerging telecom Energy Services Companies (ESCOs). Do you see GRIDSERVE as a potential future ESCO or as a partner to ESCOs? Heston Harper, CEO – APAC, GRIDSERVE: GRIDSERVE itself is well-financed, and with a background and considerable expertise in in financing power projects, we are well positioned to deliver both capex or opex models: lease-hire or selling on a consumption basis – we’re exploring all sorts of business models with multiple funding partners. But we’re more likely to be a partner to ESCOs than to start up our own ESCO proposition. We continue to find that many towercos remain a little wary of ESCOs, preferring to keep energy efficiency products in-house. In such scenarios, GRIDSERVE can provide them with high level access from their

own NOC, and potentially deliver bespoke funding to suit particular customer requirements.

TowerXchange: What sets apart GRIDSERVE from alternate hybrid energy solution providers? Heston Harper, CEO – APAC, GRIDSERVE: It’s the unique combination that really differentiates GRIDSERVE, from the best-in-class nature of every single component in the SEC12, our unique modelling capabilities, the genuine turnkey plug and play nature of the SEC12, the full system warranty, our heritage in renewable energy which means we truly understand lifecycle modelling and bankability, and ultimately our desire to exceed expectations in every area. The way we select and integrate our equipment also makes us nimble and future proofed. For example, we invested millions into lead acid, but

we weren’t ever wedded to the chemistry, and with the emergence of competitively priced lithium ion we’ve transitioned. We also always remain on the lookout for further innovations that can improve performance, and provide greater benefits for our customers. We’re confident that the SEC12 is in pole position compared to other containerised telecom power systems in terms of delivering the lowest fuel consumption, lowest DC ripple, longest potential maintenance intervals, pretty much all the key metrics in fact. That said, we believe there is no-one else really offering a single fully integrated solar hybrid – most alternate solution providers specialise in one or more aspects such as manufacturing control equipment or gensets, whereas GRIDSERVE’s specialism is turnkey plug and play. TowerXchange: What does that translate to in terms of TCO savings? Heston Harper, CEO – APAC, GRIDSERVE: On a portfolio of 500 off-grid BTS, using GRIDSERVE could yield a US$35-$45mn saving, depending on load, over a ten year period. We’re using a free feedstock (sunlight) which can enable up to a 95% reduction in opex. Diesel is costly of course not just in direct cost but in maintenance. DG runtime in emerging markets might mean in best case scenarios a standard cell site might require one site visit per month – under the right circumstances we’re aiming to push that out to one site visit every 18 months!<

“ “On a portfolio of 500 off-grid BTS, using GRIDSERVE could yield a US$35-$45mn saving, depending on load, over a ten year period


Keywords: Africa, Community Power, DRC, Energy, ESCOs, GreenWish Partners, Opex Reduction, Orange, Renewables, Sagemcom

The role for ESCOs in Africantelecoms and beyondGreenWish Partners’ vision on the importance of ESCOs in Africa’s future

TowerXchange: Please can you introduce GreenWish Partners. Charlotte Aubin, Founder, GreenWish Partners: GreenWish Partners is an independent power producer (IPP) dedicated to clean power in Africa. The company was started back in 2010, initially as an advisory company in the renewable energy sector and then in 2014 the company turned its focus to be exclusively developing and investing in clean power solutions in the African market. TowerXchange: Why did GreenWish choose to focus on Africa? Charlotte Aubin, Founder, GreenWish Partners: Africa needs power and we see that cleantech and IT combined is key to the sustainable powering of the continent. The existing energy mix is often expensive, polluting and unreliable and electrification of the continent is dragging. To power the African continent there are various business models to consider. Firstly there is the IPP model characterised by long term contracts with the government usually as a counterparty. Whilst this can deliver scale, it has long lead times and has certain other constraints, particularly in terms of bankability and the ability of different governments to contract with the private sector.

Read this article to learn:< Who GreenWish Partners are and why they saw such potential for the ESCO model in the African

telecom market< How the company came to sign their first ESCO contract in Africa and why the deal with Orange

in the DRC is so important< How both financial structuring and technology selection can be used to optimise ESCO contracts< How GreenWish are working to supply power and connectivity solutions beyond the tower

In July 2017, GreenWish Partners signed their first telecom ESCO project with Orange in the DRC, taking over management of power on 250 sites, now reaching over 300 sites and datacenters, working with Sagemcom as their operational partner. TowerXchange speaks to GreenWish Partners’ Founder, Charlotte Aubin, to find out more about the ESCO, why they see the African telecom sector as promising and how the ESCO model can be optimised to suit the requirements of different parties.

Charlotte Aubin, Founder, GreenWish Partners


At the other end of the spectrum is the B2C model, supplying power directly to the individual customer with solar home systems for instance. Whilst this is an interesting area it is not the current positioning that GreenWish has chosen to focus upon. Between the IPP and B2C solutions there is the B2B market, presenting exponential opportunities to provide climate smart solutions to the commercial and industrial sector, with the telecoms sector being particularly attractive. TowerXchange: What was it that you saw in the telecoms sector which was so attractive? Charlotte Aubin, Founder, GreenWish Partners: The telecom sector is an energy intensive sector with growth figures and multiple consumption sites that are off-grid, difficult and expensive to service with conventional power. On the other end, the sector needs to reduce the cost of operations drastically as ARPU continues to decline. In this context, solar hybrid systems are the solution to bringing cheaper, cleaner, more reliable power to the telecom sector. Meanwhile, utility scale storage systems are still expensive, battery solutions for small capacity such as telecom towers in rural locations are very competitive. Additionally, the telecommunication sector in Africa is characterised by leapfrogging;

firstly in telephony, mobile has leapfrogged over fixed line communications followed by mobile banking leapfrogging over conventional banking solutions. I see the same opportunity for the power sector; telecom can foster innovations and decentralised cleantech power solutions. Having the largest distribution network on the continent, the telecom sector has a very strategic role to play in this off-grid electrification, be it for its own consumption around towers and datacenters, microgrid development around these towers or using their distribution networks to spread solar home systems with digital payment solutions. I foresee a greater proportion of decentralised power generation over the grid thanks to cleantech and IT (net metering, internet of things, supervision system et cetera). TowerXchange: When did you start looking at ESCO projects in the telecoms sector? Charlotte Aubin, Founder, GreenWish Partners: The first opportunities we looked at were in Nigeria and Chad back in 2016 but we didn’t crack them. Whilst we saw the business opportunity and the value that the ESCO model could bring, we needed to refine our route to market and our technical, financial and contractual structures. Whilst we had extensive expertise in the power sector, we also needed partners with a strong background in telecom managed services

to be our operational partner. We looked at about 10-12 potential partners before signing with Sagemcom. What works so well in our partnership is that Sagemcom are very strong on management services to the telecom sector, with extensive expertise in the field of operation and monitoring and we are strong in the power sector, also bringing expertise in financial optimisation and structuring. TowerXchange: Do you now have an exclusive agreement in place with Sagemcom? Charlotte Aubin, Founder, GreenWish Partners: We have a strategic partnership with Sagemcom; where we respectively give each other priority in new countries. If, however, we want to go into a country in which Sagemcom doesn’t operate, we will partner with another operating company. TowerXchange: GreenWish Partners signed their first ESCO contract with Orange in the DRC, can you tell us more about the project? Charlotte Aubin, Founder, GreenWish Partners: The project with Orange in the DRC is a landmark agreement; it not only represents GreenWish’s first deal, it is also a flagship project for Orange. The DRC is a particularly challenging market both in terms of precocity of the power sector and the operational complexity of the country, it is however a high


growth country and one where the ESCO model can create a lot of value. Replacing the use of HFO (heavy fuel oil) in remote areas is very efficient as you can significantly reduce the burden of refueling as well as carbon emissions, truck roles and managing gensets in very remote areas. When you convert diesel generators to hybrid solutions, you divide the amount of operational intervention required by three, you reduce the risk of operations and you improve the energy performance. Cleantech provides a lot of upside from an operational, reliability, environmental and financial standpoint. TowerXchange: Can you explain more on your technology selection process for projects? Charlotte Aubin, Founder, GreenWish Partners: When it comes to selecting equipment, we still see major future progress on technology and pricing and want to remain open to the technology improvements. As such we are not tied up to any specific vendors, we want to maintain our capacity to optimise power equipment and remain technology agnostic. We work together with Sagemcom on procurement, we both bring a lot of expertise to the table. There is precious IP in designing, sizing and developing your own system as well as in your deployment and replacement strategy and this is something we look to

customise for every project. There is a lot of value in the way you design your system and this is one of the ways that you differentiate yourself from your competitors. TowerXchange: What about optimisation on the financial side? Charlotte Aubin, Founder, GreenWish Partners: An ESCO contract is, before anything else, about balance sheet optimisation. When MNOs outsource the power to an ESCO, they convert it from a high cost power generation expense with exposure to fuel price, currency fluctuations and import risk, to long term fixed contracts thus creating predictability in opex whilst also reducing opex and total cost of operation. GreenWish’s team has extensive technical, financial and contractual skills and we put ourselves in the MNO’s shoes when structuring a contract. We look at how to structure the best potential financial package between debt and equity to optimise the cost of capital and rollout to finance all this equipment. We look at the MNO’s balance sheet structure; Do they have debt capacity? What are their accounting rules? We examine their financial constraints and their objectives and then adapt the financial and contracting structure to their objectives. There are multiple customisation options. TowerXchange: How does Greenwish’s background in the IPP space support your role in the telecom ESCO space?

Charlotte Aubin, Founder, GreenWish Partners: From our IPP business we can leverage our understanding of and network in various countries, the regulatory, tax and legal frameworks and can also lean on our relationship with the government. Additionally, our IPP background brings a wealth of technology and procurement expertise and even more financial engineering which is at the core of ESCO model. TowerXchange: Do you see the potential for providing power beyond the tower, deploying microgrids to support surrounding businesses and communities? Charlotte Aubin, Founder, GreenWish Partners: Definitely! We are developing the GreenWish Villages, a concept inspired by our ESCO proposal to the telecoms sector. My vision and commitment is to develop ancillary services off the back of our clean power solutions around connectivity points at marginal costs. GreenWish Villages is the B2B platform that we intend to develop around telecom towers, potentially in partnership with towercos and MNOs whereby we provide value added services around energy and connectivity including cold storage, distribution, water purification and especially social and commercial digital services. We have already engaged with some MNOs and potential ICT partners to develop


partnerships around ancillary services to our energy and telecom sectors. TowerXchange: Do you seen an opportunity for GreenWish Partners to work with towercos as well as MNOs? Charlotte Aubin, Founder, GreenWish Partners: Yes, I do see the potential for us to work with towercos, particular towercos who may be intending to go for an IPO. The market will value them more highly if they have optimised their balance sheet, their cost of power and their exposure to fuel price volatility. Working with an ESCO could be a great value add for them. TowerXchange: Finally, on what proportion of African cell sites could you foresee ESCOs managing power? Charlotte Aubin, Founder, GreenWish Partners: My gut feel is that the telecom ESCO cycle will be similar to the towerco one; once it starts it won’t stop. If you look at the towerco model in Africa, within five years of its entrance, close to 40% of towers were outsourced to towercos. When it comes to the ESCO model, Orange are being the pioneers and I think that they will have converted their portfolio and outsourced what they can within two years. Other MNOs will then follow, if the ESCO model creates value for one MNO, it will create value for others<

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Rural rollout, densification,site upgrades and ESCO contractsInfrastructure experts, ieng Group, expand their support to the telecom industry

TowerXchange: It was a while since TowerXchange last interviewed ieng Group and the company has expanded and integrated new companies since then. Please can you introduce i-eng Group and its subsidiaries.

Kadri Hakim, Co-CEO, ieng Group: ieng Group is a leading turnkey infrastructure solution provider active in both the African and Asian market providing end-to-end engineering infrastructure solutions to the telecommunications and power industries. The company was founded in 2007, initially focused entirely on EPC (site build and refurbishment), and then in 2009-10 we moved into also providing O&M services to the telecom sector. We now have 11,000 sites under management with plans to increase this to 20,000 sites by 2020.

ieng Group has recently integrated tower design and manufacturing business, Eki.Struct into our group. Eki-struct produces a broad array of different tower designs; from lattice, tubular and hybrid (a combination of angular and tubular towers) solutions to low cost, quick deployment towers and camouflage designs. With a fully-fledged design and engineering office in Croatia, adopting a customized approach to designing towers for our clients, Eki.Struct has acquired more than 120 tower structure certifications for various clients across the globe, from a library of more than 200 solutions.

In addition to Eki.Struct, ieng Group recently integrated power business, GreenPole into the group. GreenPole designs and co-manufactures intelligent hybrid power systems for telecom clients across the globe. Our system combines battery power cabinets

Read this article to learn:< How ieng Group’s structure, subsidiaries and service offerings have expanded

< The role that ieng Group is playing helping operators improve rural coverage

< Details of Eki.Struct’s Multi-Tenant modular solution and how it can revolutionize the way Towercos

specify sites

< ieng Group’s ambitions in the ESCO market

Leading turnkey infrastructure provider ieng Group has further expanded its capabilities in tower design, power system provision and tower services through the integration of GreenPole and Eki.Struct and formation of their new ESCO sister company, CREI. TowerXchange speak to ieng Group’s Co-CEO, Kadri Hakim to catch up on the company’s latest developments and how ieng Group is strengthening its position as an invaluable partner to the African and Asian telecom markets.

Keywords: Africa, Camouflage, Capacity

Enhancements, CREI, Densification, Eki.Struct,

Energy, ESCOs, GreenPole, ieng Group, Multi-

Country Partner, Network Rollout, O&M, Site

Surveys, Urban vs Rural, Who’s Who


with gensets and/or grid connection, with our smart controller allowing for remote monitoring, control and optimization of the system.

ieng Group is also expanding into the ESCO space through our new sister company, CREI which has entered into negotiations with telecom companies in multiple markets.

Headquartered in Lebanon, ieng Group has a presence in 20 countries (figure one), employing over 1,500 staff. The integration of Eki.Struct and GreenPole and creation of CREI enables ieng Group to offer a more holistic service offering to the industry (figure two).

TowerXchange: There is a major focus in Africa at present on improving rural coverage, something that ieng Group is heavily involved in. Please can you tell us more about this?

Kadri Hakim, Co-CEO, ieng Group: In Africa, all MNOs are focused on finding ways to access the 20-30% of the population that they are yet to connect, most of which live in rural and remote areas. With typical high sites costs being around US$80-100k to build with an annual opex of around $1500-2000 (depending on the country), the revenue that could be generated in such rural and remote areas would not be sufficient to cover costs.

We have developed the ieng low cost rural (iLCR) and ieng ultra low cost rural (iULCR) sites to address this area of the market. The solutions, combining both active and passive infrastructure as well as a power source (solar) can deliver coverage for dramatically

Figure one: ieng Group’s geographical footprint

Figure two: ieng Group’s range of telecommunication services

Network deployment< Site planning, acquisition and property services< Design engineering and construction< Towers and masts solutions< Power supply< Procurement, logistics and warehouse management< Network equipment installation

Fibre optics< Site planning, acquisition and property services< Testing and commissioning< Procurement, logistics and warehouse management

Managed services< Operations and maintenance< Procurement, logistics and warehouse management


lower capex and opex. Our iLCR sites, which cover a radius of approximately 15km cost US$50k to build, whilst our iULCR sites which cover a radius of around 3km cost US$35k, including passive and active material; both have an opex of around $400-500 per month. As simpler systems, deployment is rapid, with it taking around a week to build a site.

Different contractors are offering a range of different business models to operators to deploy low cost rural sites. A large number of players offer a revenue sharing model, others offer a pure capex model and others offer an opex model. ieng Group offers the capex model to MNOs, with some opcos opting for a capex model and others opting for opex and revenue sharing models.

With operators competing to cover rural areas in Africa, we are getting a huge amount of interest in our iLCR and iULCR solutions and we expect demand to continue to increase dramatically over the next 3-5 years. There is a big race between operators to be the first into a given market, capturing market share ahead of their competitors.

TowerXchange: What about new build outside of ultra-rural areas, have you seen this picking up in Africa? What demands do you see from clients and how is ieng Group addressing these?

Kadri Hakim, Co-CEO, ieng Group: We have seen new build picking up across Africa; the market is turning a corner following the recession and 4G rollout is requiring an increased number of sites.

In terms of requests from clients, the one constant

is the need to push down prices. For this, you need to take into consideration both the tower structure and the foundations. Eki.struct tower designs are particularly efficient, being able to take the same load whilst using less steel. In terms of foundations we have explored different options including towers that are up to 55m high without conventional foundations. In this instance, boxes filled with stones at each of the corners are used in place of concrete foundations. The result is that the sites are much quicker to deploy with a lower TCO, such sites are useful in rural areas.

In urban areas we’re seeing increased rollout of sites to improve capacity for 4G and even for 3G. We see lots of demand for monopoles with a smaller footprint (although these are typically more expensive than angular towers), as well as for demand for alternative structures such as advertising boards and street lights. We are currently looking at the potential to develop a smart street pole solution.

TowerXchange: Ease of upgrade is an important feature in tower designs, particularly for Towercos whose business model is predicated on securing additional tenancies. Can you tell about Eki.Struct’s multi-tenant modular solution and the benefits this can offer?

Kadri Hakim, Co-CEO, ieng Group: Our Multi-Tenant modular, is a single tenant tower which is upgradable to a two, three or four-tenant tower in a single day. This allows Towercos to deploy towers with lower initial capex, safe in the knowledge that they are able to upgrade them to sites capable of

hosting multiple tenants within just a few hours. It is a groundbreaking solution for Towercos, allowing them to deploy lower capex solutions without slowing their ability to add further tenants. Towercos save around 15-20% on capex by deploying a single tenant tower and only need to pay the additional amount when upgrading to multiple tenants. This generates considerable savings for the Towerco and changes the way that Towercos prepare for tower specifications.

TowerXchange: And finally, looking more towards the power side, we have seen ESCO activity picking up considerably in the telecom sector at present with several contracts now signed and further RFPs live. Can you tell us more about ieng Group’s ambitions in the ESCO market?

Kadri Hakim, Co-CEO, ieng Group: ieng Group has formed our new ESCO sister company, CREI which stands for Communication and Renewable Energy Infrastructure. CREI has been involved in pilot projects in Afghanistan and Myanmar and we are also participating in a number of RFPs, hoping to be able to make some announcements this year.

Whilst it is not a requirement, our expectation is that we will use GreenPole power equipment in our projects, whilst also leveraging ieng Group’s extensive field experience in operating sites. We offer both an ESCO model and a guaranteed savings model to the market, anticipating that Towercos will have a stronger appetite to invest the capex themselves and opt for the guaranteed savings model, whilst MNOs will lean more towards the ESCO model (although there are always exceptions!)<


IPT PowerTech add Guinea Conakry and Lebanon to their ESCO portfolioHow the world’s largest T-ESCO is going from strength to strength

TowerXchange: Please can you re-introduce IPT PowerTech to TowerXchange readers.

Khaled Habbal, VP & COO, IPT Powertech: IPT PowerTech was founded back in the 1990s, initially focused on the provision of starter and specialty batteries. When the telecom sector started to pick up in the mid-90s we started offering battery systems to the sector before expanding into the sale of power systems, being one of the first companies to first launch the battery hybrid concept. We spotted the need to integrate power equipment into outdoor cabinets and began manufacturing our own cabinets independently. Innovation has always been at the heart of our business.

In parallel, we built our telecom services division, providing site construction services (of both towers and fibre), telecom installation and network services and field managed services and maintenance.

Whilst the product and managed services divisions remain key parts of our business, our focus has increasingly turned to our telecom-ESCO business where we see huge potential.

TowerXchange: Please tell us more about your T-ESCO business.

Khaled Habbal, VP & COO, IPT Powertech: IPT PowerTech currently manages power under T-ESCO contracts in Myanmar, Guinea Conakry and Lebanon and is enrolled in a Guaranteed Savings contract in Nigeria. The large number of

Read this article to learn:< Who IPT PowerTech are< Details of their recently signed ESCO projects in Guinea Conakry and Lebanon< How their guaranteed savings contracts have evolved in Nigeria< IPT PowerTech’s attitude to working with third party equipment providers< How IPT PowerTech envisage the ESCO investment landscape evolving

IPT PowerTech, the world’s largest T-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 equipment provider with a presence in 11 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.

Keywords: Africa, Africa & ME, Asia, Energy, ESCOs, Guinea Conakry, IHS Towers, IPT PowerTech, Lebanon, Middle East, Myanmar, Nigeria, Off-Grid, On-Grid, Ooredoo, Orange, Renewables, RMS, Solar, Unreliable Grid, Uptime, Who’s WhoKhaled Habbal, VP & COO, IPT Powertech


IPT worldwide ESCO sites and our extensive know-how makes IPT PowerTech the leading T-ESCO globally. Our current pipeline sits around a total of approximately 10,000 sites under Guaranteed Savings and T-ESCO and we remain very ambitious in our growth plan beyond this.

Recognised as a Telecom Energy Service Company (T-ESCO), we offer various models to MNOs and towercos reflecting the appetite for CAPEX savings and CAPEX leasing, while ensuring the deliverables of power availability and reliability to the network respecting all SLAs related are met.

TowerXchange: What do you think is driving the adoption of the ESCO model by the telecom sector?

Khaled Habbal, VP & COO, IPT Powertech: Operators across the globe are coming under increased financial pressure with competition from OTT players and ARPU continuing to decline. They are searching for ways to decrease OPEX whilst minimising capex and the ESCO model offers an ideal solution.

TowerXchange: Please can you share further details on the new ESCO projects that you have signed in Guinea Conakry and Lebanon?

Khaled Habbal, VP & COO, IPT Powertech: In Guinea Conakry we have signed an ESCO agreement with Orange, with high probability of extending to new sites within the upcoming 3 -5 years.

Initially we will take over management of the existing power equipment on sites, but over time we will upgrade this to make the system more efficient, a process which we have begun already. Of the total number of sites, around a third are off-grid entirely with the quality and availability of on-grid sites varying significantly. In the worst grid areas, availability can range between 6-12 hours per day, but as you get closer to urban centres this improves. All on-grid sites however require significant backup and alternative generation and so our plan is that most sites in the country will have solar in place.

In Lebanon, we are enrolled on an ESCO contract with one of the two operators in Lebanon, where the majority of sites are on unreliable grid connections: typically, 18-21 hours of usable grid in Beirut, falling to 6-12 hours in rural areas.

The grid quality in Lebanon is better than the grid quality in Guinea Conakry but grid availability can still be quite low; in Beirut, grid availability is around 18-21 hours per day but in rural areas this drops to around 6-12 hours. There is however a power schedule in Lebanon meaning that you know when power will be on or off. This predictability makes the design and management of an optimal power system a much more scientific process.

As with Guinea Conakry, we have inherited legacy power equipment with plans to upgrade this over time, in Lebanon however, most of the power equipment is IPT PowerTech equipment and so we are very comfortable with managing it.

TowerXchange: Can you tell us more about developments in IPT PowerTech’s involvement in IHS Towers’ “big five” project in Nigeria; and for those less familiar with the model, please can you explain the difference between the Guaranteed Savings model you have in place in Nigeria and the ESCO model you have in place in other markets.

Khaled Habbal, VP & COO, IPT Powertech: IPT Powertech Group is engaged in Nigeria with the largest towerco on a major project of Guaranteed Savings across the African continent under the “Big Five Initiative”, supplying energy efficient power solutions—including management and long-term maintenance — and OPEX optimisation under a long-term contract.

The guaranteed savings model is something which IPT PowerTech have been promoting for a long time, having introduced the model at TowerXchange’s Meetup in Africa about five years ago. Historically, when an MNO or towerco has purchased energy equipment, they have used contractors to deploy, operate and maintain it. When the equipment isn’t performing as hoped, a blame game can ensue with the contractors complaining that the equipment isn’t delivering on expectations, whereas in reality it may have been incorrectly deployed or maintained by the contractor.

Our approach in eliminating the blame game is simple: combine energy equipment provider, system integration, and O&M service contracting services to create a single point of accountability.


By being the energy system integrator and the contractor at the same time, we are able to manage key points in the value chain, thus leaving no room for performance failure—or for the ‘blame game.’ In fact, we believe that our group is one the few solution providers globally offering and merging hybrid and renewable energy solutions with telecom infrastructure services and offering field managed services and maintenance all at the same time.

Under a guaranteed savings model, we sell the equipment to the MNO or the towerco who then pays a fixed rate for us to install and maintain the equipment. We guarantee that we will deliver the savings promised, any deviation from this will be absorbed by IPT PowerTech. This gives the MNO or towerco not only clarity on the capex to install the system but also provides predictability in opex. With IPT PowerTech providing, deploying and maintaining the equipment, it avoids the blame game between equipment vendor and contractor that can so often occur in the management of power on cell sites.

The guaranteed savings model offers an alternative to the ESCO model, whereby the MNO or towerco still deploys the capex (whereas in an ESCO agreement the ESCO would invest the capex).

TowerXchange: What technologies does IPT PowerTech manufacture and supply and what equipment does it source from third parties? How does it select these third parties?

Khaled Habbal, VP & COO, IPT Powertech: The dedication of our professional team exceeding 4500 specialists, impelled the group into serving more than 60 operators in 50 countries and becoming one of the few companies in the region to combine product R&D to our assembly facilities in Romania and Lebanon. Our modernised factory in Romania is a leading ODM enclosures manufacturer of outdoor cabinets, and an integration facility for advanced energy solutions, allowing us to combine high quality in-house products of enclosures and cabinets coupled with our own services proposition.

IPT has also incorporated the controllers for all our gensets, and lately IPT RMS, a complementary tool to all our solutions guaranteeing optimal performance, and allowing mobile operators better surveillance of their sites globally in terms of energy availability and efficiency. IPT Digital Platform features advanced machine learning along with existing energy equipment compatibility, ensuring smart and centralised monitoring across the network

On the other hand, IPT Powertech is an integrator of top-notch products, developing and identifying best technologies to create products, optimising the output of the solution. Our D&D team always makes sure to choose top international brands from trusted suppliers ensuring optimal performance of the products. We know our suppliers well; how reliable their products are and the level of service that they provide. Whilst we do consider new suppliers from time to time, we are very cautious as

our reputation is also dependent on the quality of suppliers that we use

TowerXchange: At present does IPT PowerTech provide all the financing for ESCO projects and do you envisage using outside investment in the future? What kind of investors do you see as being interested in the ESCO space?

Khaled Habbal, VP & COO, IPT Powertech: We have relied on our own funds this far but do envisage that we will look at outside financing. We are receiving a large amount of interest from investors on both the debt and equity side from banks and funds and could foresee that many investors which have played in the towerco space will start to look at investment opportunities in ESCOs.

The challenge however is that the T-ESCO model is still very new and investors are still trying to understand it; there is a lot of ambiguity in the term ESCO, people don’t understand what type of contracts or MLAs are in place. There’s also a lack of sizeable ESCOs in the market which investors can compare; after IPT PowerTech, the next biggest sized ESCO is way behind.

Ultimately however, there are a lot of parallels between ESCOs and towercos; it is still in the telecom infrastructure space involving long term (10 year) contracts with creditworthy MNOs and towercos. There is a lot of commonality in the two business models and the fact that towercos often view ESCOs as the competition only goes to support this view<


Voltalia installs 100th ESCO sitein Myanmar, opens office in Egypt€180mn turnover renewable energy leader targets 10,000 ESCO sites in the medium term

TowerXchange: Please introduce yourself and your company. Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Founded thirteen years ago, Voltalia has multiplied its installed capacity by more than ten since 2012 to 524 MW, consolidating our position as a leading player in renewable energy, in solar, wind, hydro and biomass. In particular, Voltalia has cultivated an extensive expertise in green power generation in remote areas over the past few years. We have almost 500 employees in eighteen countries spread across four continents. Eight months ago, Voltalia signed its first telecom ESCO contract with MNTI in Myanmar (one of the towercos at the forefront of the MyTel rollout), and we’ve just installed the 100th of 171 contracted sites. We’re also actively pursuing opportunities elsewhere in Asia, in Sub Saharan Africa and North Africa – in fact we just opened our third office in Africa in Cairo (after Rabat and Dar es Salaam). To introduce our renewable energy for telecom team, I worked in telecoms for over 20 years, within companies such Equant, Orange and BT, and more recently at tower company Eaton Towers where I was part of the founding team. At Voltalia, I have gathered a team of experienced people from the telecom sector, including Michel Faivre, former Infrastructure Sharing Programme Director at Orange, and Laurent Roineau, formerly Group CTO at Camusat, prior which he was CEO of TowerCo

Read this article to learn:< The progress to date of Voltalia’s ESCO project with MNTI (MyTel) in Myanmar< Voltalia’s vision to minimise LCoE and improve QoS while fostering local development< The three challenges ESCOs must overcome: contracts, autonomy and regulation< What differentiates Voltalia from other ESCOs?< Voltalia’s medium term growth aspirations

Voltalia has acquired a very strong track record in the ESCO space over the past few years. With over 500 MW of installed power generation capacity, recognised industrial capabilities, over €900mn of assets on its balance sheet and a very long-term reference shareholder, Voltalia can afford to take a longer term, more industrial view than private equity-backed competitors. In this interview, we learn about the progress of Voltalia’s maiden telecom ESCO project in Myanmar, and learn about their pipeline for future business and targets for the coming years.

Charles-Henri Duprez, Managing Director

Keywords: Africa & ME, Air Conditioning, Asia, Bankability, Batteries, Biomass, Business Model, Community Power, DG Runtime, Dimensioning, ESCOs, Egypt, Energy, Energy Efficiency, Fixed Price, Hybrid Power, Insights, Installation, Loading, MNTI, MyTel, Myanmar, NOC, O&M, Off-Grid, On-Grid, Opex Reduction, Outdoor Equipment, Regulation, Renewables, SLA, Solar, Unreliable Grid, Voltalia, Who’s Who, Wind


of Madagascar – Laurent is now our COO and Myanmar Country Manager. Together, we will leverage Voltalia’s off grid expertise and propose a win-win model to the telecom industry. The way we manage energy at Voltalia is different than within the towerco or telco sector. Specifically our vision is as a power producer to minimise the LCoE (levelized cost of energy: the average total cost to build and operate a power-generating asset over its lifetime divided by the total energy output of the asset over that lifetime) while improving quality of service (QoS) at the same time. TowerXchange: Please describe Voltalia's long-term vision. Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Voltalia is a clean energy producer. Our main focus is to develop renewable energy solutions from scratch in order to reduce dependency on fossil fuel, to reduce O&M costs, and propose the lowest price to our clients. Our vision spans from the development and construction of clean distributed generation, to O&M, and our projects range from large scale 100MW wind plants in Brazil to small solar hybrids solutions for MNOs. We want to become a long-term partner of our clients within the telecom and tower industry and enable them to focus on their core business while we manage the end-to-end provision of energy to their sites.

The mission of Voltalia is both to improve the global environment but also to foster local development in countries where we operate, providing water irrigation, helping grow new local businesses, et cetera. TowerXchange: What specific challenges are you helping MNOs and towercos overcome? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Energy often represents more than half the operating costs for cell sites on bad grid or in remote areas. The high and unpredictable delivered cost per litre of diesel, exacerbated by theft and the high costs of maintenance, means the price per kWh can often be significantly in excess of US$1. And this can have an adverse effect on QoS for difficult to access sites. The best way to reduce and predict opex is to reduce or eliminate the use of diesel. Solar is the obvious

solution, but MNOs and towercos have many demands on their capital, so often lack the available capital to invest in hybrid renewables. Voltalia overcomes this challenge by bringing its unique capacity for investment, combined with its extensive experience in industrial project development, solar and battery expertise and O&M capabilities. TowerXchange: Congratulations on winning the contract with MNTI in Myanmar. What can you tell us about that contract and the challenges to be overcome in Myanmar? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: MyTel, the fourth operator in Myanmar, backed by a consortium headed by Viettel, launched commercial operations on June 9 of this year, at which point we were already operational on around half of our contracted 171 sites for one of MyTel’s key rollout partners, local towerco MNTI. We currently have 100 sites live in Myanmar, with the balance of the contracted sites to be fulfilled after the rainy season, prior to the end of this calendar year. We’ve exceeded our expectations in terms of operations and implementation – Laurent Roineau and his team have done a great job down there – despite the number one challenge to find experienced and reliable local contractors . Our initial tranche of 171 sites is in the Bago and Ayeyarwaddy regions, where 20-25% are on good

Laurent Roineau and Michel Faivre, Voltalia


grid connections, 10-15% on unreliable grid, and the remaining ~65% off grid. At the moment most of our sites are battery hybrids as we continue to conduct proofs of concept for solar hybridisation in order to further reduce the use of diesel, hence lower the cost of energy. Contrary to the popular belief that it rains too often for solar to be a viable option in Myanmar, there are an increasing number of solar sites, particularly in the Northern states. Ours is the first ESCO contract in Myanmar, and it has a ten-year duration. We own all the energy equipment, and our contract has three components:

infrastructure, maintenance (both fixed costs) and energy, which is charged according to consumption within load bands. Diesel costs remain a pass through, at least for the time being. We’re excited by the opportunity to expand our footprint in Myanmar where we are also exploring opportunities in mini-grids and utility scale renewable energy projects (solar and hydro). TowerXchange: Who are your shareholders and what can you tell us about the strength of your balance sheet?

Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Voltalia is listed on the Euronext in Paris and our reference shareholder is Creadev, the investment company of the Mulliez family, owner of some of the largest retail groups in Europe (including Auchan, Decathlon, Leroy Merlin, et caetera). Our shareholder base also includes the renowned Proparco, the French development institution specialised in the private sector. For Creadev and Proparco, investing in renewable energy is a commitment in line with their long term vision. Voltalia has a turnover of €180mn (up 42% YOY) and over €900mn of assets on its balance sheet. We have undertaken a capital increase of €170mn in 2016 in order to finance our additional capacity and we also have the ability to raise debt both at a corporate and project levels. TowerXchange: What are the challenges ESCOs must overcome to evangelise their business model to MNOs and towercos? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: There are currently three main challenges: < Our first challenge is to make MNOs and towercos realise it is in their own interest to sign long term contracts. Investing in solar panels and batteries requires substantial upfront capex, and equipment lifecycles can be in excess of 20-30 years.


While contracts in the energy sector are typically 15-25 years, in telecoms a minimum duration of 10-15 years is required. Contracts in telecom are often aligned with tower or O&M contracts, which is not enough to finance the energy generation project, which needs a true PPA (Power Purchase Agreement) to be bankable. < Another challenge is to make MNOs and towercos realise they have to give full autonomy to the ESCO to produce power, governed by the terms of their Service Level Agreement (SLA), in order for the ESCO to be able to design optimal solutions, hence achieve the highest level of Quality of Service (QoS). We also need the autonomy to provide excess energy for community power and to other towers. Some operators haven’t really understood the ESCO model – they want the lowest fee but they also want to impose constraints on the energy storage solutions and gensets we use. They have to give us more leeway as to how we deliver within the SLA. < The third challenge is regulatory. ESCOs must be licensed and must have the ability to sell energy as an independent power producer (IPP). As of today, regulation differs considerably across countries although overall the regulatory framework is moving in the right direction. The price of solar PV modules has halved in the last five years and the total cost of energy storage is decreasing as well, albeit slower than the price of solar, yet the pace of renewable energy technology adoption still lags in the telecom industry.

TowerXchange: What happens at the end of the 10-15 year contract? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Our clients will most likely want their contracts to be renewed, but they could decide to terminate. If termination clauses are not well defined, the ESCO will be reluctant to invest in last years of the contract. At termination, there may or may not be an opportunity to buy the assets, the value of which is typically linked to the net book value and the condition of the equipment. TowerXchange: What differentiates Voltalia from other ESCOs? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: Many of our competitors are private equity backed, with a limited near-term capacity for investment whilst they re-finance. Voltalia has a very solid industrial background, €180mn annual turnover and over €900mn of assets on our balance sheet – we can afford to take a long term view. Voltalia is a service-oriented partner, offering full Energy Service management, proven over multiple large-scale power production projects. We have developed an holistic range of installation, maintenance and monitoring services tailored for the telecom market. Contrary to some other ESCOs proposing vendor financing like approaches, we are

willing propose a 100% OPEX offer over long-term period, to ensure our customers full predictability on their power needs with guaranteed SLA through a one stop shop. In addition, as renewable power producer and service provider in the energy sector (turnkey power plants, O&M), which is unique in the ESCO space, we can easily extend our footprint to solar and wind farms, solar rooftops, etc, through CAPEX or OPEX models, to bring even more environmental and financial benefits to the MNOs. Our investment appetite extends beyond telecom ESCOs to become an independent power producer (IPP) in each country, which means we not only bring mobile connectivity to communities, but also mini-grid power to local homes and enterprises, promoting economic development and enhancing revenue generation for the cell site owner. TowerXchange: Having worked for both a towerco (Eaton Towers) and now an ESCO, what’s your opinion on why an MNO should choose to partner with an ESCO rather than a towerco? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: ESCOs have a single-minded focus on optimising the LCoE, whereas towercos’ focus is on revenue generation – lease prices and lease up. For an MNO willing to keep the ownership of the towers, the ESCO under a buy and lease back model


could be a tremendous opportunity to generate a quick sale of non-core business assets, with a guaranteed savings on its opex. The ESCO could also play the role of colocation agent to the benefit of the MNO. Also, we’ve initiated dialogues with many emerging market towercos about the idea of simplifying their business model by selling their energy assets - their entire power-as-a-service business - to an ESCO

such as Voltalia. Doing so could make their business model less complex and less risky, and therefore more attractive to institutional investors. TowerXchange: Part of the Voltalia value proposition is to be multi-model: which business model is best for telecom? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: One of

our strengths is precisely our flexibility to adapt to different models: where appropriate we will still use the capex model. But in general for partnerships with MNOs and towercos we are seeking long term opex model contracts – we invest the capex, undertake installation, O&M and crucially we also provide replacement capex. Last but not least, our focus extends beyond off grid and bad grid sites, to cover all energy needs of MNOs. We are discussing with several tier one MNOs in Africa to provide them energy on large scale (20MW or more) through corporate PPAs – solar is becoming cheaper than grid power in most markets with sufficient solar resources. This also gives the telecom operator better visibility on their future cost of energy and enable them to focus on their core business. TowerXchange: What are your targets for the growth of Voltalia’s telecom ESCO business? Charles-Henri Duprez, Managing Director, Renewable Energy for Telecom, Voltalia: We’re targeting 10,000 sites in the medium term: additional sites in Myanmar, others elsewhere in Asia, but probably the majority of new sites in both Sub-Saharan and North Africa. Voltalia is unique among the companies bidding for large ESCO contracts in that we have a robust balance sheet, enabling us to take a more long-term, industrial view than competitors backed by short term private equity funds<


Footnotes[1] For example, the cost of power represented 54% of Helios Towers’ cost

of sales and 49% of cost of sales for IHS and MTN’s joint venture towerco in

2016 (excluding depreciation and amortisation)

[2] 1,500 of Ascot’s sites operated in partnership with Makasa Sun in

Nigeria

[3] All 300 GreenWish Partners sites to date operated in partnership with

Sagemcom

[4] 260 sites (0.9%) ownership undisclosed, whether MNO or towerco

[5] Other business models include the OMC ABC model, Distributed Power

Africa’s “Zero installation cost” model and GreenWish’s customised model

[6] Other business models include the OMC ABC model, Distributed Power

Africa’s “Zero installation cost” model and GreenWish’s customised model

[7] IHS has a ‘manage with license to lease’ deal with Orange Côte d'Ivoire

under which IHS manages and leases up around 1,000 of Orange’s towers

on a long-term lease, although technically Orange still owns the sites.

[8] TowerXchange has studied the tower markets in 30 countries SSA,

across which we have identified 57,223 cell sites off-grid or on unreliable

grid connections. TowerXchange has not studied 20 smaller African tower

markets, but we estimate that they might represent a further 3,000 off-grid

and unreliable grid sites between them, bringing the total to 60,223.

[9] MEA towerco site count excludes 10,000 contracted IHS ‘Big Five’ sites

and 10,284 towerco sites in South Africa

[10] The 14,242 tower Iraqi tower market may be particularly attractive to

ESCOs as the country’s MNOs are struggling with high opex, attributable in

large part to security and logistics issues across the country. Power remains

a major challenge and whilst figures for power availability vary by region

and by time of year (ranging from zero grid to 16-18 hours in Kurdistan

in summer), the vast majority of sites are reliant on dual diesel gensets.

Hybrid power systems have not yet been trialled at significant scale in

the country and, whilst fuel is not expensive by a global comparison, the

costly and difficult logistics associated with fuel delivery and generator

maintenance means that a switch to renewable energy is attractive.

[11] ‘Breakdown of the 39,443 sites in our second tier addressable market

of MEA power-as-a-service towercos: Helios has 3,495 sites in Tanzania,

1,767 in DRC, 384 Congo Brazzaville and 839 in Ghana; Eaton Towers has

700 sites in Burkina Faso, 1,200 in Ghana, 1,200 in Kenya, 600 in Niger and

1,300 in Uganda; we also include the 5,503 IHS towers in Nigeria outside the

‘Big Five’ initiative 2,284 IHS towers in Cameroon, 2,518 IHS towers in Côte

d'Ivoire, 841 in Rwanda and 1,714 in Zambia; 4,757 American Towers sites

in Nigeria, 1,490 in Uganda, 2,276 in Ghana, and 723 soon to be acquired in

Kenya; plus 5,852 towers owned by 13 smaller towercos.

[12] Towercos included in our “Other MEA towerco sites” count: Pan

African Towers, TowerCo of Madagascar, Iranian Towers, BCTek, Al Karama

Towers, Communication Towers Nigeria, African Towers, SWAP Telecoms

and Technologies, Fanasia, Hotspot Network, TASC Towers, HOI-MEA, and

Shared Networks Tanzania

[13] TowerXchange has identified 6,414 ESCO sites already contracted in

India, but does not have the precise breakdown of those sites by circle,

hence the totals shown for each circle include sites already contracted,

which is why -6,414 is shown as a negative value

[14] The four towerco license holders in Bangladesh: edotco, TASC Towers,

iSON Tower and AB Hightech Consortium.


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