Tower Power Africa: Energy Challenges and Opportunities for the Mobile Industry in Africa September 2014 Tower Power Africa, September 2014 Contents Executive Summary ................................................................................................................................ 5 Introduction .............................................................................................................................................. 7 Industry Context: Mobile Networks Growth in Africa ............................................................. 10 Mobile Network Coverage and Subscriber Growth ..................................................................................... 10 Size of Mobile Networks (No. of Tower sites) and Growth ...................................................................... 11 Industry Structure and Changing Tower Ownership ................................................................................. 11 Operations Context and Challenges to Growth ............................................................................................. 13 Challenges for Operations and Growth of Mobile Networks in Africa .................................... 14 Energy and Power Sector: Current State and Challenges in Africa ..................................... 15 Current state of Energy Supply and Consumption ...................................................................................... 16 Electricity Infrastructure and Challenges ....................................................................................................... 18 Energy as a challenge: Cost of Powering Mobile Networks in Africa ................................. 20 Grid Infrastructure and Growth in Off-grid and Unreliable-grid Network of Sites ..................... 21 The Real Cost of Grid Electricity in Africa ....................................................................................................... 22 Cost of Powering Mobile Networks ..................................................................................................................... 22 Renewable Energy in Africa: As an alternative for Powering Mobile Networks ........... 24 Renewable Resources and Potential in Africa ............................................................................................... 24 Policy and Regulations for promoting Renewable Energy ...................................................................... 26 Renewable energy alternatives for Powering Mobile Networks........................................................... 28 Suitability and Feasibility for Telecom Power .................................................................................. 28 The green opportunity ................................................................................................................................ 30 Current state of green adoption .............................................................................................................. 30 Barriers to green adoption........................................................................................................................ 31 Industry Trends and Opportunities: Future of Powering Mobile Networks in Africa 33 The Emerging Tower Co model ............................................................................................................................ 33 Impact on Green Adoption ........................................................................................................................ 35 Energy Outsourcing prospects in Africa ........................................................................................................... 36 Outlook and Future Prospects .............................................................................................................................. 37 Drivers for the green transition .............................................................................................................. 37 Conclusion ............................................................................................................................................... 39 2 Tower Power Africa, September 2014 Appendix A: Infrastructure Sharing and Outsourcing ............................................................ 40 Appendix B: Energy Outsourcing .................................................................................................... 44 Appendix C: Community Power from Mobile Infrastructure ............................................... 47 Appendix D: Renewable Policy and Targets across Africa .................................................... 49 Figures Figure 1: Mobile Coverage and Subscriber Penetration ................................................................................................. 10 Figure 2: Size of Mobile Networks in Sub-Saharan Africa (Number of Towers) ............................................................. 11 Figure 3: Tower Co share of total Tower Portfolio .......................................................................................................... 11 Figure 4: Major Tower Cos and their Tower Portfolio ..................................................................................................... 12 Figure 5: Operational Context of Mobile Networks ......................................................................................................... 13 Figure 6: Power Generation Mix and Installed Capacity ................................................................................................. 16 Figure 7: Electricity Generation, Access and Consumption in Perspective across Africa .............................................. 17 Figure 8: Electrification rates in Africa ............................................................................................................................ 18 Figure 9: Transmission and Distribution Grid Infrastructure in Africa ............................................................................. 19 Figure 10: Tower Sites by Off-grid and Unreliable-grid ................................................................................................... 21 Figure 11: Share of Energy costs in overall network OPEX ........................................................................................... 22 Figure 12: Cost of Powering Tower Sites (Off-grid) ........................................................................................................ 23 Figure 13: Business Case and Feasibility of sample green power system ..................................................................... 29 Figure 14: Cash flow Comparison and OPEX savings ................................................................................................... 29 Figure 15: Green Power deployments in Africa .............................................................................................................. 30 Figure 16: Key barriers to green power adoption in Telecoms ....................................................................................... 31 Figure 17: Growth in Tower Co model (by country, deals etc.) ....................................................................................... 33 Figure 18: Phases of Investment in Energy by a Tower Co (Post-acquisition) and the Impact on Green Energy investment ....................................................................................................................................................................... 34 Tables Table 1: Renewable Resource Potential (TWh) in Africa – by regions ........................................................................... 24 Table 2: Renewable Policy – guidelines, targets and incentives across select African countries................................... 26 Table 3: Green Alternatives: Fit for Telecom Power Deployments ................................................................................. 28 Glossary: MNO: Mobile network operator or mobile operator Tower Company (Tower Co): A company that manages a part or the entire assets of a telecom tower. 3 Tower Power Africa, September 2014 ESCO: Energy Service Company that provides end-end energy services and supplies power to telecom towers and/or community and businesses on a agreed pricing and business model. Mobile Coverage: Coverage (of population or land) by mobile network signal Mobile (unique) Subscribers: Number of people having subscribed to atelast one mobile service or connection Mobile Connections: Number of active connections (including mulptiple SIMs per user) CAPEX Model: Mobile Operator or Tower Company invests CAPEX of their own to rollout the renewable solution. OPEX Model: An ESCO invests CAPEX to generator power at site level and sells power to MNO or Tower Co Tenancy Ratio: A tenancy ratio is expressed as a fraction of the total number of operators sharing towers/total number of sites present. Site: Mobile tower site or Mobile base station site Off-grid site: Telecom Base Station Site which is NOT connected to the commercial Grid power supply On-grid site: Telecom Base Station Site which is connected to the commercial Grid power supply Bad-grid/Unreliable grid: Sites with power outages in excess of 6 hours per day on an average Grid: Electricity Utility Grid DG: Diesel Generator IRR: Internal Rate of Return is the Rate of Return of an Investment. OPEX: Operational Expenditure CAPEX: Capital Expenditure ROI: Return on Investment kWh/ MWh / GWh / TWh: Kilo Watt Hour / Mega