Solar to improve efficiency of Pakistan’s telecom sites

Share With:
As published on www.towerxchange.com Renewable Energy wing of DH Corp has already deployed 2MW of solar energy to 250 cell sites Salman Khalili, Head of Telco, Reon Energy: Established in 2012, Reon Energy is Pakistan’s fastest growing and the largest national solar installer for commercial and industrial clients, with 30MW of delivered and ongoing solar power plants. Reon is the clear market leader in the telco space, having contributed 2MW of solar energy on over 250 cell sites in the last three years. Reon is the renewable energy wing of DH Corp, which is listed on the Pakistan Stock Exchange, with a market capitalization of approximately US$400mn. DH Corp is one of the country’s largest conglomerates with a varied business portfolio which includes, fertilizers, foods, chemical storage and handling, trading, and energy – including independent power production, renewables, and petrochemicals. In July 2017, DH Corp and Edotco entered into an agreement to jointly acquire Deodar (13,000 Jazz Towers). As part of the transaction partnership, DH Corp was investing a 45% equity stake in Edotco PK, while the remaining 55% controlling stake was to be held by Edotco. Unfortunately, this deal recently got called off on regulatory approval grounds. TowerXchange: Please describe for us the operating environment for tower co.s and mobile network operators in Pakistan in terms of the extent of the electricity grid and the reliability of that grid. Salman Khalili, Head of Telco, Reon Energy: Pakistan is quite notorious for its poor grid condition. The gap between demand and supply results in extended outages, especially during the summer season (from April-October) every year. Outages peaked in 2013, with a daily average of 18 hours’ downtime in remote areas and up to six hours in metropolitan areas. Though things have improved a little in the last couple of years, even today the experts foresee the energy crisis continuing, whereby metro cities could face four hours and rural areas up to 12 hours of daily grid outage on average. This situation has severely dented all businesses and telco is not an exception. Operating costs shoot up due to exorbitant generator fuel and maintenance costs. More reliance on generators means more frequent refueling and more pilferage. For a low ARPU market like Pakistan, this is a matter of grave concern for all telecom operators, for whom roughly 40% of technology OpEx is spent on energy management (~25% of total company OpEx). However, this adversity has brought its own set of opportunities for renewable energy and storage solutions. There is an increasing focus on solarising telco sites and adding additional battery backup. As electricity from the grid and international oil prices see an upward trend, and the price of solar panels plummets, the time is right to shift to solar energy.
TowerXchange: What are the typical energy generation and storage systems in use in Pakistan, and how does the choice of technologies vary between good grid, bad grid (<16 hours per day) and off-grid sites? Salman Khalili, Head of Telco, Reon Energy: A typical on-grid BTS site has three sources of power – grid, generator, and battery. While the first two are generally constant, the average duration of grid outages determine the business case for solar, and the type and size of battery storage used. By and large, BTS sites have standard 12V or 2V lead-acid and gel batteries. The number of battery banks depends on the number of hours grid is typically not available. The idea always is to prevent the generator from running, and storage is sized as such that it should see off the outage hours and when power returns, get charged again before the next outage cycle. So, fast charging deep cycle batteries are required. Like solar, lithium-ion technology has also gained popularity and a good number of off-grid and bad grid sites are being upgraded to solar with lithium-ion batteries to reduce diesel genset’s runtime.
TowerXchange: Is there an opportunity for a third party Energy Services Company (ESCO) to work alongside Edotco in the provision of primary and backup power solutions in Pakistan, or is the plan for Edotco to deliver such capabilities in-house? Salman Khalili, Head of Telco, Reon Energy: The tower co.s concept is still new to Pakistan and it has still to witness a large successful transaction go through. We certainly believe ESCO is workable as it takes care of half the job a tower co. is expected to do – provide uninterrupted power at a fixed rate of consumption and maintain the uptime Service Level Agreement (SLA) regardless of how energy is generated or stored. From a tower co perspective, we believe that a pass-through energy cost model will not be lucrative enough for telecom operators as energy management is not their core business and they are always searching for options to outsource non-core business to go lean and less OpEx intensive. Suppliers with core expertise in power generation and storage solutions always have an opportunity to combine strengths and maximize margins for operators and tower companies alike. Reon has recently signed a 5MW solar energy sales contract with a mining company and is actively pursuing similar deals in the telco space as well.
TowerXchange: One of the principle challenges ESCOs must overcome is the cost of capital compared to tower co.s – how can larger EPC and IPP companies like Reon help hybrid and renewable telecom energy projects access low-cost capital? Salman Khalili, Head of Telco, Reon Energy: Capital is a challenge when it comes to ESCO. However, it is much easier to get access to capital for green initiatives if backed up by a well thought out contract covering risks. Reon, as part of the largest private group in Pakistan, already has access to the cheapest cost of capital and invests in longer-term energy projects. Investors in SPV’s of Reon, who provide long term energy contracts, are some of the top global corporates and by pooling an ESCO with its existing renewable portfolio it offers low-cost capital in line with those typically available to telecom operators or tower companies.
TowerXchange: Does Reon Energy have any activity or appetite for, telecom energy projects outside Pakistan? If so where? Salman Khalili, Head of Telco, Reon Energy: Currently, Reon does not have any activity outside Pakistan simply because there is massive potential within the country that needs to be unearthed and we are focused on harnessing that before moving out. However, the appetite is there and as a part of the wider group strategy, the company will be keen to look at international opportunities as well. Apart from Telecom, we have worked with partners and have assessed solar projects in Poland and Turkey. The strategy that the group employs is to go with existing local players in new markets whereby it combines its low-cost capital and strong engineering strength with local partners’ local knowledge and capabilities. It also offers partners the principals of reciprocity where they are offered to come into the local Pakistani market on the back of Reon. Countries in the Far East, GCC, and South America are markets we will be happy to explore with the right partners.
>TowerXchange: Do you see cell site energy as a self-contained opportunity, or is there an opportunity to extend rural cell site energy solutions to provide power to local communities? Salman Khalili, Head of Telco, Reon Energy: Absolutely, there is an opportunity to make these towers more powerful. Reon is already working with Edotco to use one of their tower locations in an off-grid area to set up a mini-grid that serves the local community. This is a part of Edotco’s “Tower to Power” drive. We are also working with financial institutions like microfinance and mobile banks on a similar model. This would allow us to create an impact across multiple UN Sustainable Development Goals, especially SDG 7 on making sustainable energy available at an affordable price, SDG9 on improving ICT and connectivity, and many others through improved financial inclusion.
TowerXchange: Finally, please sum up Reon Energy Solutions’ vision for the future of telecom energy. Salman Khalili, Head of Telco, Reon Energy: Reon offers customized small, medium and large-scale solar solutions with a vision to create an energy-rich future while upholding our commitment to the planet through safe and sustainable practices. We understand it is imperative to have affordable and reliable power for business continuity. Reon brings with it unparalleled partnership stories from local and international groups and, with an in-house product development team, we continue to explore possibilities to enhance a partner ecosystem where we create great value for our customers. We strive to be the preferred energy partner for all telecom players by offering a wide array of solar energy, storage, and asset management solutions, backed by multiple commercial engagement models to choose from.
TowerXchange: Does Reon Energy have any activity or appetite for, telecom energy projects outside Pakistan? If so where? Salman Khalili, Head of Telco, Reon Energy: Currently, Reon does not have any activity outside Pakistan simply because there is massive potential within the country that needs to be unearthed and we are focused on harnessing that before moving out. However, the appetite is there and as a part of the wider group strategy, the company will be keen to look at international opportunities as well. Apart from Telecom, we have worked with partners and have assessed solar projects in Poland and Turkey. The strategy that the group employs is to go with existing local players in new markets whereby it combines its low-cost capital and strong engineering strength with local partners’ local knowledge and capabilities. It also offers partners the principals of reciprocity where they are offered to come into the local Pakistani market on the back of Reon. Countries in the Far East, GCC, and South America are markets we will be happy to explore with the right partners.
>TowerXchange: Do you see cell site energy as a self-contained opportunity, or is there an opportunity to extend rural cell site energy solutions to provide power to local communities? Salman Khalili, Head of Telco, Reon Energy: Absolutely, there is an opportunity to make these towers more powerful. Reon is already working with Edotco to use one of their tower locations in an off-grid area to set up a mini-grid that serves the local community. This is a part of Edotco’s “Tower to Power” drive. We are also working with financial institutions like microfinance and mobile banks on a similar model. This would allow us to create an impact across multiple UN Sustainable Development Goals, especially SDG 7 on making sustainable energy available at an affordable price, SDG9 on improving ICT and connectivity, and many others through improved financial inclusion.

TowerXchange: Finally, please sum up Reon Energy Solutions’ vision for the future of telecom energy.
Salman Khalili, Head of Telco, Reon Energy: Reon offers customized small, medium and large-scale solar solutions with a vision to create an energy-rich future while upholding our commitment to the planet through safe and sustainable practices. We understand it is imperative to have affordable and reliable power for business continuity. Reon brings with it unparalleled partnership stories from local and international groups and, with an
in-house product development team, we continue to explore possibilities to enhance a partner ecosystem where we create great value for our customers.

We strive to be the preferred energy partner for all telecom players by offering a wide array of solar energy, storage, and asset management solutions, backed by multiple commercial engagement models to choose from.

subscribe to dialogue

Stay up to date with latest Reon news and industry innovations

We won’t send you spam. Unsubscribe at any time