The story of a visionary who gave away a mountain provides a parable for our wireless world
Forwards's Color's Productions, Arlington, VT

The story of a visionary who gave away a mountain provides a parable for our wireless world

Andrea Macario Andrea Macario

Andrea Macario

Growth agent experienced in building and operating strategic initiatives and new ventures internationally

发布日期: 2019年11月11日
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Mount Equinox is my favorite hike in Vermont’s Green Mountains; it’s a great way to spend a half-day in nature, hard enough climb to feel like a workout and with satisfying 360-degree views at the summit.

When contemplating the views, you will see the presence of an abandoned old inn, originally designed as a ski lodge. Alongside the nearby toll road are cellular towers, the assets that generate income to sustain the livelihood of the only U.S. charterhouse of the Carthusians, a 900-year-old Roman Catholic monastic order devoted to silence, solitude, reverent contemplation of the human condition, and the quest for grace. Those towers, like the rest of the mountain, are powered by two hydroelectric stations that turn a 900-rpm generator. 

The history of Mount Equinox entails the fascinating story of the retirement project of Dr. Joseph George Davidson, an accomplished chemist tied to a number of key industrial patents and to the gaseous-diffusion project, which refined the uranium used in the fission of the first atomic bomb.

In the 1940s, Davidson purchased of tracts of land on Mount Equinox, eventually purchasing 11 square miles, nearly the entire mountain. In his retirement there, Dr. Davidson turned his attention to new technologies and to conservation of natural resources. Ultimately, he bequeathed the mountain and its road, telephone and energy infrastructure to the Carthusians.

Fast forward from Dr. Davidson’s time to the present: We have all witnessed our world relentlessly moving from a state of expectation of “something, sometimes, somewhere to someone” to a state of “everything, every time, everywhere to everyone,” and it is hard to find a better poster child for this cultural transformation and change in expectations than the wireless industry.

In wireless, the “Everything” aspect of the transformation is represented by the now “zillion” dollar companies that have disrupted all sorts of incumbents and made certain we can satisfy our insatiable demand for wireless media, service, content, etc. At the same time, carriers have progressively enabled all this wireless demand and usage by iterating the various “Gs,” or generations, of their networks.

The “Everywhere” part of this story involves both land and structures and has brought us more than four million sites, just like Mount Equinox, where cell towers deliver “Everything” to “Everyone” and in the process pay the bills of their owners, like our Carthusians.

It is the “Every Time” part of this story that the company I am helping to build, BetterGrid, is uniquely focused in a very compelling way.

Our Dr. Davidson at Mount Equinox was motivated from a powerful need for self-sufficiency, expressed most clearly as a disdain for public utilities; he wanted to be in control, not dependent on someone else’s generation of electricity.

At Better Grid, we aim to provide the same type of control and self-sufficiency, at scale, for the benefit of the most large-scale owners of cell towers: Mobile Network Operators and Tower Companies (MNOs & TowerCos).

“Every Time” means that users demand that cell towers be powered at all times. To them, every time includes during power outages, during emergencies and natural disasters and, of course, all the time in places where electricity is provided for only a few hours a day by the local utility, as well as places where no local utility operates.

MNOs & TowerCos are actually doing reasonably well in this domain, but the more time we spend with them, the more we understand how “Every Time” is a constraint and a source of stress in their business models:

  • First off, no power means no signal. People employed in the wireless industry are normally quite agreeable; however, you can test them by bringing up something called “Loss of Network Availability” and see what their reactions are. For better effect, try to ask for actual data on how frequently that happens and throw in the context of prepaid subscribers.
  • Wireless availability for “Everyone” is not a reality yet. Mobile subscribers worldwide are almost five billion people, and while that is a lot, it is still only 70% of “Everyone” – so not exactly everyone benefits from wireless. Try to google things like “rural connectivity” or “digital divide” or “Internet everywhere” or “country X coverage targets” and you will find lots of initiatives involving a great many technologies. In the world of cell towers, these initiatives often demand “OffGrid sites.” For one Mount Equinox, with its hydroelectric systems, there are thousands of other OffGrid sites where the “system” is essentially a diesel generator running 24x7 powering lead-acid batteries that in turn power the tower. That’s EXPENSIVE for a number of reasons. The diesel is expensive. Delivering the diesel via truck across middle-of-nowhere roads is expensive. The diesel is frequently stolen. The batteries are frequently stolen. The end result is that some of these sites – that would be required to get connectivity to more people – are not economically viable and are not deployed unless they are subsidized by someone.
  • Still there are tons of OffGrid or PoorGrid sites in operation (possibly 400,000+ in the world according to the publication TowerXchange). Some of these sites can cost north of 100K USD / year to maintain, according to a number of sources, with costs per kWh that are several orders of magnitude greater than what you and I are used to in our electricity bills.
  • Of equal importance, one gallon of diesel produces 22 pounds of CO2, so for a generator that burns 24x7 at one gallon/hour that would make 192k pounds of CO2 a year. According to the EPA, that amount of diesel is equivalent to the carbon sequestered by 105 acres of U.S. forest in a year. All MNOs have strong targets to significantly reduce emissions, and these levels of CO2 do not help them.
  • All this, plus the complexity and opportunity cost of operating energy at these towers classifies well into the category “High TCO” (Total Cost of Ownership), a metric business people are trying to reduce.

Today is a super interesting time to be in this market as several developments are occurring simultaneously that will essentially remedy these problems in the course of the next few years.

First, falling costs of solar panels and lithium-ion batteries make renewable energy essentially the lowest TCO option available for the industry. Lithium-ion batteries prices have fallen 85% between 2010 and 2018 and are forecast to fall at a rate of 6.5% per year in the next decade according to Bloomberg NEF and several other sources. Meanwhile, solar seems to be on track to become the most cost-effective energy generation option:

Falling costs of lithium-ion batteries - source Bloomberg
Falling Costs of Solar Power Generation - source Bloomberg

Second, advances in technology, AI, etc. allow energy infrastructure to be connected to monitoring and decisioning systems that further reduce costs both in terms of operating efficiency of the equipment and in terms of maintenance and operations costs. (Speed of response and many other factors also matter in maintaining uptime and service levels.)

Third, a new class of companies has emerged to specialize in Energy Services. The models adopted by these companies vary in their vendor financing, asset lease, kWh consumption, and energy savings agreements.

In our case, we chose to offer a full “as-a-service” model where we design, configure, purchase, install, own, monitor, operate and maintain the equipment at our client sites. We do this in exchange for a long-term monthly service fee against a service level agreement for a certain kW load uptime.

We like this model because, besides generating savings to our clients from Day 1, it also allows them to completely transfers risks and management complexity to us. In turn, this allows us to be in full control of the energy infrastructure, to specialize and ultimately become extremely efficient in operating it, while being transparent in sharing our control points with our clients and their network operations centers.

Energy Services Companies (ESCOs), are currently serving less than 1% of the world’s towers and are growing extremely fast, particularly in Latin America, the Middle East and India and, in general, in areas that combine favorable solar yields with either high costs of energy or low grid reliability or sometimes both.

BetterGrid has been operating only for a few months; however, our experience suggests that these types of “as a service” arrangements are often solicited by tower owners who understand the benefits extremely well and that the market growth forecasts for ESCOs found in industry research may even be a touch conservative.

The good news is that the combination of these factors will allow the industry to essentially upgrade its energy equipment, save lots of money, cut lots of emissions and keep the network up all the time. We will see this starting from more problematic sites where replacing the high use of diesel is seen as a very quick way to reduce outrageously high levels of operational costs and to free up financial resources that can be invested in things like 5G networks or simply can improve financials. Over the course of the next few years, we will see this infrastructure upgrade eventually applied at perfectly fine sites that are reliably powered by local utilities and only need a few hours of power backup to guarantee continuity of service.

All of this will require a significant amount of capital (think 4+ million towers and tens of thousands of USD to invest per tower) and will not happen overnight. At BetterGrid our experience has been that at this particular time, and given the other investment opportunities that the industry offers, long-term telecom infrastructure investors are looking at the Energy as a Service transactions very favorably from a risk / return point of view in most countries and often treat them as an investment priority.

This gives me a lot of confidence that ESCOs like BetterGrid will be able to meet the demand of tower owners to solve their energy problems, dramatically reduce their emissions due to diesel generators, improve their network quality – all while saving a lot of money. Like Dr. Davidson and our Carthusian monks, they will feel that they have regained control over the “Every Time” dimension of their value curve and will be able to focus on getting “everything to everybody, everywhere” so our insatiable and growing digital demands will continue to be met.

On a personal note, involvement in this market opportunity has been super exciting. Anyone interested in learning more, has suggestions or wants to geek out, shoot me a text or send me a note at [email protected]

 

Ciao!

Andrea



 Sources: 

Alex Rosales

Waste to Energy

4 年

Awesome. thanks!!!

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Mattia Liverani

Country Manager at Pharmanutra USA Corp. || GM + High-growth Executive | Nutraceuticals and Tech

5 年

grande Andy!

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