Case study 7: African Solar Designs: Trialling the Community Power for Mobile Model in Kenya
In 2013, we launched the Mobile for Development (M4D) Utilities Innovation Fund (formerly MECS) to test and scale the use of mobile to improve or increase access to energy and water services. With the support of the UK Government, GBP 2.4 million in Seed and Market Validation grants was awarded to 13 organisations in 11 countries across Africa and Asia.
Today we continue our Case Study series on lessons learned from these 13 projects. Core outputs of the Innovation Fund are the lessons and evidence base developed throughout the grant timeline that can inform ecosystem players on topics such as commercial benefits to mobile operators, and social and economic impacts for the underserved. By making these lessons public, we intend to accelerate scaling and sector growth. Since the inception of these grants, we have already seen significant expansion and innovation of mobile-enabled products and services for water and energy delivery as well as sanitation and the business models that support them.
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The seventh Case Study in our series focuses on African Solar Designs (ASD), a Kenyan company which was founded in 2008 as a clean energy advisory and engineering solutions provider. ASD provides bespoke off-grid solar solutions to companies across East Africa as well as consulting for governments and international development agencies.
In December 2013, GSMA awarded ASD a Seed grant to trial a solar-diesel hybrid energy system for powering an off-grid telecom tower along with surrounding businesses and communities. This rural energy business model is referred to as Community Power from Mobile (CPM) and ASD trialled this pilot with Airtel in Kakuma town, Kenya.
In the CPM model, a telecom tower serves as the anchor customer while businesses and household connections in the vicinity of the tower benefit from energy services that would otherwise not be viable without the anchor customer. Since 2010, there has been wide interest in demonstrating the viability of the CPM model, although, few examples exist in Africa. Kenya was targeted as having significant CPM potential due to the high number of off-grid telecom towers near small businesses and communities. Additionally, Kenya has an overall grid electrification rate of just 20% while 92% of its population has mobile coverage. Energy models that leverage mobile networks, such as CPM, could serve approximately 30 million people in Kenya.
Unfortunately, ASD could not complete the pilot within the grant timeframe and structure. The main challenges were around the negotiations of a power purchase agreement (PPA) to power one of Airtel Kenya’s off-grid towers, the transfer of tower ownership during negotiations, and the underestimation of the mobile operator’s expectations and requirements. Regardless of the grant termination, some important lessons emerged. These lessons are outlined below and are explained in greater detail in the Case Study:
The CPM model must address core business drivers of tower operation
Mobile operators’ most valuable asset is the reliability of their network and increasingly mobile operators are trying to reduce their network capital expenditure. Energy service companies (ESCOs) such as ASD, must demonstrate their ability to fulfil the strict uptime requirements of the mobile industry’s licensing agreements at an attractive price in order to obtain the necessary senior buy-in. Tower owners/operators may need more time to work with ESCOs who do not have a track record of providing power to towers, as was the case with ASD.
Additionally, while ASD found Airtel’s operational staff to be very enthusiastic about the CPM model, senior decision-makers faced other pressing priorities, such as the impending sale of their towers, and this delayed negotiation.
Mobile operators seek assurance that pilots can scale
Tower companies and mobile operators have thousands of towers and prefer them to be configured and serviced in a similar manner to reduce complexity. The fact that this pilot only covered one site, coupled with ASD not having clear plans or resources for scaling the solution, caused Airtel to hesitate, compounding the negotiation challenges.
Flexible and patient financing are needed for pilots heavily dependent on partnerships
Grant capital is still essential to trial and de-risk the CPM model, however the rigid structure of the M4D Utilities grant was ill-suited considering that a commercial agreement had not been signed between ASD and Airtel Kenya. The 12 month timeline of the grant with pre-agreed milestones did not allow the flexibility needed to successfully pilot the CPM model. Equity investment or longer term research funding could have accommodated the significant delay in achieving a PPA but the duration of the M4D Utilities grant could not.
Despite not completing this CPM pilot within the grant timeline, the learnings of the requirements and challenges of the CPM model will help inform ESCOs and tower companies seeking to serve the energy needs of multiple customers in the future.