18 July 2012
Telecommunication installations contribute greatly to atmospheric pollution. Globally telecommunications comprises 35% of the total Information and Communications Technology (ICT) contribution to greenhouse gas emissions. And in India it’s even higher because of the aggressive growth in the telecom sector.
According to the Telecom Regulatory Authority of India (TRAI), India currently has 3,100,000 tower sites out of which over 30,000 are in off-grid areas. However, the majority are run by diesel generators, whether on-grid or off, due to the intermittent power supply. The total annual consumption of diesel fuel by these towers is 2 billion litres, as a result of which 5 megatons of CO2 is produced annually. A total of 8 megatons CO2 is emitted by towers due to annual grid electricity consumption.
TRAI’s renewable energy goal
TRAI has recently made it mandatory for telecom companies to use renewable sources of energy for powering their towers. At least 50% of towers and 20% of the urban towers are to be powered by hybrid energy sources (renewable and grid) by 2015. In the second phase, the telecom companies will be required to convert 75% of the rural towers and 33% of the urban towers to run on hybrid power. Ministry of New and Renewable Energy (MNRE) is supporting off-grid solar telecom applications by providing capital subsidy of 30% to a maximum subsidy of Rs 90 per watt peak. Alternatively, soft loans at 5% interest rate subsidized by India Renewable Energy Development Agency (IREDA) for such projects along with other benefits such as accelerated depreciation. However, the support is restricted to only 100 towers per company and will be insignificant to fuel renewable energy growth in telecom.
Business threat and opportunities for Telecom players
Energy costs for telecom operations have been rising and are currently about 30% of the total cost. Due to frequent power cuts, telecom operators depend heavily on diesel which costs around Rs 20 per unit of electricity as compared to commercial grid electricity price of around Rs. 5 per unit. Upon switching to solar there would be savings of $1.4 billion in operating expenses for telecom tower companies spent on diesel annually as per TRAI.
Uncertainty on diesel subsidy
If diesel subsidies are cut, the annual expenditure to power the towers would increase to INR 150 billion, which would be equivalent to the capital expense required over the next 10 years at current electricity demand to solarise around 500,000 network towers. Coincidentally that is the number of towers expected in the near future. However, now the main obstacle before the telecom operators is the finance required for this. Each tower costs Rs 40 Lakh and there will be an additional cost of Rs16 Lakh for installing the solar panels, which will almost double the cost of installing solar-powered towers. Another challenge for operators is diesel theft, which is as high as 20%. Moving to solar would lessen this issue.
Solar telecom project
India's first solar/grid telecommunications project executed by Alta for Viom Networks in a grid-deficit location, Kolar, which is about a 70 minute drive from Bangalore. The project was initially powered by 1 KW diesel-generated (DG) grid power system with per day grid supply of 9 hours at Rs. 7/ KWh and DG run time 12 hours and battery run time 3 hours. Upon implementation of Solar/Grid power system costing around 15.1 Lakhs for 1 KW load, per day average supply from solar panels is 6 hours, Grid 9 hours and battery 9 hours. Monthly operating expense comes out to be around Rs. 6166 (average cost of Rs. 9/ KWh) which includes panel cleansing cost of Rs. 1000, Grid cost (to power BTS and charge battery) Rs. 2785 and battery (48V 600Ah- 2 units) cost of Rs. 2381. This led to overall reduction in operating expenses by as high as 86% and cutting down CO2 emissions by 21 Tons per year with payback period of 3 years and will lead to cumulative savings of 68.1 lakhs above capital cost over 10 years.
Functional solar telecom project at Kolar
Mr. Teckkee Shih, CTO, Alta Energy, talks about a new business model for tower companies, which charge a fixed rate on operating expenses for a solar powered telecom system along with a monthly lease rental, which leads to higher return on investment and lower risk. He added, “A more sensible approach will be to start solarising all new sites coming on stream. The new solar power sites will have 90% savings on opex, this savings can be used to pay for the solar system. The next step will be to identify single tendency sites in off-grid locations that are suitable for retrofit (10% of 70,000 off-grid sites). Those are the sites which are most costly to operate; calculated total cost can be as high as Rs92/kWh.” Last but not the least, regulatory authorities need to support the telecom industry in implementing innovate and effective business models since for achieving “sustainability” in telecom operations, the stakeholders should first be able to achieve sustainability in their business operations.
Written by Varun Mittal, Department of Management Studies, Indian Institute of Technology Roorkee, Uttarakhand, India.