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Need of the Hour: Green energy solutions crucial to reduce dependence on diesel

October 31, 2012
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Kunal Walia, Engagement Manager, Analysys Mason

The telecom sector is one of the largest consumers of diesel in the country, using over 2 billion litres of fuel each year. This has increased the cost of operating telecom networks, as about 50 per cent of a telecom tower company’s opex comprises energy-related expenses.

As operators expand their networks to small towns and rural areas, energy demand is likely to grow further. Energy management will, therefore, become increasingly important, especially as operators roll out infrastructure to support new technologies like 4G and broadband wireless access.

tele.net recently held a conference, “Energy Needs of the Telecom Sector”, to examine the energy requirements of various stakeholders, identify the issues and challenges faced by them and discuss strategies and solutions. The following section com-prises a series of articles based on presentations by experts at the conference…

The Indian telecom industry consumes an estimated 4,550 MW of power every day and is one of the largest consumers of diesel in the country.

Within the mobile network, the energy requirement is the highest at the base station level (about 59 per cent) followed by mobile switching centres (21 per cent) and the core transmission network (20 per cent).

In the coming years, the energy requirement of operators is expected to increase due to factors like a significant growth in mobile broadband data traffic, which will translate into a higher demand for base transceiver stations (BTSs). The industry expects to add about 360,000 BTSs over the next five years.

In addition, operators are expected to increase coverage in rural areas where energy costs are higher. The main drivers for this include enhancing 2G network coverage to meet mandatory total-cost-of-ownership requirements and increasing 3G network coverage to Tier I and Tier II cities.

However, as operators expand their networks outside urban areas, low grid power availability will result in an increase in the opex as diesel will be the only practical fuel solution.

According to the Telecom Regulatory Authority of India (TRAI), 87 per cent of sites in remote areas operate on diesel-based power. Also, about 67 per cent of rural sites run on diesel while the rest operate on grid power. In urban areas, the share of diesel is 33 per cent.

Using diesel involves challenges such as volatile prices, transportation and storage issues, and high carbon dioxide emissions.

As per Analysys Mason and industry inputs, an operator spends Rs 7,500 per month on diesel and Rs 20,460 per month on electricity. Besides, operators spend on operation and maintenance (O&M)-related activities such as diesel storage and refuelling.

Therefore, for operators in developing countries, energy costs typically have a significant impact on overall profitability. The network opex of an operator is about 20 per cent of the total revenues (excluding interconnection and access charges).

In developing countries, energy comprises a major part of the overall site costs with expenditure on diesel accounting for about 50 per cent of the total. This is due to unreliable and poor grid supply. In India, operators directly bear the costs of power and fuel as tower companies consider this as a pass-through component. Fuel and power costs borne by the operator do not reduce significantly with an increase in tenancy, unlike other network opex components such as rentals (20 per cent of the cost) and passive O&M (30 per cent).

In developed countries, energy acc-ounts for about 5 per cent of the overall site cost, ground rental for 65 per cent and O&M for 0 per cent.

To address the issue of rising energy costs, operators have started considering options that help in reducing  their energy consumption and expenditure.

Green energy solutions (such as wind and solar power), energy efficient equipment (BTSs with low energy consumption) and power management solutions have emerged as viable options.

Wind and solar energy solutions reduce operating costs of tower sites by around 25 per cent.

Other green energy solutions such as free cooling systems and intelligent power management systems are being deployed to reduce air-conditioning requirements in shelters.

Currently, operators like Uninor, Bharti Infratel and Wireless-TT Info-Services Limited are increasingly adopting alternative energy solutions to reduce their energy bills. Uninor is undertaking pilot projects for solar energy (at $22,000 per site) to reduce energy costs by over 50 per cent.

Similarly, Bharti Infratel has taken initiatives to reduce its dependence on conventional sources of energy. Green energy solutions adopted by Bharti Infratel include a solar-diesel generator hybrid (which reduces dependence on diesel), a variable speed DC generator (to achieve energy efficiency) and fuel cells.

Vendors are also offering energy management solutions as part of managed services contracts in developing countries in Africa and Asia.

Therefore, telecom service providers are taking several initiatives to meet the increasing energy requirements. In addition, TRAI’s recent recommendations on adopting green telecom solutions are expected to reduce their energy consumption.

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