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Risks and Returns: Green solutions gain ground despite challenges

June 10, 2013
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Rising diesel prices and pilferage as well as pressure from the government to reduce carbon emissions have compelled telecom tower companies to opt for renewable energy solutions to power their tower sites. Besides, erratic grid power supply in semi-urban and rural areas is driving the demand for alternative energy solutions. The adoption of renewable solutions has also gained momentum with the Department of Telecommunications mandating the telecom industry to utilise hybrid power – a combination of renewable energy solutions and grid power – to operate 50 per cent of rural towers and 20 per cent of urban towers by 2015. The industry has made several efforts to adhere to the stipulated guidelines.

The Tower and Infrastructure Providers’ Association has selected two renewable energy service companies (rescos) – Creative Mark Solutions and Mahindra & Mahindra – to set up renewable energy-based power plants near tower sites and sell power to tower companies at a predetermined cost on a pay-per-use model.

However, despite the steady progress made with regard to the deployment of alternative energy solutions, issues such as the high costs, intermittent nature of renewables and integration with the grid still remain to be addressed.

One of the major issues concerning the industry is the high capex involved in deploying renewable energy solutions. Although the opex for hybrid solutions is estimated to be lower than that for using diesel fuel to power towers, the initial investment required to set up power plants deters tower companies from pursuing renewable energy options. Consequently, the industry has reiterated its preference for an opex model rather than a capex model. Under the opex model, tower companies sign an agreement with a third-party resco for the supply of off-grid power to the former’s towers in rural and semi-urban areas. The rescos are required to supply equipment, provide operations and maintenance services, obtain the necessary land approvals, conduct site monitoring and security checks, and deal with risks such as theft and vandalism.

The intermittent nature of renewable energy sources (such as solar and wind) is another issue limiting their usage for powering towers. Telecom tower sites require 24x7 power supply to ensure continuous operations; however, solar and wind sources can generate power only under specific conditions (adequate sunlight) or at specific locations (high to medium wind sites). In fact, as compared to conventional power plants that have a plant load factor of 80-85 per cent, renewable power plants have a capacity utilisation factor of only 25-35 per cent. This discourages tower companies from using renewable energy as the primary source of power. They prefer to adopt renewable energy alternatives along with grid power and diesel generators (DGs).

In the case of solar and biomass power systems, space requirements are a key concern. It is estimated that a 1 kW solar power system requires 7-8 metres of area, which, along with right-of-way issues, poses a major challenge in urban areas. In this regard, it has been suggested that renewable power plants be set up outside urban areas and be connected to the grid for supplying renewable energy to urban towers. Meanwhile, setting up rooftop solar projects is an expensive proposition as compared to conventional sources of power and has, therefore, not yet witnessed much traction. In rural areas, the lack of adequate infrastructure such as roads and transportation is one of the key challenges in setting up renewable power plants. Other concerns include protests from local communities due to insufficient compensation to landowners and non-sharing of profits.

Besides, the energy generated from renewable sources does not match grid power availability patterns in semi-urban and rural areas. This requires renewable energy to be stored when grid power is available. The stored energy can act as a backup. However, the absence of affordable grid-scale energy storage solutions continues to be a challenge. Lack of technical expertise is hindering the deployment of green solutions for towers. Companies set up towers at diverse locations across the country to ensure seamless mobile connectivity. However, these geographical locations demand different renewable energy solutions – wind, solar and hydro. Therefore, tower companies cannot adopt the “one-solution-fits-all” approach. The selection of an appropriate green solution for a particular tower location becomes crucial.

Despite these challenges, tower companies are gradually considering renewable energy solutions to power their towers and reduce carbon emissions. Also, the hike in diesel prices has made adoption of green energy solutions relatively more viable. In addition, solar photovoltaic (PV) plants are emerging as the most viable energy solution due to the decline in PV module costs and are therefore being seen as a long-term replacement for DG sets.

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