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Green Solutions: Industry takes measures to reduce its opex on energy

March 17, 2015

The lack of reliable and quality grid power and the cost concerns associated with diesel generator (DG) sets – the next-best alternative to grid power – have emerged as the biggest impediments to telecom tower operations in the country. As per industry estimates, about 70 per cent of the sites have no access to the grid for at least eight hours per day. Grid outages severely affect operations, particularly in rural areas. While DGs are being widely used to ensure uninterrupted power supply, diesel costs have surged significantly over the years. Given that the industry consumes over 3 billion litres of diesel annually, the affordability of diesel-based power comes into question. As a result, energy costs have emerged as one of the biggest opex components for tower companies in recent years.

The telecom tower industry is compelled to look for ways to manage its en-ergy needs in a better way and it is now exploring various methods to reduce its dependence on diesel, bring down energy consumption and achieve higher energy efficiencies. With advancements taking place regularly, the dependence on battery banks has gone up. Several indoor sites are being converted to outdoor sites in order to reduce the use of air conditioners and free cooling units are being installed at various sites. For instance, Indus Towers recently stated that it was able to make around 30 per cent (35,000 sites) of its total tower sites diesel-free through various measures. It has been able to reduce its diesel consumption by 54 million litres per annum, resulting in a decrease of 140 million kg of carbon emissions. Similarly, Bharti Infratel has installed variable speed DG sets at over 700 towers and deployed hybrid battery banks at about 12,600 tower sites. It has eliminated the use of air conditioners at another 13,000 tower sites by using free cooling units. Nearly 19,600 towers across the company’s network are diesel-free.

A total of 17,580 of Vodafone India’s 106,160 partner sites have been declared green sites. The deployment of innovative solutions, latest battery technology and close monitoring of sites have led to diesel-free operations of towers in Ahmedabad, Chennai, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai and Surat. In addition, 1,700 of all Vodafone India-owned sites have been converted from indoor to outdoor. Several other tower companies are also taking steps to reduce diesel consumption and carbon emissions. An inter-ministerial panel constituted in late 2014 requires operators to cut carbon emissions by 17 per cent in the next five years.

A sustainable way forward for reducing diesel intake is by ensuring a viable business case for the deployment of renewable en-ergy technologies (RET)-based solutions. Green solutions, though in the spotlight for many years, have seen limited adoption on account of lack of scalability as well as unsuitable cost economics. At present, less than 25 per cent of the country’s towers operate on green power. Further, the majority of these sites do not have RET as a stand-alone option, with green technol-ogies being used mainly in conjunction with diesel. This is in spite of the Department of Telecommunications’ (DoT) green energy mandate, which requires companies to switch 50 per cent of all cell towers in rural areas and 20 per cent in urban areas to hybrid power by 2015. Hybrid power has been defined as a mix of grid supply and renewable energy based on solar, wind, biomass or fuel cells. By 2020, tower companies are required to run 75 per cent and 33 per cent of cell towers in rural and urban zones respectively on hybrid power – a target which looks highly ambitious given the current level of deployment.

Amongst other key trends, the adoption of energy storage solutions, focus on a fixed-cost model and emergence of specialised companies to handle supply-side issues are gaining momentum. The energy management strategies adopted by tower companies are undergoing a significant change and the segment is now witnessing interesting trends in this regard, some of which are discussed in the following sections.

Strong case for fixed-cost models

Conventionally, the industry has followed a fuel cost pass-through model wherein tower companies had little incentive to invest in high quality batteries or reduce fuel pilferage. Energy cost optimisation was clearly not a strategic area. However, the scenario is now changing with the industry shifting towards fixed-cost contracts. These agreements incentivise tower companies to optimise fuel costs and focus on reducing energy pilferage. Tower companies invest in batteries and security, and the efficiencies generated are shared with the operator.

Site monitoring and energy optimisation

Tower companies are facing significant inefficiencies in areas such as monitoring fuel consumption, ensuring security at sites, and equipment configuration and maintenance. As a result, they are now focusing on automation to track site-level performance and avoid unscheduled downtime. They are setting up real-time monitoring equipment to get instant updates in terms of alarms and control signals. Most tower companies have established a tower operations centre (TOC) for 24x7 tower monitoring on a real-time basis. The TOC acts as a centralised data repository for analysis, particularly with regard to energy management at towers and in most cases, actionable insights can be derived from this data.

The growing dependence on analytics for ensuring energy optimisation has led to the emergence of a new breed of energy management companies. These players help tower operators – who clearly are not equipped to address power-related issues as the area lies outside their core operations – in reducing their carbon footprint, optimising energy usage to manage costs, and track and monitor energy consumption. Tower management and control reduces energy expenses, enhances the life and performance of tower assets as well as improves operational efficiency through actionable intelligence.

Further, the new site designs that are being introduced make room for integrated active equipment components to reduce energy consumption. Capex challenges can be addressed to a large extent by customising site specifications as per tenancy profiles. For instance, a monopole for an outdoor base transceiver station (BTS) that has an advanced valve-regulated lead acid battery can be used on a single tenant site located in an area with reasonable grid power.

RETs yet to go mainstream

Increasing diesel costs, environmental concerns over carbon emissions as well as a strong government push to move away from diesel present a compelling case for RET adoption by the tower industry. However, the existing rate of deployment of these solutions conveys a different story. In November 2014, the telecom ministry stated that private sector telecom companies have executed only 3,400 RET projects, which is a minuscule number when compared to the targets set by DoT under its green policy.

Solar power is currently the most commercialised technology amongst RETs used to power towers. The technology is best suited for rural areas, which offer a vast expanse of land for panel installation. In urban areas, solar panels mounted on rooftops are gaining acceptance. Further, with the price of panels declining in recent years, solar is becoming a more feasible option financially besides being the most easily deployable technology amongst RETs. The number of solar sites, however, continues to constitute less than 10 per cent of tower companies’ portfolio. Bharti Infratel operates over 2,500 solar-powered towers with an installed capacity of about 9 MW. These are under the company’s Green Towers P7 programme focusing on energy conservation. Further, Vodafone India has a total solar-powered site count of 405 off-grid and poor grid sites in its portfolio.

Amongst other RET solutions, biomass is an economical and commercially viable solution for sites with an average load of over 5 kW and grid outages of more than eight hours. However, issues relating to biomass feedstock availability and logistics, and challenges in dealing with fuel security have prevented large-scale deployments. Fuel cells and wind technology have seen fewer takers due to high operations and maintenance costs.

The tower industry realised the urgency of the situation and adopted a renewable energy service company model in 2012, wherein specialised energy generation companies partner with tower companies to meet their energy needs locally. The model has failed to make a strong impact in the Indian telecom infrastructure segment with only a handful of deployments so far. However, the model holds huge promise. The power is generated from renewable sources, mainly solar, and sold to telecom infrastructure companies on a metered basis. As a result, power costs can come down by around 50 per cent as compared to the DG equivalent, and emissions can be reduced by 40 million tonnes (mt)-50 mt of carbon dioxide per tower every year.

Growing government interest

The government has also shown significant interest in controlling energy costs and curbing diesel usage. Besides introducing stringent targets for the industry, the government is emphasising on adopting other innovative solutions. In mid-2014, it signed an MoU with Japan’s New Energy and Industrial Technology Development Organization for deploying renewable energy management solutions at telecom towers in the country. The project entails the demonstration of a system that will reduce diesel consumption and ensure stable electricity supply at tower sites. The method requires the application of a photo catalyst coating – which reflects solar radiation – on the side wall and roof of the BTS shelter to control the temperature inside the shelter. The project is currently being implemented at 62 sites across India. Meanwhile, DoT is also committed to deploying green energy technologies like solar for powering around 1,863 towers in order to boost mobile coverage in areas affected by left-wing extremism.

Storage to become smarter

Currently, all telecom tower sites have deployed energy storage solutions. However, conventional lead acid-based batteries are temperature sensitive, slow to charge, occupy huge space, have round-trip inefficiencies and need significant manual intervention. In recent years, several reiterations to existing models have helped improve the efficiency of energy storage solutions. New energy storage technologies today are adaptable to site infrastructure capabilities and mostly come embedded with integrated information systems. They can charge fast, require less space per kW and have higher round-trip efficiency.

However, the biggest problem with new technologies is the high replacement cost. Unless these are priced in the same range as lead acid batteries, it will be difficult to adopt the new solutions. This is especially true given that tower companies are yet to establish the long-term performance of new systems. Moreover, there are issues related to the suitability and compatibility of new technologies with the existing site infrastructure and limited field support.

The opportunity for energy storage technologies is, however, limitless and this space is set to witness significant innovation and transformation in the coming years, particularly with little improvement in Indian grid conditions on the one hand and RETs finding more takers on the other.

Conclusion

In sum, as operators come under increasing pressure to meet quality of service levels, ensuring uninterrupted tower operations will become more crucial. However, given the challenges and costs associated with energy management, environmentally sustainable growth is the way forward.

 
 

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