Interview with M.K. Upadhyay, founder, chairman and MD, ACME Group

The ACME Group has been one of the early entrants into the field of energy management and innovative power solutions for the telecom sector. It has supplied and installed its products at over 150,000 telecom sites across the world. In a recent interaction with tele.net, Manoj Kumar Upadhyay, founder, chairman and managing director, ACME Group, shared his views about the changing energy requirements of the telecom industry and the group?s plans to meet the same.

Excerpts….

How have the power requirements of telecom tower sites evolved over the years? How is ACME Cleantech Solutions Limited placed to meet these requirements?

Technology has changed the landscape of telecom infrastructure radically. The power requirement of telecom sites was high in the early years. The earlier base transceiver station (BTS) of 2-2-2 configuration used to consume 4 kW-5 kW of energy, which requires a 2.5 tonne air conditioner to maintain the temperature. ACME Cleantech Solutions Limited (the erstwhile ACME Tele Power Limited) has innovated energy management and energy saving products like green shelters, power interface units (PIUs) and phase-change material to optimise site operations.

With time, the technology has evolved and requirements have changed. BTSs of 4-4-4 configuration were modified to work in high temperatures, facilitating the setting up of outdoor sites. The power requirement of the sites also reduced to 1.5 kW. ACME invested in technology innovations and introduced energy efficient solutions like free cooling units, battery coolers and advanced PIUs. Today, a typical telecom site requires less than 1 kW of energy.

What are your views on the level of innovation and research and development (R&D) that has been adopted by the industry so far?

The process of innovation and R&D is capital intensive and considering the downtrend in spending by operators, it is very likely that investments in innovation and R&D may decline and the level of innovation may be limited.

The past few years have been challenging for the Indian telecom sector. How has it impacted your business?

Yes, the past few years have been very challenging for the telecom sector and for us. However, we diversified into the services business, focused on new areas and launched new products to minimise the impact of the slowdown.

What is the way forward for the telecom infrastructure industry?

In telecom, the sky is the limit. Technology is evolving rapidly and will change the telecom infrastructure industry drastically. We envisage that in the near future, we may not require telecom towers and the other equipment that we use today. Many companies are working on simplifying the process and reducing the power requirement of telecom sites, and we are among them.

What are the key solutions that you provide to your clients to ensure energy efficiency?

Considering the current power requirements of telecom sites, the location-wise power scenario and the awareness about carbon emissions, we have invested our time and effort in producing highly efficient green energy solutions. Our latest range of solutions includes smart power management, energy management solutions, lithium-powered energy storage and solar solutions. The solutions are capable of hedging energy costs for at least the next 10 years and eliminating diesel from telecom sites.

What are the company?s plans for 2014-15? What are the opportunities that it plans to tap in the coming months?

Our core focus is on energy generation, management and conservation. We are working on disruptive technologies that can significantly reduce operating expenses while conserving the environment. In the coming months, we are focusing on our lithium-based energy storage solutions, which promise considerable savings on the total cost of ownership at telecom sites. We are also in talks with real estate firms for using energy storage solutions in buildings and thus displacing diesel gensets.

What has been the trend in revenues from telecom operations?

We recorded a revenue growth of 30 per cent in 2013-14 compared to 2012-13. In 2012-13, revenues declined by 30 per cent vis-?-vis the previous year, but the sector revived in 2013-14 with an increase in revenues. A similar trend has been observed in Africa, which is another key market for ACME.

How is the energy requirement changing with the adoption of new-generation technologies?

Most of the sites are getting upgraded from 2G to 3G or 4G, so the energy requirement has gone up. Telecom towers that were planned for 2G, 3G or 4G technology were given a higher frequency for a smaller coverage area. This implies that operators need a lot of fill-up sites. But the older towers are getting even bigger. The increase in power requirements can be seen from the fact that the average size of the PIUs being demanded has increased from 8.5 kVA in 2007-08 to 40 kVA at present. As the data uptake at 3G and 4G sites increases, tower capacity will need to be increased, thereby increasing the demand for power.

So in a way, ACME?s lithium-based storage solutions have come at a time when the telecom sector is undergoing a technology revamp? What trends do you foresee?

The lithium-based storage solutions are scalable, with the minimum size being 5 kWh. We have created a data bank over the last seven or eight months by installing these solutions at our own sites, both in grid and off-grid areas.  It has been observed that sites with grid connectivity can be made absolutely diesel-free by using these solutions.

For sites that are not connected to the grid, just four to five hours of power needs to be arranged, whether it is from a solar plant, a wind turbine or any other source. For the remaining 19 to 20 hours, the tower can function using the lithium-based storage solution.

As operators move to 3G or 4G services, these solutions will be very useful in meeting the energy requirements. I will not be surprised if, eventually, the land/building owner also invests in this kind of energy infrastructure for his own energy requirements. This model, whereby the building owners set up the energy storage device to feed power to the tower and for their own domestic consumption, is likely to become popular.

The investment required for this solution is not very high. It starts with a small investment ranging from Rs 100,000 to Rs 1,000,000, depending on the power requirement. The payback for larger equipment is two to three years.

Another trend that I foresee is the tower companies? move to a fixed-cost model. While they are currently following a fixed model, it is not technically fixed since it carries a variable component determined by grid availability. For example, the fixed energy cost for a site in Uttar Pradesh is different from that in Delhi. What we believe is that the true fixed cost will come in where the capex and the energy cost are combined into one set amount.

What is the expected life of the product?

We have estimated that over a period of around 11 years, the battery storage capacity comes down from 100 per cent to 70 per cent. In the next 10 years, it decreases from 70 per cent to 50 per cent. However, nobody has tested this technology for that long as it is only 10 years old.

What are the company?s current manufacturing operations? What are the expansion plans in the near future?

ACME Group has one of India?s largest energy, infrastructure and telecom equipment manufacturing facilities in Rudrapur. It is spread across an area of over 27 acres. We manufacture equipment for power conversion, cooling, storage, etc. The facility was set up in 2007-08, when 7,000 telecom sites were being added every month. That was a time when telecom infrastructure was expanding at a fast pace and the plant was created to meet that demand. However, that level of demand does not exist today. Although we are operating across 17 countries, the kind of demand the plant has been set up for is no longer present anywhere in the world.

ACME is in the process of overhauling the facility to manufacture lithium-based energy storage products. Once the demand for these products picks up, the entire facility is likely to be utilised. These products will change the way energy is being consumed today, and the way we use electronic equipment.

What is the likely investment requirement for upgrading the manufacturing operations?

We have planned an investment of around $10-$25 million. Since the core investment on machinery and facilities has already been made, this is an incremental investment for upgrading the existing facilities.  If such an infrastructure had to be built today from scratch, it could cost over $100 million.