Telecom operators are constantly expanding their network coverage to reach areas that are either underpenetrated or have not been covered at all. This network expansion is happening in the form of tower deployment. As per recent Cellular Operators Association of India estimates, the telecom industry installed 634,000 new base transceiver stations (BTSs) and 65,000 new mobile towers between November 2016 and November 2018. Further, the consumer need to stay connected has necessitated towercos to keep their services operational at all times. This, in turn, has created a need for constant supply of electricity.
According to 6Wresearch, the telecom tower power systems market size in India is projected to grow at a compound annual growth rate (CAGR) of 4.1 per cent during 2017-23. The growth in the number of internet users, coupled with a multifold increase in the consumption of cellular data, has been one of the key factors driving the telecom tower power systems market. At present, India has over 1.2 billion subscribers who are connected through 500,000 mobile towers with over 2 million BTSs.
While most of the electricity demand for telecom towers is met through grid power, it is not the only energy source. Given that grid supply can be unreliable, companies more often than not depend on energy storage solutions. As per a recent market report, energy storage solutions contribute up to 5 GWh towards power consumption and are expected to account for up to 25 GWh by 2022. As per a recent report by TEC, from a cost perspective, energy constitutes nearly 30 per cent of the opex of telecom companies in urban areas and nearly 50 per cent in rural areas.
Given that energy storage solutions form a very important component of the larger telecom tower power systems market, it is imperative that the industry explores newer innovations and solutions that can help it save costs. A look at the recent trends shaping the energy storage market in India…
Constraints of traditional energy storage technologies
So far, the majority of the electricity demand by telecom towers has been met through grid power. As per market estimates, telecom towers in India consume about 16.5 billion units of electricity per year. Given that the power supply situation in various pockets of the country is highly erratic, telecom tower companies also depend on backup energy storage solutions to meet their power needs. Traditionally, towercos have been dependent on diesel generators (DGs) for power backup. However, these backup solutions are neither cost effective nor sustainable in the long run. As per industry estimates, telecom towers in India consume 3.2 billion litres of diesel, emitting around 8.6 million metric tonnes of CO2 per year. Given the negative impact traditional backup solutions have on the environment, towercos are now turning to more environment-friendly and cost-effective battery solutions such as lithium-ion (Li-ion) batteries.
Case for Li-ion batteries
Owing to various challenges associated with the use of diesel generators and valve regulated lead acid (VRLA) batteries, the industry has started using Li-ion batteries to meet their power needs. Li-ion batteries charge faster, discharge slowly, require less space and provide high round trip efficiencies. The use of Li-ion batteries has enabled the tower companies to reduce their dependence on DGs to an extent that DG sets are used as an emergency backup only when there is no power for a long duration. In fact, some industry analysts believe that the new-age Li-ion battery solutions have the potential to completely replace DGs over the next few years. While DGs require high maintenance and are not at all environment friendly, Li-ion batteries require very low maintenance and do not emit any harmful gases. Thus, using Li-ion batteries leads to higher cost savings and ensures greater compliance with carbon emission norms. Since Li-ion batteries come with higher performance parameters like depth of discharge and efficiency, there has been an uptake in their deployment. In fact, Li-ion batteries are fast emerging as the go-to solution for towercos to meet their energy storage needs. According to a report by Research and Markets, the Indian Li-ion battery market is likely to grow at a CAGR of 29.26 per cent during 2018-23.
The way forward
Going forward, the telecom sector will see an uptake in the demand for batteries. This will be primarily driven by the government’s focus on reducing the carbon footprint, the increasing rate of tower density in urban areas and telecom operators’ plans to increase telecom tower penetration in semi-urban and rural areas. Recently, telecom minister Ravi Shankar Prasad directed incumbent telcos to connect over 43,000 unconnected villages by 2020. To this end, telecom operators have set the goal of installing over 57,500 telecom towers in rural areas during financial year 2019-20. This is expected to add to the already high demand for energy by telecom towers.
While earlier the high cost of Li-ion batteries was considered a major deterrent to their adoption, this is no longer the case. The cost of Li-ion batteries is expected to fall from $209 per kWh in 2017 to $137 per kWh in 2022, as per CES estimates. Therefore, the future outlook of the Li-ion battery market in India looks bright and will present a host of opportunities for various stakeholders, as the market matures further.
