India will have 1.4 billion mobile subscriptions by 2022, according to Face­book. This means that there will be more mobile phones than people in the country. However, neither these phones nor the telecom network that powers them can operate without electricity. This is a major problem in rural areas, where electricity supply is very limited and erratic. Current­ly, telecom companies are circumventing the power shortage problem by using diesel generators to run mobile towers, but diesel is an expensive and environmentally un­fri­end­­ly source of power. In an emerging market, around 40 per cent of the total operating expenditure on a mobile network is on account of power and fuel.

In view of these problems and the government’s green energy drive, telecom co­m­­panies are planning to adopt renewable po­wer solutions. Companies such as OMC Power are setting up microgrids and minigrids, which provide renewable energy to te­le­com networks beyond the traditional grid.

Set up in 2011 by three former Erics­son employees, OMC focuses on powering mobile towers through 35-50 kW solar power projects, which generate at least 30 per cent more power than what is typically needed. While OMC can partner with a tower company to install solar panels inside a tower facility, this entails huge costs. This is because tower companies pay rent by square metre, and hence, aim to build facilities on as small an area as possible, whereas a solar plant requires a bigger area.

In developing countries like India, Ban­g­la­­desh, Pakistan and Africa, where telecom networks need to cover many villages and every operator has a separate tower, the towers stand close together.  “We set up the plant clo­se to the towers so that there is no transmission loss like there usually is in a grid,” says Sarraju Nara­singa Rao, the company’s chief technology officer.

The capacity of one “micropower” plant is 100 kW. It comprises a bifuel generator that runs on compressed natural gas or diesel generating around 45 kW of power, and a solar array, which generates anywhere between 24 kW and 48 kW. The plant can store 100 kWh of energy in a large on-site battery bank.

Beyond telecom

Apart from serving the telecom industry, OMC (formerly known as Omnigrid Micropower Company Private Limited), provides hybrid diesel-solar solutions in rural areas and distributes the electricity generated through minigrids to other businesses and households. It follows the ABC (anchor, business and community) model or the anchor load model to deliver electricity to rural areas. The ABC model uses the loads of telecom towers and other commercial businesses to “anchor” service delivery to the local community.

“A” stands for anchor, which includes entities such as mobile towers, ATMs or gas stations that require reliable, round-the-clock power. “B” stands for small and medium enterprises and C is the community, the majority of which is below the poverty line. The A and B segments help in providing affordable services to C through cross-subsidising. Product packages are designed for each segment in the village. These range from 24×7 metered supply packages for those who can afford them to smaller packages like LED bulbs at a subsidised rate for low-income families. Smart metering allows OMC to plan the loads and timings. The community pays for the subscription in advance.

At present, the company has 100 operational plants with minigrids, which cater to around 60,000 people. These plants provide electricity to households (70 per cent) and small enterprises (30 per cent). In the medium term, the company aims to operate 1,000 minigrids with a total generation capacity of about 50 MW, supplying electricity to more than 1 million people living in rural areas. According to the company, all its power plants are profitable on an earnings before interest, taxes, depreciation and amortisation basis.

Funding

In 2016, OMC received $4.5 million in financing from the Rockefeller Founda­tion for the construction and retrofitting of 100 solar power plants with minigrids in rural Uttar Pradesh.

Mitsui & Company, the Japanese in­­dustrial conglomerate, formed a joint venture (JV) with OMC Power to expand its mi­nigrid business in Africa in Sep­tember 2017. The new JV is a part of a $9 million eq­­uity investment by Mitsui in OMC Power.

Anil Raj, OMC Power founder and chief executive officer, expects the capital from Mitsui to enable OMC Power to unlock more debt financing, which has been a challenge for many minigrid developers. OMC Power already has lines of credit from several development finance institutions. According to Raj, the new JV is already evaluating five to six countries in the more developed eastern part of Africa as well as newer markets.

For OMC, the key challenges are regulatory uncertainties and the high cost of capital. However, with more states planning to introduce a microgrid policy and support from NITI Aayog, the company’s medium-term goals seem within reach.

Nina Mehta