With over 400,000 telecom towers and forecasts of market growth to half a million sites by 2017, India is host to one of the largest passive infrastructure markets in the world and is reportedly consuming as many as 11 billion kWh per year, a figure expected to rise to 17 billion by 2016.
The Indian telecom regulator is now demanding towercos and MNOs to shift to renewable and hybrid sources of energy with stringent targets to be met by 2015. But Indian telecom players and industry associations have objected that the cost of this shift is simply not affordable for an industry already near its debt capacity. As a result, only 1% of Indian telecom sites are currently running on green power solutions.
According to a 2012 report by GSMA, over 38% of Indian sites were then connected to an unreliable grid and over 17% were off-grid. Of those off-grid sites, 73% were operating on a combination of dual diesel generators and DG+battery hybrids and only 7.4% adopted renewable or green hybrid solutions.
In 2013, the Indian telecom industry consumed as many as 2 billion litres of diesel to power its sites and AT Kearney has reported that diesel consumption could increase almost 50% over the next few years. On the other hand, the telecom tower industry is driving energy efficiency programmes to reduce opex, therefore reducing its carbon footprint and diesel consumption, including via infrastructure sharing and by utilising deep cycle batteries.
In an attempt to rationalise energy consumption and reduce CO2 emissions caused by telecom towers, which reached 11 million tonnes in 2013, the Telecom Regulatory Authority of India (TRAI) issued a recommendation back in January 2012 titled Approach towards Green Telecommunications.
The much discussed document required at least 50% of all rural sites and 20% of urban towers to be powered by hybrid solutions by 2015, with the goal to increase percentages to respectively 75% and 33% by 2020. Additionally, the recommendation required all telecom products, equipment and services to be energy and performance assessed and certified with a Green Passport by 2015. TRAI demanded the progressive adoption of optimised energy efficient radio networks, and that the energy consumption of each site should not to exceed 500W in total by 2020. Finally, TRAI required all service providers to regularly declare their carbon footprint, with the objective to reduce emission targets by 8% in 2014-2015, 12% in 2016-2017 and 17% in 2018-2019.
These targets have been referred to as too rigid by telecom operators and towercos who also objected that the cost of shifting to alternate sources of energy is not affordable for the industry. It has been reported that the cost to run a site on diesel is approximately Rs 15/unit (US$ 0.24) versus Rs 7/unit for grid sites (US$ 0.11). Considering grid power is able to meet approximately 30% of the industry’s needs, seeking alternative energy solutions is the only option.
Shifting to solar energy seems like a good idea, but there is no escaping the capital intensity of the transformation required. On the capex side, the cost per site of a solar unit could reach Rs 15 lakh (US$24,000) with operational costs ranging between Rs 28 and 32 per unit (US$0.45-0.52) for a single tenant site.
In spite of the risk of shrinking margins, some companies have started green initiatives that will also serve as a benchmark to seek viability gap funding (VGF) for further expansions. In fact, as of 31st March 2013, 20,000 sites, corresponding to 20% of Indus’ portfolio of towers, are said by the towerco to be green. Bharti Infratel powers 2,000 of its 40,000 sites on solar and 750 of 9,500 Idea Cellular’s towers use green energy sources.
In a recent statement, Viom Networks and GTL Infrastructure have announced they’ve signed a MoU with Japan’s New Energy and Industrial Technology Development Organization (NEDO) for a demonstration project, which is aimed at reducing the diesel consumption and introducing renewable energy.
On the lobby side, TAIPA has recently requested TRAI to revise its Go Green targets in order to reduce the expected capital investment of Rs 66,000 crore (~US$ 10bn) by 2020 in light of the operational and technical challenges companies are encountering in rolling out their green initiatives. Considering that the Indian telecom and tower industries are currently facing a debt burden of over Rs 2 lakh crore, (~US$30 bn) key players and associations hope that a practical agreement can be reached to enable Indian towercos and MNOs to invest in green energy within a more realistic timeframe.
