According to the estimate of a working group report of the Planning Commission, diesel demand in India is expected to grow at a compound annual growth rate of 6.1 per cent from 2012-13 to 2021-22. The outlook for the supply side is just as positive, with domestic refining capacity addition ensuring unconstrained supply. Historical trends suggest that diesel demand in India is primarily driven by the transport sector. However, with the rapid growth in the telecom industry over the past five years, the share of telecom towers in the overall demand for diesel is growing.

Estimates by ICF International, a global consulting firm, show that there are over half a million mobile towers in the country, 60 per cent of which are located in rural India. With the rapid deployment of 3G and 4G technology, the industry is expected to add 200,000 more towers by 2020. A notable fact is that only 10 per cent of all mobile towers have grid power available for more than 20 hours. Most towers in rural areas have access to reliable grid power for just 8 to 12 hours. Tower infrastructure companies therefore rely on batteries, standby diesel generator (DG) sets and a variety of power management equipment to back up the grid power supply and ensure network availability. With an annual consumption of an estimated 6,000 litres of diesel per tower, for eight hours of daily operations on DG sets, the total diesel consumption by telecom towers is about 5.12 billion litres a year.

While DG sets have a low capex, their operating cost is fairly high. With the government allowing a Re 0.50 review of diesel prices every month, in order to keep them at par with the real cost, prices are on the rise, and this trend is expected to continue.  In addition, DG sets entail high maintenance costs. High pilferage of diesel adds to the operating cost. Further, diesel causes high rates of pollution by releasing greenhouse gases and unburnt carbon particles. A comparative cost analysis by ICF of various combinations of power sources for telecom towers, shows that powering towers using a combination of DG sets, batteries and the grid results in an operating cost of about Rs 40 per kWh. Incorporating solar photovoltaic (PV), along with the other three options, reduces the cost of operations to about Rs 30 per kWh. The lowest cost combination of Rs 20 per kWh can be achieved with a mix of grid power, solar PV, batteries and fuel cells. The analysis suggests that eliminating diesel from operations at telecom tower sites is cost effective.

Though powering telecom towers using diesel is neither economically nor environmentally sustainable, the alternative sources of power also have their own sets of challenges. Solar PV units have a higher upfront cost than DG sets and have to depend on battery backup when daylight is not available. To configure a solar PV installation for a telecom tower site, a detailed evaluation of the load profile of the site has to be taken into consideration, along with factors like weather conditions at the site throughout the year, battery efficiency, charge controller efficiency, power loss due to dust accumulation and available area for installing solar PV panels.

The other viable option is using fuel cells, but they have the highest upfront cost among the three options. Moreover, the technology is new and still evolving, and as a result issues like the fragmented hydrogen and methanol supply chain persist. Its feasibility needs to be tested on a larger scale. In view of these factors, DGs cannot be completely eliminated from operations at telecom tower sites.

In the future, a hybrid technology that addresses the cost effectiveness and challenges of all of these technologies needs to be developed as a viable option for the telecom tower industry. Hybrids of solar PV, biogasifiers, DGs and batteries are already in commercial usage by many tower infrastructure companies. Moreover, the size of the Indian telecom market provides opportunities for achieving economies of scale and lowering the capital cost of renewable energy technologies. To take advantage of these factors, it is essential to have a favourable policy environment that can help in the development of an ecosystem conducive to the adoption of new technologies for powering towers.