The emergence of the tower industry was an offshoot of the growing pressure on telecom operators who were unable to concentrate on their core business areas due to involvement in network-related issues. They eventually decided to outsource their tower and network management needs, and focus exclusively on their key areas of strength. However now, the tower industry has reached a similar crossroads. The mounting cost of energy, and the unavailability of quality and uninterrupted grid power are some of the biggest issues facing tower companies today.

Energy expenses have been rising steadily, outstripping the growth in the tower industry’s revenues. Power and fuel constitute a significant 25-30 per cent of network operating costs. This is primarily because of low grid power availability and high dependence on diesel generators for energy needs. Power outages range from 4 to 20 hours a day, depending on the area where the site is operating.

Operators and tower companies are facing several other issues and challenges as well on the energy front. Unlike a captive load, power usage in telecom is a distributed load. It, therefore, becomes a challenge to manage and control what is happening at the site. Another challenge is that telecom sites have been developed over a period of time and thus, they have highly variable configurations like indoor, outdoor, single tenant and multiple tenant.

Further, the cost of diesel, a key back-up power option, has been on a rise. The increasing consumption of diesel over the next few years will only lead to higher operating costs. Associated with this is the high cost of fuel pilferage.

Need for a paradigm shift

In this scenario, infrastructure providers are of the view that a paradigm shift is required in the business model, with energy companies emerging as a new link in the telecom value chain.

In this context, a new outsourced model, involving renewable energy service companies (rescos), is gaining attention. Promoted by the Tower and Infrastructure Providers Association (TAIPA), the resco model involves integrating renewable energy power generation with energy efficiency services in order to provide a comprehensive and holistic solution to their consumers.

Telecom infrastructure providers have realised that it is not possible for them to manage the energy needs of tower sites. Though tower companies like GTL Infrastructure had earlier ventured into power generation to meet their energy requirements, infrastructure providers have not been able to produce energy at the lowest possible cost, nor do they have the expertise to generate power. Moreover, the limited scale of generation makes such attempts unviable.

These issues have led to the need for independent energy management companies that can manage the energy needs of infrastructure providers. Tower operators are of the view that a resco model should be set up with government support so that they can outsource their energy needs to such independent energy companies while these entities can supply power to other sectors as well as to meet community needs.

Infrastructure providers are of the view that government support for such set-ups should be sourced from the Universal Service Obligation Fund and the Ministry of New and Renewable Energy (MNRE) in the form of subsidies. Infrastructure providers and TAIPA have suggested the promotion of such a model to the Department of Telecommunications (DoT).

TAIPA has been working with the MNRE and DoT to promote such companies. About 17 companies have already been shortlisted as energy providers by the MNRE. However, several technicalities regarding the kind of support to be provided to these companies, etc. still need to be worked on.

The tower companies and TAIPA have also suggested that renewable energy usage for towers can be promoted by outsourcing the site’s energy demands to rescos. As the tower industry increases the demand for energy, the model can be viable because it helps in addressing the cost economics by improving the scale of supply. For instance, several plants that provide renewable energy are uneconomical, unless adequately deployed. With a large anchor demand for energy from just one user, local telecom infrastructure, several off-grid distributed solar and other renewable energy projects can achieve scale and become viable. Hence, the telecom industry is a veritable part of the solution.

Several telecom tower companies have made attempts at implementing renewable energy solutions at their remote sites to bring down energy costs. For instance, Bharti Infratel launched a P7 Green Towers initiative about two years ago, under which it is implementing various energy efficiency solutions including renewable energy. The initiative aims to save 57 million litres of diesel and reduce 154,000 metric tonnes of CO2 per annum, resulting in 25 per cent energy cost savings. So far, the company has solar powered more than 1,000 sites.

However, various concerns regarding the use of renewable energy still remain. Even though panel prices have come down over the past few years, this has not translated into cost reductions on telecom solar installations. This again leads to the conclusion that the industry needs a resco-type model to bring in efficiencies in energy cost management.