The true cost of providing energy for telecom towers in India

Unreliable electrical grid supply is one of the biggest
challenges faced by the rapidly growing telecom tower industry in India. Today,
on average, 70 percent of the approximately 400,000 mobile towers in India face
electrical grid outages in excess of 8 hours a day.

Telecom tower operators currently use diesel generators,
batteries, and a variety of power management equipment to address the
demand-supply gap. The resulting energy costs alone account for 25 percent of
the total network operating costs1, affecting the profitability of the

Average per day grid availability by region in India


The telecom tower industry in India is estimated to
consume over 2.5 billion litres of diesel annually making it the second largest
consumer of diesel in the country. This business continuity service results in
a revenue under-recovery3 (revenue loss) of INR 14.64 per litre4 of diesel to
the public sector oil marketers totalling to approximately INR 3,660 crore (USD
732 million approx) annually.

The 2.5 billion litres of diesel consumed, emit 6.6
million metric tons of CO2 annually, making the current use of diesel
generators both an environmentally and economically unattractive solution.

This white paper details true energy costs of a telecom
tower site facing average power outage of 12 hrs a day. The above mentioned
site is powered by a diesel generator and a pack of batteries, a configuration
that currently exists in over 90 percent of the telecom tower sites.

A typical telecom tower site

At a typical cell tower, the power demand is determined
by the number of base transceiver stations (BTS5) housed. The power demand
ranges from 1 kW to 8.5 kW where more than 80 percent of these configurations have a
demand less than 3.5 kW. To ensure power availability of more than 99.95 percent,
tower owners backup the electrical grid with a combination of batteries and
diesel generator.

At most sites, the tower owners install diesel generators
of 10kVA to 15kVA capacity and supplement it with battery banks of 300Ahr to
900Ahr capacities. The diesel generator and battery configurations are decided
based on the power outage pattern, equipment at site, geographical location and
optimal CAPEX and OPEX economics.

Schematic of power supply at the telecom tower


Telecom site operating conditions

When the power from the electrical grid is available, the
Power Interface Unit (PIU) selects the best phase of the 3 phase electrical
grid and provides power to the rectifier or switched mode power supply (SMPS).
The SMPS converts the 220 VAC to -48 VDC (in some cases to 24 VDC) providing
power to the telecom tower equipment and additionally, to charge the batteries.

When the power from the grid is interrupted, the PIU
sends a signal to the diesel generator to turn on and the diesel generator
comes on line in a few minutes. It supports the entire power requirement at the
site. During the transition of supply from the electricity grid to the diesel
generator, the batteries provide the power required by the telecommunication
equipment at the tower and ensure uninterrupted operation of the telecom site.
Tower owners may use various strategies on how the transition from electrical
grid through batteries to DG works.

For example, the tower companies may allow the batteries
to discharge to a minimum state of charge before the diesel generator is turned
on in order to minimize operation of the diesel generator. For the purposes of
this white paper these cases have not been considered.

Case study: 3 BTS Site with 12 hours of electrical grid

The scenario in this case study is of a 3 BTS outdoor
telecom tower site. The site includes a 10kVA diesel generator and a 48V,
600Ahr battery bank. The average electrical power demand of the site is 2.52
kW. On average, electrical grid power is available for 12 hours a day only. The
information included in Exhibit 3 forms the basis for the calculation of energy
costs. This information was derived from surveys of telecom tower sites and
dealers of products used in providing power to the telecom tower sites.

Case Scenario for a 3 BTS site with 12 hours of electrical grid

Cost calculations: CAPEX and OPEX calculations

CAPEX Calculations:

The purchase of a diesel generator, a battery bank, a PIU
and SMPS constitute the CAPEX investments.

CAPEX percentage contribution of DG, Battery, SMP & PIU

OPEX Calculations:

OPEX costs are the monthly costs of running and
maintaining the equipment that support the energy infrastructure at a telecom
site. This mainly includes the cost of electricity from the grid, the cost of
diesel to run the diesel generator in the absence of grid power and the
maintenance of all power equipment installed.

The direct cost of energy per day is made up of the cost
of grid power consumed and the cost of diesel consumed. The below table
(Exhibit 5) totals the direct cost of energy per day.

The equipment installed to manage energy at the site
requires regular maintenance. Telecom Tower companies invest man power to
manage operations and maintenance activities. As the industry has matured, this
activity is often outsourced to companies that provide specialized services in
operating and maintaining either energy management equipment or both energy and
telecom equipment. The below table lists the cost involved in the installation,
commissioning and regular up-keep of energy management equipment.

Direct cost of energy at the site per day

Maintenance costs for diesel generator at site/day

Plausible additions

In addition to the calculations above, the total monthly
cash outflow is influenced by one or more of the scenarios listed below.

Fuel Losses: Fuel losses including diesel pilferage6 are
estimated to be 15 to 20 percent of the total diesel consumed. This addition
raises the monthly cost of energy from INR 47,694 to INR 57,233.

Deregulation: The under-recovery of revenues for diesel
is approximately INR 14.64 per litre3 as of April 2012. If the deregulation of
diesel is to be considered, the true cost of providing energy to the telecom
tower site will be INR 54,106 instead of the current INR 47,694.

Energy cost breakup

Energy costs at various sites

Using the same calculation method as in the case scenario
above, Exhibit 9 plots the cost of energy per month as a function of site power
requirement and the number of hours of DG set is run. Running DG for 24 hours
each day for a 7 kW load site might cost upwards of INR 102,252 per month.
However, in reality the battery bank at the off-grid site may be adequate
enough to support the load for a certain portion of the  day thus reducing the overall cost of energy
at a particular site.

Monthly cash outflow at telecom site for variable loads


The effects of diesel price increase

To tackle subsidy burden and large deficits, the Finance
Minister of India has pegged the fuel subsidy burden8 for 2012-13 at INR 43,580
crore, compared to INR 68,481 crore in the revised estimates for this financial
year. This is a definite indication for 
increase in diesel prices.

Increase in diesel (either due to deregulation or
increase in oil prices) will increase the monthly outflow at 2.3 percent for
every INR 2 increase in the diesel price. For example, if diesel were to be at
INR 59.64, the monthly outflow for energy would be INR 72,981.

In the last 12 months diesel has risen by INR 4 and is at
INR 45.99 per litre9. A fully deregulated price of diesel at the current oil
prices will be significantly higher. It is just a matter of time that diesel
prices will be deregulated in India.

Rise of current cost
against rise in diesel prices



The total cost of energy to operate a telecom site is
major cause of concern for Telecom Tower Infrastructure Providers. The rising
operating costs, the logistical issues, the deregulation in price in the near
future and the environmental cost of using diesel, all together are pushing the
telecom industry to look for alternative solutions.

The government is encouraging renewable solutions to
overcome the challenges faced by the economy and environment due to increased
diesel usage. To come up with an optimal solution, it is essential to explore
different alternative solutions.

By Intelligent Energy India
[email protected]