Finance Minister P Chidambaram may have failed to cheer the telecom industry by not offering any direct incentive. But, in his Budget speech, he urged the state governments to prepare the financial restructuring plans for power distribution firms (discoms) "quickly".
The telecom tower companies will benefit most from the restructuring of the discoms as this would ensure better power supply, mainly in rural and semi-urban areas.
According to industry estimates, the telecom tower industry consumes two billion litres, or 3.5 per cent of the total consumption in India, of diesel every year, as 60 per cent of towers in India solely depend on diesel.
Considering that diesel is sold at Rs 48.16 (Delhi price), the industry spends Rs 9,632 crore in a year to buy it, which could be saved if power supply is ensured.
At present, tower companies mainly depend on diesel for generating power. However, the cost of diesel is actually passed on to the telecom operators, increasing the operating cost for service providers.
According to industry estimates, cost of power sourced directly from the grid is Rs 7 for a unit, from diesel it is Rs 25 a unit and renewable energy (solar), Rs 16-18 a unit. On an average, one tower requires five-six kilowatt every day.
There are about 4,00,000 telecom towers in India of which about 20 per cent are not connected to the grid. About 70 per cent of the towers connected to the grid do not get power for about 12-16 hours a day, and 95 per cent of them are prone to outage, according to a recent study.
Consulting firm AT Kearney had, in a report, projected that if companies switch from diesel to solar power, the industry could save $1.2 billion in operating cost a year.
"The financial restructuring scheme for Discoms by respective state Governments will ensure availability of reliable grid power that will enable the telecom sector to reduce its dependency on diesel and benefit both the environment and drive efficiency for the sector," said Syed Safawi, CEO, Viom Networks.
Meanwhile, the Telecom Regulatory Authority of India (Trai) has directed tower companies to reduce dependence on diesel and run at least 50 per cent of all rural towers and 20 per cent of urban towers on hybrid power by 2015 and 75 per cent of rural towers and 33 per cent of the urban towers are to be powered by hybrid power by 2020.
"It is this inadequacy of grid power that is compelling the telecom tower players to rely on diesel. A balanced approach towards holistic development of the grid power and renewable energy solutions can mitigate the usage of diesel to reduce the overall carbon footprint," said Umang Das, director general, Tower and Infrastructure Providers Association (TAIPA).
However, be it direct supply from grid or be it solar energy, the industry needs to develop a proper distribution model. "The responsibility of providing power lies with the power ministry supported generation and distribution entities. In addition, it would make eminent commercial sense for companies to use a cleaner or safer viable alternative such as solar power. We hope to support conversion of towers to renewable energy in partnership with the Government and renewable energy service companies," said Das. Safawi also said that the fund support to IREDA will enable the telecom industry to gradually shift a portion of its energy utilisation from fossil fuels to renewable sources of energy such as solar.