Mobile towers need diesel to run power generation sets in the absence of steady electricity supply. A few years ago, this segment was an important contributor to non-auto related diesel demand. This, however, is now changing, and industry experts add there is scope for more.
In its data for 2013-2014, IOC said the telecom business consumption was at 800,000 kilolitres (kl). The latest data available is for December 2017, where the consumption for the month was at 51,000 kl, making the yearly average consumption 720,000 kl.
With the entry of Reliance Industries’ Jio into the telecom business, diesel demand from the mobile tower segment was expected to continue to remain healthy or improve. However, the expansion did not lead to higher sales for OMCs. “Some of the towers are now solar. Overall power availability has improved. When loadshedding has reduced, why would they run diesel generator (DG) sets?” said an official from one the three state-run OMCs.
According to the Central Electricity Authority data, all-India peak power deficit for March 2018 was at 1.1 per cent. This compares to 7.4 per cent in March 2013.
Industry estimates suggest the average cost of generation through diesel is Rs 13-15 per unit, against renewable energy and battery generation cost of ~7-8 per unit. Tower companies
in the past launched a programme to use more solar and reduce costs. "The telecom tower industry is aggressively aiming to use alternate energy resources to reduce its dependence on diesel," said Dua
There are other factors at play. “In addition to improvement in electricity, for some telecom providers, we have also seen a tendency to underutilise towers in low-demand sectors by not running them 24x7,” said another official from an OMC. There are also constant efforts from telecom service providers to share infrastructure and reduce operation costs.
Though there is a decline in demand, industry experts believe there is scope for further reduction. “Overall demand for diesel may have come down, but the dependence is still high despite improved power supply in most states. This may be due to pilferage of diesel at the field level. More can be done to cut down diesel consumption by effectively adapting to renewable energy and battery,” said Debasish Mishra, partner at Deloitte Touche Tohmatsu India LLP. Mishra added efforts in this direction will also help bring down India’s overall oil imports.
Telecom's dwindling contribution
2013-2014: Towers contributed 2% to retail diesel demand for IOC
December 2017: Towers contribution to retail diesel demand fell to 1.78% for IOC
Improvement in electricity
March 2013: All-India peak power deficit was at 7.4%
March 2018: All-India peak power deficit was at 1.1%
Source: Central Electricity Authority of India, company estimates, industry estimates
Solar is cheaper
Rs 13-15 per unit: Cost involved in diesel-generated power
Rs 7-8 per unit: Cost involved in renewable energy usage