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Solar-Diesel Hybrid Energy Model for Base

Transceiver Station (BTS) of Mobile Phone


Operators
Shahriar Ahmed Chowdhury1, Shakila Aziz2
1

Centre for Energy Research, United International University, Dhaka, Bangladesh.


School of Business Administration, United International University, Dhaka, Bangladesh.
1
Shahriar@eee.uiu.ac.bd
2
cactusflower_80@hotmail.com

Abstract The telecommunications industry has the greatest


coverage among all utilities. Remote areas of the country that
have no roads, grid-electricity, land line telephones or gas, still
receive network coverage from one or more telecom companies.
However, the Base Transceiver Systems (BTS) that these
companies used in off-grid areas are dependent on on-site diesel
generators, and the frequent maintenance and refueling that this
entails. This paper analyses the costs of the solar-diesel hybrid
systems, and the cost of electricity generated by such a system. It
has been found that the cost of such a system comes to US$ 0.625
per kWh of electricity, using the hybrid configuration currently
under consideration by mobile telecom operators. This
configuration assumes that the generator will run for 2.5 to 3
hours, and provide energy for 8 to 10 hours. However, increasing
the size of the panels will reduce the cost of electricity, keeping
other factors constant. Traditional capital budgeting analysis
and HOMER analysis are done to find out the energy cost and
also for sensitivity analysis.
KeywordsSolar BTS, CAPEX, NPV, IRR, HOMER

I. INTRODUCTION
Terrestrial GSM networks now cover more than 80% of the
worlds population [1]. The telecommunications industry is an
energy intensive industry, where large quantities of electrical
energy are consumed by the base transceiver stations for the
running and cooling of electrical equipment. For example,
Grameen Phone is the largest mobile phone service provider in
Bangladesh, covering 99% of the countrys polulation and 89%
of the land area. There are 13,000 base stations in 7,200 sites
around the country, as of December 2010[2]. In comparison,
only 48% of the population have access to grid electricity [3].
Just as people living in off-grid locations have in many cases
resorted to using solar home systems to access rudimentary
electricity, the communications equipment of telecom
companies can also use renewable energy for electricity. This
has been shown to not only reduce the maintenance, operating
and fuel costs, but also to prevent power outages, which results
in disrupted services and lost customers and revenues.
At present Bangladesh has six mobile phone operators
(Grameen Phone, Robi, Banglalink, Airtel, Teletalk, CityCell)
and all together they have 1762 Off grid BTS, Most of them run
using a diesel generator set with a battery backup system. If all
these BTSs change their energy system to Solar-Diesel hybrid

systems, it can all together reduce up to 84.95 million litres of


diesel and reduce emissions of 226,254 tons of CO2 by 2015.
In this paper, we will look at the technical, economic and
financial grounds for corporations to use renewable energy in
place of fossil fuels. Next, we will look at the case of a typical
BTS in Bangladesh, performing a financial analysis of its
instalment and operations, and calculating the NPV of the
project over an operating period of 20 years. In the project, we
will assume different tariff rates for electricity in the revenue
component generated from the project. We can only forecast the
costs and revenue from using the hybrid system, but we cannot
accurately predict the gains in revenue due to improved
customer service and coverage.
Furthermore, financing for emission reducing projects can be
obtained using carbon credits or emission reduction units, under
the Kyoto Protocol, but this consideration is not factored into
our analysis.
The costs of the equipment are taken from average current
market prices and operating expenses are estimated from the
reported costs the power supply companies currently incur. In
practice, telecom companies outsource the installation and
maintenance of the hybrid systems, and the capital budgeting
analysis of this paper is done from the perspective of the power
supply company.
II. POWER CONSUMPTION OF A BTS
The power consumption of a BTS site depends on the
equipment used, area covered, location, temperature/humidity
etc. The main power consumption of BTS is due to the
following equipments: Transceiver (TRX), the power
amplifiers, combiner, the duplexer, antenna, alarm systems,
control unit, Baseband receiver unit (BBX) and cooling
systems etc. In previous times BTS used air cooling units to
keep the temperature at certain level, which consumed almost
half of the BTS energy consumption. But at present the BTS
uses IVS (Intelligent Ventilation Systems), which consumes
on an average 150~200 W. The IVS consists of cooling fans
(exhaust). The total power consumed by a BTS depends on
the number of RBS in that particular BTS. A typical BTS site
of Bangladesh consumes 1.2 kW on average. Sometimes long

towers require aircraft warning lights and so they require


some hundred additional watts. In this paper we will consider
an average BTS load 1.5 kW.
III. A FINANCIAL BASIS FOR USING RENEWABLE ENERGY
Hybrid power systems have been shown to reduce the energy
costs of a BTS by more than 50%. This is because it eliminates
the cost of diesel by upto 75%, along with the other drawbacks
of using diesel, including fuel delivery, generator maintenance,
fuel storage, greenhouse gas emissions and uncertain future
diesel prices [4].
The capital costs of a solar powered system for a BTS is 50%
more than one using diesel. However, if we use a 9% cost of
capital, the solar power system will recover the invested capital
in five years. Furthermore, the cumulative costs (NPV) of a
diesel powered system will exceed that of a solar powered
system within ten years of the projects operation. If we consider
the lifetime of the solar equipment to be 20 years, we can see
that in the long run the solar powered system is far less
expensive than the diesel powered one. The following graph
illustrates this trend, assuming 10,800Wp solar panels against a
diesel generator of 13 kW capacity [4].
Net Present Value of Costs
(US$)

Solar

9 11
year

Diesel

13

15

17

19

Fig. 1 NPV trends of solar vs diesel powered BTS.


Traditionally, financial managers have not actively included
environmental considerations into their financing or investing
decisions, and did not include environmental risk in their
investment strategies. However, this is now changing, as in
many parts of the world, fiduciaries are legally required to
address environmental risk in their financial strategies. It has
been demonstrated by the financial advisory firm Innovest that
different companies in the same industry can face significantly
different costs of CO2 regulatory costs of compliance, based on
their environmental practices. In the world of increasing
environmental awareness and regulation, companies that take
measures to reduce their carbon footprint have been shown to
have share prices 3% higher than similar companies that are
environmentally indifferent [5]
In order to assess a companys net relative financial risk
exposure to climate change, Innovest suggests a measure called
Carbon Beta, which measures carbon risk in terms of four
variables [5]:

Companies overall carbon footprint or potential risk


exposure, adjusted to reflect differing regulatory
circumstances in different countries and regions.
Their ability to manage and reduce that risk exposure
Their ability to recognize and seize climate-driven
opportunities on the upside
Their rate of improvement or regression
The entire benefit of using renewable energy cannot be
precisely measured by using a conventional capital budgeting
analysis of the project alone. Its long term benefits to the share
price of the company can come from indirect and unpredictable
sources that are not accurately estimated.
According to a report by World Resources Institute, the benefits
of using renewable energy solutions can be measured in terms
of cost factors and risk management [6]. These benefits arise
from gaining an energy cost hedge, energy reliability, brand
enhancement and tax waivers. Bangladeshi companies, being at
the mercy of irregular power supply from the grid, and
unpredictably increasing fuel prices, can benefit from all these
factors. Investments in the renewable energy sector enjoy tax
exemptions [7].
There is empirical evidence that investing in renewable
energy can act as a hedge against fuel price increases. Unlike
contracts for gas fired electricity generation, renewable
generation is sold under long term fixed price contracts,
which can eliminate price risk for up to 20 years [8]. To
accurately compare the fixed costs of renewable energy with
fossil fuel powered conventional energy, utility companies
should use the hedged or guaranteed price of fossil fuels from
the forward markets, instead of price estimates based on the
uncertain spot price [8]. A study by Bollinger and Wiser [8]
reveals that the futures prices in the market exceed the
forecast prices for natural gas powered electricity by 0.4 to
1.7 cents/kWh. Furthermore, gas prices and the stock market
move in opposite directions, and fossil fuels have a negative
beta, favouring producers to the disadvantage of consumers
during economic downturns. Lastly, using renewable energy
reduces the demand on fossil fuels, thus leading to a decline
in its price. This price decline in fuel can offset any premium
price paid for renewable power in the long run [8].
Bazilian and Roques recommends taking a portfolio approach
to planning energy solutions. They have demonstrated that
energy portfolios benefit from diversification in a way similar
to portfolios of financial securities. This means that on a
standalone basis, renewable energy solutions may appear
more risky or have less return than conventional energy, but
when they are combined with conventional energy, the overall
energy supply portfolio can have greater risk adjusted returns
[9].
Switching to renewable energy is a way a corporation can
signal to shareholders and institutional investors that it is
mitigating climate related risk. Major corporations, like FedEx,
Johnson and Johnson, Du Pont and General Motors to name a
few, now are obtaining their electricity from renewable sources
including solar, wind and even landfill gas [10].

III. TECHNICAL CONSIDERATIONS


The average BTS load is considered to be 1.5 kW. The BTS
will be powered by solar-diesel hybrid systems. Daily average
generator run time is considered to be 2.5 hours (according to
the mode of operation is followed by local mobile phone
operators). When the generator runs, it will at the same time
provide power to the BTS equipment and charge the battery
for back up energy. The energy supplied by the solar system
is considered to last 16 hours and energy from the generator
lasts 10 hours. Two hours extra is considered as a safety
margin. No autonomy days is considered while designing the
solar-diesel hybrid system. We have taken the GHI (Global
Horizontal Irradiance) as the solar input data. However, in
practice our panels will be tilted at 23o angle (equal to the
local latitude), and this result in a higher solar radiation on the
panels. Consequently, the output energy from the solar panels
will be higher than what we have assumed here.
i. Diesel generator covers 10 hours load and also for
emergency requirement.
ii. The average radiation is 4.65 kWh/m2/day, while the
minimum radiation is 1.6 kWh/m2/day and maximum
radiation is 7 kWh/m2/day [11].
iii. The sizing of the system will be based upon the average
radiation of G=4.65 kWh/m2/day. So, in summer months
(when the radiation is higher, then generator back up time
will be less). And in winter or the rainy season, the
generator back up will be higher. But the average annual
generator runtime will not be more than 3 hours /day.
iv. The energy harnessing efficiency of the solar panel is
considered to be 95% (using the MPPT Charge controller)
(cc)
v. Battery efficiency is 85% (b) and maximum Depth of
Discharge (DOD) operation of the battery is 70%.
System Sizing
Panel
Daily Energy demand: 1.5 kW24 Hrs = 36 kWh
Solar energy contribution (16 Hours): Es=1.516= 24kWh
Average insolation G=4.65 kWh/m2/day
Battery DOD used= 70%
The required panel size is= P
Power from the panel will be directly fed into the BTS
equipment and rest will be stored in the battery. Considering
an average of 8 hours of direct feed from the panel. We get,

P
5.87

G 0.5

0.5

Es

Battery
Maximum battery energy backup will be required in the
lowest irradiation days (Lowest irradiation= 1.6 kWh/m2/day).
The battery capacity required is:

required energy for 16 hrs solar input energy


battery efficiency DOD of battery used
24 1.6 6
0.85 0.7
= 24.2 kWh
= 504 Ah (at 48 V)
At the sixth year (considering 6 years of battery life) the
battery capacity is assumed to be reduced to 80% of the initial
capacity.
Battery capacity required for smooth operation =
800 Ah at 48V.

= 630Ah

Generator
Generator backup is considered for 10 Hours 1.5 10
15
The generator will run for 2.5 hours, So the capacity of the
generator should be at least 6 kW

Considering the efficiency of the generation process


(ie. Rectifier loss and losses in other circuitry) 80%.
Generator size= 7.5 kW

Considering the availability and also the life time of the diesel
generator we have chosen a 8 kW ( 10kVA) generator.
Considering the aging of the generator and the declination of
the efficiency, we assume the fuel consumption per hour is
2.5 Litres. That is 3.2 kW/litre.
Rectifier
The rectifier will rectify the ac power to dc to charge the
battery as well as supply power to the BTS equipment.
Rectifier size at 48V =
166 A.
As all the BTS has existing rectifier. So, the rectifier price is
not included in the initial capital cost.
IV. FINANCIAL DESCRIPTION OF THE PROJECT
The energy supply to the BTSs in the day time will be from
PV panels and at night, partially from the energy stored in the
battery and partly from the generator. The system is
connected to a generator, so in extreme weather condition or
in emergency situations the BTS will be powered by the
generator. The size of the generator is determined by the load
supplied to the BTS and also by the charge from the battery
bank. To ensure a higher battery life, the battery is operated at
a maximum DOD of 60%. The costs and their components for
powering 1 BTS are summarized as follows (The prices are
collected from the local market/vendor/enterprises, converted
to US$):

COST BREAKUP OF THE SOLAR-DIESEL HYBRID SYSTEM


TABLE I
Unit cost
($)

Equipment

Units
required

Total cost
(US$)

Solar panel

1.5 / Wp

6000

9000

Battery Bank ( 48 V, 400 AH)

0.5 /Ah

9600

Battery Rack

125

250

Junction Box for Solar Panel

350

350

Charge Controller (60 A, 48V)

500

1500

Battery Protection Box

250

250

Solar Support Structures and


associated civil works

1300

1300

Cable & Connectors

1500

1500

Generator-10 KVA

6000

6000

Energy meter with data logger

120

120

Transportation and installation


( 3% of total equipment cost)

1000

1000

Breakers, Protection and others

1000

1000

Total Cost of Equipment

31870

Annual O&M cost

1000

Annual diesel cost

0.67/L

6.25L/day

1530

We can see how the NPV and IRR values of the project
change when we use various tariffs per KWh of electricity,
starting from US$ 0.6 to 0.66.
12

IRR (%)

10

All the equipment will be newly purchased and the energy


system will be built from scratch, without considering salvage
value from existing equipment.
Under the above assumptions, the break even tariff for the
BTS system comes to US$ 0.625 per kWh.
The cost of the system will change if the cost of diesel varies
significantly from the assumed values. All the costs of the
hybrid system are known from the beginning except for the
future costs of diesel fuel. Furthermore, the electricity is sold
to the Telecom operator under a take or pay contract, and so
the minimum sales revenue is also known in advance. The
only variable that introduces risk into the system is the price
of fuel.
Diesel prices in Bangladesh are a function of world crude oil
prices, refining and distribution prices, international demand,
taxes and subsidies. This is why the price of fuel is a
significant source of volatility. Utility companies that provide
power solutions to the BTS should consider hedging the price
risk of fuel by entering into forward or futures contracts,
depending on the needs of the company, and the market price
trends.

IV. HOMER ANALYSIS OF THE SYSTEM


The BTS project cost is analyzed using HOMER, a renewable
energy cost analysis software developed by NREL. The
assumptions used in the HOMER model are:

8
6
4
2
0
0.6

0.62
0.64
0.66
Tariff Rate (US$)
Fig. 2 Project IRR according to tariff per kWh
6000

Fig. 4 Schematic diagram of the Solar-diesel Hybrid system


solution (HOMER Analysis)

NPV in US$

4000
2000
0
-2000
-4000

0.6

0.62

0.64

0.66

Tariff rate in US$

Fig. 3 Project NPV according to tariff per kWh


In the above analysis the tariff rate for revenue is assumed to
be constant, but the cost of diesel and operations and
maintenance costs are assumed to grow at an annual
compounded rate of 5%. The cost of capital is considered 9%.

a) The BTS load is considered as a constant 1.5 kW that is


36kWh per day.
b) The generator is chosen so that when it is operates it will
not only supply the power to the BTS equipment but will also
charge the battery. The battery charging current will be at its
maximum possible rate, so that the battery back up time from
the generator will be at a maximum.
c) The solar radiation data of Dhaka city is taken for the
analysis.

d) Annual interest rate is considered as 100% and project life


time is 20 years.
e) Component specifications:
PV panel: Capacity of the panel is 6 kW
Wp, life 20 years,
derating factor 80%, PV panel assembly iss south facing with
23o tilt angle and ground reflection is taken as 20%.
Battery: 800AH, 2 V battery with 6 years life
l (at 70% DOD)
is taken for battery input data. So, the batttery replacement is
considered in every 6th year. Battery costt is taken as USD
0.5/AH of 2 V batteries. Salvage value of
o the batteries is
considered to be 20% of the battery capital cost.
c
Generator: Generator is taken as 10 kVA raating and generator
life is considered to be 10 years. One litre diesel
d
will produce
3.2 kWh of electric energy (i.e. 0.3125 L/H
Hr/kW output). No
load fuel consumption per kWh of rated caapacity is taken as

0.2 (L/Hr/kW rated). Cost of thhe generator is 6000 USD and


replacement cost is USD 4000
f) Price of the charge controlleer is included in the converter
price, as there is no option inn HOMER to include charge
controller price. Life time of the
t controller is taken to be 5
years. No cost for converter (acc to dc) is included in the cost
as every BTS has its own rectifi
fier. System fixed capital cost is
taken USD 5770, which inclludes cost of the solar panel
structure, battery rack, energgy meter with data logger,
transportation and installation cost, cost of protection and
alarm devices, cable and connecctors,
g) Efficiency of the rectifier is considered
c
90% (ac-dc)
h) System fixed O&M cost is considered
c
USD 1000 per year.

(a)

(b)

(c)

(d)

Fig. 5 HOMER Analysis Outputs (a) Monthh wise Global Horizontal Radiation of Dhaka (also showing the clearness Index), (b)
Monthly average electric production (contriibution of energy from Solar PV and from diesel geneerator), (c) Cost wise cash flow
summary (net present cost) of the project coonsidering the project life 20 years,
(d) Componennt wise cash flow summary (net
present cost).
HOMER Output Data: The yearly energy output from PV is
proportional to the solar radiation data.
d
The energy
contribution from solar is 59% and that from diesel generator
is 41% (Renewable Fraction is 58.7%), The
T cost of energy
stands at USD 0.628. Cost wise, net presentt cost is highest for
the initial capital cost followed by fuel cosst (diesel) and then
by replacement cost (as batteries need to be
b replaced after 5
years and the generator needs to be replacced after 10 years.

Component wise cash flow is the highest for the generator


(the fuel cost is included in the generator cost). It is
mentionable that PV cost is thee second lowest among the five
types of costs.
An Analysis for cost optimization by varying the PV panel
capacity

From the above analysis it is seen that the PV cost component


is one of the lowest. We varied the size of the PV, keeping the
capacity of the other components unchanged and observed
how the energy cost varies. We have started with the PV
panel capacity from 3kWp to 14 kWp. As the capacity of the
PV panel increases obviously the renewable fraction of the
system increases. Although the increase of the PV panel size
increases the initial capital cost, but the cost of energy is
decreasing.

Cost of Energy (US$)

0.8

Renewable fraction
100
80

0.7

60
40

0.6

20
0

0.5
2

Renewable Fraction (%)

Cost of Energy

7
12
PV panel size (kWp)

Fig. 6 Variation of cost of energy and renewable fraction of


the system with the variation of PV panel capacity.
The optimum size of the PV panels is 10kWp considering the
1.5 kW constant load. From the above sensitivity curve it is
seen that the cost of energy (CoE) decreases with the increase
in panel size from 3kWp. At 10 kWp the CoE is minimum
and that is US$ 0.575/kWh. The renewable fraction increases
with the increase of panel size.
V. CONCLUSIONS
Using the model that is currently under consideration by
mobile operators in Bangladesh, the cost of electricity in a
solar diesel hybrid energy system for a BTS comes to US$
0.63 per unit of electricity, for a 36kWh BTS using a
generator runtime for 2.5~3 hours a day. However, the cost of
electricity can be reduced by increasing the panel size while
keeping other factors constant. In fact, without using a storage
system, PV energy is cheaper than the diesel generator for
small systems like BTS. This implies that during daytime use,
without storage PV energy is more economic than a diesel
generator based energy.
The nominal cost of using a solar diesel hybrid is higher than
that of a diesel powered BTS, but this is only so under current
market conditions and prices. A significant part of the cost of
diesel power comes from the price of diesel, which is highly
variable and unpredictable. In fact, diesel may appear
affordable now, but price volatility may change this in favour
of solar power at any time in the near future (On the other
hand the price of the solar panel is continuously decling). The
dependence on solar energy, where the investment occurs in
the beginning of the project, has the additional advantage of

removing unknown costs in the near and distant future. This


will remove financial and operational risk, and create a more
dependable source of power in the long term.
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Annual Report 2009-2010, Bangladesh Power development Board, 2011
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Holdings International Inc. 2009
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