Bhaskar Solar: Making the ESCO model scalable

Pioneers of renewable energy in India, Bhaskar Solar currently has around 3,500 Indian cell sites, large solar firms and rooftops, 500+ bank branches, 200+ irrigation and water treatment plants. Thousands of other installations including rural households and institutes are also under operation. TowerXchange spoke to the CEO, Partha P Chatterjee about his vision for the future of both Bhaskar Solar and of the telecom ESCO market in India and beyond.

TowerXchange: Please introduce the TowerXchange community to Bhaskar Solar.

Environ Solar, operating under the brand name Bhaskar Solar, has been in renewable energy services since 2002. Our vision is to touch every life with sustainable and renewable energy solutions – to connect every unit, both residential and commercial, across the country, with a focus on scalability and sustainability.

Our initial focus was to create investible revenue streams through the transformation of households to solar energy, and we have subsequently diversified to become a systems integrator and EPC solution provider. We partnered with the Photovoltaic Market Transformation Initiative (PVMTI) of the IFC and SREI way back in 2002-2003 which helped establish solar solutions as an alternate energy source in un-electrified areas, replacing diesel and kerosene.

Bhaskar Solar is deploying solutions across various segments, for example we were the first energy services company in India to provide solar solutions to rural banks and ATMs. We see telecom towers as another segment in need of reliable power, and have identified this segment as an area for potential scale.

Our experience in telecoms started with a project for the Department of Telecommunications (DoT). We did a pilot project with the DoT and BSNL in 2009-10 and were the first to convince the DoT to adopt the solar+diesel+genset+battery hybrid model to optimise opex and reduce carbon footprints.  Indus Towers and Idea Cellular were our early customers subsequent to which we added other customers like ATC and Viom Networks (earlier Quippo and now acquired by ATC).

TowerXchange: Are your sites concentrated in a particular region of India, and do you have ambition to expand?

Our headquarters are in Eastern India, but Bhaskar Solar are not limited by geography – we are a pan-India player. However, with the towercos focusing on the good grid sites, like most India’s ESCOs we’ve been somewhat focused on off-grid sites or locations with erratic grid availability. The provinces where the grid is most unstable tend to be in Eastern and West-Central India (West Bengal, Bihar, Jharkhand), as well as Uttar Pradesh, Northeast, and few small pockets in the West.

TowerXchange: Please describe your contract structure and business model.

We use a simple contract structure to provide our customers with assurance of power supply at a fixed rate that includes energy, O&M, management of the NOC, site security et cetera or/and components thereof.

Our rates are also linked to uptime SLAs.

TowerXchange: Appreciating you cannot disclose your actual pricing, how do the economics compare to tower leases?

The towercos usually have two components of their revenue; tower lease or rental charges and energy charges. While tower lease charges factor in site security and O&M costs, energy is typically a pass through cost for the towercos, though these are increasingly being converted into fixed energy models.

We help the towercos to optimise both on tower lease charges by optimising O&M, security and energy infrastructure capex and also energy costs through various efficiency measures. Energy management remains our core competency as we have both monitoring and control technology for optimising energy usage and the cost thereof. We usually offer a 10-20% optimisation opportunity for the towercos.  This gives the towercos (who own around two thirds of India’s towers) a timely opportunity to make an arbitrage on energy efficiency at a time when MNO consolidation is putting their core revenues under pressure.

Lease rates in India are typically around US$500pcm per tenant and energy cost per tenant also is around US$500pcm. We can improve upon these numbers if towercos and MNOs outsource energy management to us.

TowerXchange: Do you see community power as an opportunity for Bhaskar Solar?

We focus on scalability and sustainability. I’m not sure if the community power model can be scaled as fast as the segments we’re focusing on. To date we have found the provision of community power services too variable, while the regulatory environment is less than ideal.

TowerXchange: How is your business financed? Do you have an interest to attract more capital?

Our key funders are SREI Infrastructure Finance.

We are currently exploring supplementary finance options to reduce our cost of debt and expand our network, so we’d love to connect with other members of the TowerXchange community to identify long term investors interested in the ESCO market.

TowerXchange: Please describe the energy equipment on your cell sites - what is the blend of DG, batteries and renewables? Are you technology agnostic?

We have been technology agnostic since day one.

Bhaskar Solar is solution rather than product focused – we work solutions around customer requirements to resolve their pain points. We have no commitment to a given technology, component or brand, so can optimise TCO by selecting solar, wind, fuel cell, lithium-ion et cetera, delivering reliability and leveraging long term support from our suppliers.

We take responsibility for our sites; for example Bhaskar Solar was the first ESCO in India to offer five year warrantees and TCO, which we offered before the market had achieved the proof of concept of solar which we have today.

TowerXchange: What is your personal view of the telecom ESCO market in India - it seemed to make a great start a couple of years ago, but has grown slowly since – are we right, if so what must be done to reinvigorate the market?

The Indian telecom market is undergoing a period of unprecedented consolidation – everyone is trying to survive or merge. The tower portfolios of Idea Cellular, Vodafone and even potentially Indus Towers are all on the block. This inevitably contributes to a degree of indecisiveness in the market, as decision makers hold off commitments awaiting confirmation of the new market structure. By the end of 2018-19, this phase of consolidation will largely be over, and the decision makers’ focus will revert to forging long term relationships to optimise operating costs.

Growth in the Indian ESCO market also stalled because people previously didn’t understand technology evolution – there were initial doubts whether to back PV, fuel cell, lithium-ion et cetera. While all those solutions have their use cases, solar has emerged as the way forward in the majority of circumstances.

TowerXchange: What do you think is the key to ESCOs forging partnerships with towercos?

The sheer scale of installation and maintenance is a challenge across towercos’ increasingly diversified portfolios, which creates opportunities for ESCOs to create greater efficiencies than towercos can achieve in-house.

While towercos are proactive in driving their partners’ efficiency, through remote monitoring, control and SLAs, there is a threshold of efficiency towercos cannot push beyond without ESCO partners to help them optimise the longer term payback technology solutions they need to bring their costs down even further.

We feel the focus of towerco energy efficiency programmes is now shifting. Originally their focus was on replacing diesel, but with the cost of grid power going up, they’re increasingly seeking to offset the cost of the grid, leveraging renewables to bring down TCO, so good grid sites are becoming part of our addressable market.

TowerXchange: What is the scale of the Indian telecom ESCO market today?

ESCOs are operating a little under 10,000 cell sites in India in total. The ESCO market is quite fragmented, and not all the players will be sustainable in the long term. Consolidation among ESCOs is as inevitable as it has been among MNOs and towercos.

Most of the ESCOs are striving to scale up and prove to the financial partners that we can achieve deliverable results, rather than constantly needing more funding.

TowerXchange: What is your vision for the future?

I will reiterate our vision to touch every life with sustainable renewable energy solutions, from households, businesses, and telecommunications to energy utilities.

We have the necessary strength in-house, and the right partnerships, to scale and meet the requirements of our target markets in India. We are already engaged in Africa, having started working in Nigeria, and we’re exploring opportunities in Myanmar and Bangladesh.