Huge potential for renewables in the telecom sector

Many industries today keep their potential for greener business models unexplored and continue on their business-as-usual journey. For the telecommunications sector with its wide network of stations this is an opportunity foregone, argues Dr Thomas Hillig, founder of the renewable energy consultancy firm THEnergy.

What differentiates the telecommunications sector with regard to renewable energy sourcing from other industries?

Especially for mobile phone providers, the energy consumption profile is different from many other industries. They rely on a huge network of telecom towers. Often, they still operate these towers, sometimes the towers are outsourced. That means that tower companies own and/or operate the towers. In any case, telecom towers consume electricity. There are many towers globally, estimates go from 3 – 5 million towers worldwide. Many towers are in remote locations without reliable access to electricity, which means that power must be generated locally – normally with dirty diesel gensets.

Companies like AT&T, BT and Telefonica are members of RE100 and have pledged 100% renewable energy sourcing. In 2018 these three have consumed 20 TWh from renewables. Is renewable energy sourcing regarded solely as an opportunity for large companies?

Generally speaking, public pressure is bigger for large brands to act. They also have the internal resources to build up renewable energy competences quickly. Smaller companies are often below the screen. Many telecom companies do not consider power generation as a core competence.

An IRENA report on Key Industry Renewable Energy Sourcing from 2018 shows that only 7% of energy consumed by telecommunication service companies is renewable, second lowest by sector comparison. What are the options for corporate sourcing to increase this share?

Corporate Power Purchasing Agreements (PPAs) can be used to increase the renewable energy share quickly. Telecom companies also start switching to decentralized renewables for powering their remote towers. Solar and batteries play an important role. Fuel cells sometimes compete with batteries.

Is there an unexplored potential for telecommunications service companies to opt for renewables?

The unexplored potential is huge! However, this is really nothing new. The technology for decentralized solutions already exists. It is not a question of technical feasibility – rather a matter of speed.

What is the business case/value proposition for telecommunication companies to source renewable energy?

As the costs of renewables have come down so quickly during the last years, the value proposition is mainly cost savings. Beyond costs there are quite some additional advantages from renewable energy sourcing. Telecom companies are in constant and close interactions with their end customers. They are in an ideal position to use renewables to polish up their brand. In general, I see that energy branding will become more important. Independent power providers that sell electricity to telecom companies might need to think of how to brand their energy to provide a better value proposition for renewables.

Which role can corporate PPAs and Energy Attribute Certificates (EACs) play in this regard?

Renewable energy PPAs normally represent a long-term commitment. The energy markets are changing. The market mechanisms are not modified accordingly. No one really knows about the value of renewable energy in the future. Marginal costs of renewables are zero – this allows for dreaming: will there be electricity for free? At the same time, it is clear that the market design has to change. The incertitude stops many corporate off-takers to commit long-term to renewables.

EACs have a more short-term perspective. They are great if telecom companies want to act now. As long as the share of renewables regarding global energy production is still relatively small, I think that corporate PPAs and EACs are excellent and can help corporate off-takers to act quickly. In the long run, I see however that there will be significant pressure on telecom companies to use more onsite renewables.

Can telecommunication companies become the new utilities?

I rather see that telecom companies will be great partners for renewable energy players. I would not expect telecom companies to become the utilities of the future. I rather expect them to outsource everything that has to do with energy supply.