Tag: electricity consumption

Should telcos dive deeper into energy?

Introduction

Some telcos have been dabbling in the energy market for a decade or more, partly reflecting the interdependent nature of the two industries. In the past two years, energy has climbed up the agenda of telcos’ management teams, as the electricity and gas sectors experience another major wave of disruption.

In much of the world, energy prices have surged as a result of the war in the Ukraine and the subsequent sanctions against Russia. At the same time, the ongoing transition to renewable energy in response to climate change is opening up new sources of supply and bringing in new players. The cost of wind and solar power, and battery storage is falling steadily, while many policymakers are introducing further incentives to hasten the transition away from oil, natural gas and coal.

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In 2022, energy prices have surged around the world

Source: The IEA

In August 2022, for example, US President Joe Biden signed the Inflation Reduction Act, bringing with it, tax incentives and other measures that should significantly boost the deployment of renewable energy and storage (large-scale batteries). The Act earmarks US$369 billion to help bring about a 40% reduction in greenhouse gas levels by 2030, by supporting electric vehicles (EVs), energy efficiency and building electrification, wind, solar photovoltaic (PV), green hydrogen, battery storage and other technologies. For example, the Act introduces an investment tax credit for standalone energy storage, which can lower the capital cost of equipment by about 30%.

As policymakers and consumers seek out new energy propositions to try and contain rising costs and greenhouse gas emissions, some telcos, such as Telstra and Polsat Plus, are seeing strategic opportunities to build deeper relationships with households. To that end, they are pushing deeper into the energy market, investing in generation capacity, as well as developing retail propositions.

Our landmark report The Coordination Age: A third age of telecoms explained how reliable and ubiquitous connectivity can enable companies and consumers to use digital technologies to efficiently allocate and source assets and resources. In the case of energy, telcos could develop solutions and services that can help consumers and businesses manage their own consumption and sell excess power back to the grid.

This report explores why telcos may want to get involved in the energy market, what their options are and presents case studies, outlining the steps some telcos have already taken. It considers the key advantages/assets that telcos can exploit in the energy market, illustrated by short case studies:

  • Extensive distribution networks
  • Established brand names
  • Billing relationships and payment mechanisms (mobile money/carrier billing)
  • Existing connectivity and IoT expertise
  • Big buyers of energy and in-house energy management expertise

The subsequent chapters in the report include an in-depth review of Telstra’s end-to-end energy strategy, the economics of energy retailing and whether telcos should move into energy generation and storage. The penultimate chapter, which considers how to engage consumers, is followed by conclusions summarising how telcos can help address some of the challenges facing energy suppliers and buyers.

Table of Contents

  • Executive Summary
  • Introduction
  • Extensive distribution networks
    • Case study 1: Polsat Plus – bundling telecoms & electricity
    • Case study 2: Orange Energy Africa – distributing solar kits
  • Established Brands
    • Case Study 1: Singtel Power – taking on the incumbent
    • Case study 2: Building a Reliance Jio for energy
  • Billing relationships and payment mechanisms
    • Case Study: MTN Nigeria – Pay as you go solar
  • Existing connectivity and IoT expertise
    • Case study 1: Telefónica España – monitoring solar panels
    • Case study 2: Proximus – electric vehicle charging
  • Energy buying and management expertise
    • Case study 1: Vodafone – enabling energy data management
    • Case study 2: Elisa – balancing the electricity grid
  • In depth case study: Telstra Energy
    • The strategic justification
    • How the IoT and AI can help
  • The Economics of Energy Retailing
    • An even tighter regulatory regime
  • Telcos and energy storage and generation
    • Competition from other investors
    • Planning permission
    • Grid connections
  • Engaging consumers
    • Ripple Energy – consumer ownership
  • Conclusions

Related research

 

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Building a green network: Sustainability game changers

Carbon emissions: At the heart of the corporate strategy for SPs

At the core of all service provider businesses is their network. Customers expect from these networks a service which is fast, reliable, customisable and cost-effective. For service providers to continue to meet these expectations, they are investing in new technologies that help to improve their performance. This investment includes but is not limited to 5G (SA) core, cloudification, AI and automation capabilities, edge computing, vRAN and O-RAN, fibre to the home and more.

However, at the same time as making these network advancements, service providers are also focused on reducing their carbon emissions. Never before has this been such an important part of the corporate strategy of many large companies, not the least the service providers. Becoming greener has become a top priority politically, economically and socially and is increasingly encompassing all parts of the business, from reducing the use of electricity to trying to increase the amount of recycled and refurbished equipment in use.

In many instances efforts to become more sustainable have been accelerated because of the wave of commitments from service providers to become net-zero companies in the next 10-30 years.1 Achieving these commitments will require changes in operating practices across service providers’ businesses, but particularly, changes in the way that they rollout, operate, manage, maintain and upgrade their networks.

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The single biggest contributor: Green networks

Figure 1 indicates why the networks are such an important element in reducing carbon emissions – because they are by far the most energy-hungry part of a service providers’ business. Last year, the Belgian service provider Proximus reported than more than 75% of their electricity consumption came from their networks.

More than 75% of Proximus’ electricity consumption last year came from its fixed and mobile networks

Green networks - Proximus electricity consumption emissions carbon

There are technological advancements that are both improving network performance and helping to reduce carbon emissions. One such of these is “Moore’s Law” – the observed phenomenon from the co-founder of Intel that while compute speed and power doubles every two years, the cost of the computers is halved. Making smaller, more powerful equipment helps to reduce the embedded carbon of a network and while we expect generally that this trend will continue, it will not be enough alone for service providers to reach their net-zero goals.

Instead, more radical action must be taken. Service providers must accelerate their efforts to prioritise sustainability just as much as performance when it comes to their networks and data centre infrastructure. In this report we discuss five key steps that could be sustainability gamechangers in building green networks. The insights from the report have largely been formed through an interview programme with service providers globally to understand their current efforts and future ambitions.

Table of Contents

  • Executive Summary
    • Five sustainability gamechangers to build a greener network
  • Introduction
    • Carbon emissions: At the heart of the corporate strategy for SPs
    • The single biggest contributor: Why the focus on green networks
  • Re-evaluate the gold standard for network KPIs
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Develop best-in-class AI and automation capabilities
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Simplify the network to achieve emission benefits today
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Ensure workloads are running on green energy as much as possible
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Target a power usage effectiveness rating of 0.5 through innovative waste heat solutions
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Conclusion

 

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