The telecom industry is striving to balance the growing demand for uninterrupted connectivity, low latency and high network performance with the need to reduce carbon emissions and improve energy efficiency. The rapid expansion of 5G networks, surging data traffic, increasing deployment of data centres, growth of edge computing infrastructure and rising densification of telecom towers have significantly increased energy consumption across the sector. While the adoption of next-generation technologies such as artificial intelligence (AI), internet of things (IoT) and cloud computing has enhanced network capacity, operational efficiency and service quality, it has also increased the need for additional radio equipment, fibre infrastructure and advanced cooling systems, thereby intensifying overall power demand. Although the industry has taken several initiatives in recent years to improve energy efficiency and expand the use of renewable energy sources, progress has remained constrained by structural, operational and financial challenges. As the sector’s energy requirements are expected to rise sharply in the coming years, telecom operators and infrastructure providers will need to adopt commercially viable green energy solutions supported by favourable policy and regulatory incentives as well as improved financing mechanisms to effectively reduce the industry’s overall energy footprint.
AI deepens the industry’s energy challenge
Traditionally, mobile networks have been among the most energy-intensive components of the telecom ecosystem. Base stations account for a significant share of overall power consumption as energy is required not only for radio transmission but also for cooling systems, power rectifiers and backup infrastructure, which are needed to ensure uninterrupted network operations. The transition to 5G and the deployment of macro cells, small cells and distributed antenna systems have increased both network density and operating intensity, thereby raising aggregate electricity consumption across telecom networks.
More recently, the growing adoption of generative AI and large language models has sharply increased electricity demand from hyperscale data centres and cloud infrastructure that support AI workloads. According to the International Energy Agency (IEA), global electricity consumption from data centres reached around 415 TWh in 2024, accounting for nearly 1.5 per cent of global electricity consumption, and is projected to almost double to about 945 TWh by 2030. Further, as per IEA estimates, electricity demand from data centres increased by 17 per cent in 2025, with AI-focused data centres witnessing even faster growth. Recent estimates also suggest that data centres now account for nearly 6 per cent of electricity consumption in countries such as the US and the UK.
Among other next-generation technologies, the rapid proliferation of IoT devices has increased overall power demand across digital networks. Although individual IoT devices consume relatively small amounts of energy, their massive scale of deployment across industries, smart cities, logistics systems and consumer applications has significantly increased cumulative electricity requirements. A more pressing concern, however, relates to the growing volume of electronic waste generated by IoT ecosystems, driven largely by the widespread use of batteries, sensors and semiconductor components with relatively short replacement cycles. In addition, edge computing infrastructure, which processes data closer to the source to reduce latency and improve real-time responsiveness, is contributing to rising energy consumption through the deployment of distributed micro data centres and processing units.
Virtualisation and renewable energy as key pillars of industry’s sustainability initiatives
Virtualisation and renewable energy adoption are increasingly emerging as the two core pillars of the telecom industry’s efforts to reduce energy consumption, lower operating costs and minimise carbon emissions.
Traditionally, telecom networks have relied heavily on dedicated hardware infrastructure for individual network functions, resulting in high power consumption, underutilisation of resources and significant cooling requirements. However, the growing adoption of network virtualisation technologies such as network functions virtualisation, software-defined networking and cloud-native architectures is fundamentally transforming network operations. By shifting network functions from physical hardware to software-driven virtual environments, telecom operators are able to consolidate infrastructure, improve resource utilisation and reduce dependence on energy-intensive equipment. Virtualisation also enables operators to dynamically allocate computing resources depending on network traffic conditions, thereby reducing unnecessary energy consumption during low-demand periods. In addition, virtualised networks facilitate automation, AI-driven optimisation and remote network management, further improving operational efficiency and reducing maintenance-related energy requirements.
Further, telecom operators and tower infrastructure providers are increasingly expanding the use of renewable energy solutions to power telecom towers, data centres and network infrastructure. The industry has traditionally relied heavily on grid electricity and diesel generators, particularly in remote and rural areas with unreliable power supply. However, rising energy costs, climate commitments and regulatory pressures are encouraging operators to transition towards cleaner energy sources such as solar and wind power. Tower companies are increasingly deploying hybrid power solutions combining solar panels, lithium-ion batteries and energy storage systems to reduce diesel dependence and improve energy reliability. Several telecom operators are also entering into green energy purchase agreements and investing in energy-efficient data centres equipped with advanced cooling technologies and AI-enabled power management systems.
While AI has emerged as a major driver of energy demand, it is also becoming a key instrument for implementing efficient and sustainable energy management practices. AI-enabled systems are helping operators, utilities and industries optimise electricity use through predictive analytics, smart cooling systems, automated power management and real-time network optimisation. AI is also enabling operators to dynamically switch equipment into sleep mode during low-traffic periods and optimise traffic routing to reduce unnecessary power consumption. Similarly, smart grids are increasingly using AI to forecast electricity demand, integrate renewable energy more efficiently and minimise transmission losses.
Major challenges in the industry’s green energy drive
Despite the growing focus on sustainability, telecom operators and infrastructure providers continue to face several challenges in implementing efficient energy management practices. With regard to the adoption of renewable energy solutions, the transition involves substantial upfront capital expenditure and long payback periods, further constraining operators in a highly competitive telecom market characterised by low tariffs and profitability concerns. The intermittent nature of renewable energy sources such as solar and wind also creates operational uncertainties, particularly in regions where adequate battery storage systems and smart grid infrastructure are lacking. Delays in regulatory approvals, land acquisition challenges and limited access to affordable green financing further limit renewable energy deployment.
While the industry is increasingly adopting virtualisation to improve resource utilisation and operational efficiency, the shift has also increased dependence on energy-intensive data centres, cloud infrastructure and high-performance computing systems. Also, the migration from traditional hardware-based systems to software-driven virtualised environments often entails high transition costs, interoperability challenges across multivendor ecosystems and large-scale modernisation of legacy infrastructure. Ensuring cybersecurity, network resilience and uninterrupted service delivery in highly virtualised environments adds to operational complexity and energy management requirements.
The implementation of advanced energy management systems such as AI-enabled network optimisation, intelligent cooling technologies and automated power management solutions also requires significant technological integration, specialised technical expertise and continuous monitoring capabilities. Further, the lack of standardised energy management frameworks across multivendor telecom networks and concerns relating to cybersecurity and operational reliability continue to pose additional challenges in the large-scale adoption of advanced energy optimisation technologies.
Outlook
The energy requirements of the telecom sector are expected to rise sharply in the coming years, driven by the continued roll-out of 5G networks, transition to 6G technologies and expansion of data centres and edge computing infrastructure. While AI will continue to intensify electricity demand through hyperscale data centres and high-performance computing systems, it will also create significant opportunities for improving energy efficiency through intelligent network optimisation, predictive maintenance, automated power management and smart cooling technologies.
Going forward, the telecom industry faces the complex challenge of balancing rapid digital expansion with environmental sustainability. The transition towards cleaner and more efficient energy systems is essential not only from an environmental standpoint but also for improving long-term cost efficiency, reducing dependence on volatile fossil fuel markets and strengthening energy security. Accelerating this transition will require stronger policy and regulatory support from the government in areas such as faster approvals for renewable energy deployment, improved access to affordable green financing, incentives for the adoption of energy-efficient technologies, and the expansion of smart grid and battery storage infrastructure. Greater policy clarity regarding carbon reduction pathways, renewable energy procurement and green data centre development will also be important for encouraging long-term investments. In addition, stronger industry collaboration involving telecom operators, tower companies, equipment manufacturers, power utilities and policymakers will be necessary to develop standardised frameworks for energy-efficient network deployment and sustainable infrastructure management.
