In many low- and middle-income countries (LMICs), access to mobile connectivity is being provided through the expansion of mobile towers. These towers are typically located in areas that are either not connected to a national electricity grid, or are connected, but receive unreliable electrical power. These “off-grid” and “bad-grid” towers rely on on-site diesel-powered generators for their operation, inflicting a measurable cost on the environment as well as the balance sheets of mobile network operators (MNOs).
Both off-grid towers, which are completely disconnected from the grid, and bad-grid towers, which experience over six hours of power outage per day on an average, increase telcos’ greenhouse gas emissions. To curb these emissions, the industry is slowly moving towards the use of renewable energy, which is not only effective in reducing operators’ greenhouse gas emissions and reliance on diesel fuel, but also generates cost savings, thus enabling the profitable expansion of mobile networks to rural and low-population-density areas.
In order to examine the opportunity to convert off-grid and bad-grid sites in LMICs to renewable energy-based sites, the GSMA recently released a report. It tracks changes in the percentage of towers that are off-grid, bad-grid and powered by renewable energy in over 200 countries and territories between 2014 and 2020, lists challenges in renewable energy adoption and highlights the key steps that need to be taken in this regard.
A look at the key findings of the report…
Global tower trends
According to GSMA analysis, the number of towers across the world has increased from an estimated 4 million in 2014 to 5 million in 2020. Over half of all global towers installed since 2014 are in China (487,000 net towers installed) and India (183,500).
Over the past six years, the global telecom industry has witnessed a 45 per cent growth in the number of off-grid and bad-grid sites powered by renewable energy. As per GSMA estimates, there are nearly 70,000 towers powered by renewable energy worldwide. India accounts for 60 per cent of this growth, having added over 12,000 renewable energy towers during this period. Moreover, annual carbon dioxide equivalent (CO2e) emissions from diesel-powered generators at off-grid and bad-grid towers have been reduced by almost 2.2 million metric tonnes, from 9.2 million in 2014 to 7 million in 2020. India has been responsible for the highest emission reduction. Once responsible for over a third of global emissions from tower diesel generators, it now accounts for 12 per cent emissions.
Barriers in transitioning to renewable energy
The increased adoption of green sites in LMICs has shown that tower owners and managers – MNOs, towercos and energy service companies (ESCOs) – understand the technical and financial viability of renewable energy, the in-house and external expertise required and the importance of having the right mix of energy partners or vendors to deploy renewable energy systems. However, around 88 per cent of the world’s off-grid and bad-grid towers are still powered by non-renewable sources.
The GSMA has identified the key global trends that are impeding the larger-scale deployment of renewable energy. Some of these are as follows:
- Today, 70 per cent towers are owned and managed by tower companies, which have adopted the tower sharing model. This model has transformed how renewable energy business models are assessed and evaluated. It is designed to be extremely capital efficient, aiming for a payback period of three to four years on all capex investments. In many LMICs, this requirement presents a significant hurdle for renewable energy systems.
- ESCOs have assumed an increasingly important role as specialised renewable energy suppliers and managers. However, due to the lack of standardisation in ESCO contracts, and the absence of price benchmarking in most countries, ESCOs are unable to structure their business models to achieve scale.
- Improved access to electricity from national grids is disincentivising investments in renewable energy. That said, in some LMICs where access to electricity is high, MNOs are executing or exploring net metering systems, a regulated arrangement in which a company with on-site solar electricity generation capacity can receive credits for excess generation that is fed back into the grid. According to GSMA research, over 40 LMICs already allow some form of net metering in their respective national energy policy and regulatory frameworks. In India and Bangladesh, MNOs and towercos such as Robi Axiata and Bharti Infratel, which collectively own several hundred solar-powered sites that are connected to the grid, are planning to obtain net metering contracts with their local grid utilities to optimise their solar and grid usage and further reduce their energy opex.
- Small cell sites and the anchor-business-community (ABC) minigrid model have the potential to provide connectivity and electrification to rural areas, but are still not proven at scale. The ABC minigrid model is used to install and operate renewable energy-based minigrid systems in off-grid locations. These grids supply electricity to towers with MNOs or towercos as the anchor customers, as well as to local businesses and community households. Owing to a number of persistent challenges, the model has achieved mixed results.
- Many LMICs need enabling telecom and energy sector policies and regulatory frameworks that incentivise renewable energy. Telecom and energy regulators in countries such as India, Kenya and Bangladesh have either conducted industry consultations or included basic renewable energy measures in their national policy and regulatory frameworks. However, in many LMICs these policy measures are not comprehensive or effectively enforced.
- In addition, the decision to deploy or not deploy renewable energy solutions can be influenced by a range of contextual factors, such as local tower sharing policies, the availability of low-cost energy from the grid, local policies and regulatory frameworks related to renewable energy, the presence and capacity of a renewable energy vendor ecosystem and the local price of diesel fuel. Further, MNOs and towercos often rely on the resources and expertise of other ecosystem players such as regulators, investors, donors and renewable energy equipment providers.
As per the report, there are certain areas in which additional support could facilitate the transition of mobile towers to renewable energy. For one, the business case for renewable energy can be strengthened through improved data collection and analysis. Geographic information system (GIS)-based sophisticated data visualisation tools can help MNOs gather, integrate, manage and analyse data. The GIS data in this tool covers the locations of existing and upcoming telecom towers; national grid availability; power consumption estimates for towers and estimated energy consumption at each of these towers; the delivered price of diesel (updated regularly based on local price data); the distance from the nearest service point/ diesel reservoir to the site; the availability of solar/green resources; and roads at these locations.
Further, stakeholders should work together to standardise and benchmark en-ergy contracts between MNOs, towercos and ESCOs so that they are mutually beneficial and incentivise green investments. Tools and documents that could address this challenge include standardised energy opex contractual procedures (at the national or regional level) between MNOs and towercos, and examples of global best practices in requests for proposal, business models and tower energy management policies. Moreover, there is a need for case studies, replication guides and industry workshops that can help facilitate action, improve coordination and reduce fragmentation.
There is also a clear opportunity to establish an industry consortium, with strong support from global partners such as TowerXchange and the International Finance Corporation, which offer regular opportunities to MNOs to engage, either virtually or in person. Creating a repository of industry best practices should be the first task of this consortium.
Since only a few LMICs have enabling policy and regulatory frameworks to promote renewable energy deployment at telecom towers, more policy-related dialogue is needed between telecom and power sector policymakers and regulators along with MNOs, towercos, ESCOs and other stakeholders. Governments can introduce favourable import and customs duties, and taxation structures and incentives for the local manufacturing of renewable energy equipment.