As energy and telco industries transform, is there room for partnership?
As energy and telco industries transform, is there room for partnership?
A new report from the International Energy Agency spells out some of the structural shifts taking place within the energy sector amid moves to increase energy security and reduce the impact of climate change. The question for telcos is whether these changes will help to open up potential partnerships and create new revenue streams.
Speaking at Mobile World Congress in Barcelona this year, Allison Kirkby, CEO of Telia, (set to join BT as CEO in January 2024) stated that energy infrastructure needs to be “modernised and decentralised,” opening up the possibility of more partnership between the two sectors. “Modern societies need very strong digital and energy infrastructures.”
At the same time, the energy crisis of 2022 underscored the need for telcos to manage their energy use. During 2022 Telia’s annual energy bill rose from SEK 1.3 billion to more than SEK 2 billion, an increase of over 50%, whereas Vodafone’s spending on energy in Europe had rapidly risen from €600 million per year to around €1.3 billion.
According to the GSMA the telecoms industry already accounts for around three percent of global energy usage. According to the GSMA’s report, electricity costs currently make up 20% to 40% of operating expenditure on cell sites, with power loss during transmission being a long-standing challenge.
The need to reduce energy costs has driven CSPs to innovate how they build networks, from end to end, spanning: equipment, cell sites, network operations and devices, to incorporating green networking practices and reduce their energy needs — in addition to sourcing renewable power supplies such as solar and wind, as well as in backup generation and storage systems. For instance, Japan’s NTT DoCoMo has reported that it has reduced grid-power usage by as much as forty percent at many of its base station sites by using solar panels and high-capacity batteries.
By incorporating energy generation and storage capabilities at cell sites, CSPs can not only generate affordable energy for their own networks but also potentially create excess energy, which can be sold back to the power grid operator. For energy providers, working proactively with the telecoms industry to incorporate green base station sites as unofficial extensions of the power grid is an opportunity to increase their provision of reliable green energy, whilst leveraging the CSP’s network and communications know-how to support smart integration of new renewable resources.
Technology fuels new opportunities
The concept of partnerships between power utilities and telecoms operators is not new, though it has typically been limited. But arguably there now are a range advances in ‘mutual benefit’ technologies such as IoT, AI, data analytics and cloudification of systems that make collaboration between the two industries not just increasingly logical, but also more desirable.
The Finland-based CSP Elisa, for example, has made its mobile network part of the national virtual power plant (VPP) infrastructure—a cloud-based power plant that plays a crucial role in balancing supply and demand of intermittent renewable energy sources. It works by aggregating power from distributed, fluctuating sources, such as wind, solar or hydroelectric and stores it in batteries to release when needed.
Whilst a utility building a VPP must invest in batteries and connect them to the electricity grid, CSPs already have a distributed network of batteries to back up their base stations, because most regulators stipulate the ability to maintain backup power in radio access networks (RAN) as a condition of spectrum licenses. CSPs can reuse the network-supporting power connections already deployed for operating each base station to transport excess power generated at each site.
As part of the creation of its Distributed Energy Storage (DES), Elisa upgraded its RAN energy storage infrastructure to lithium-ion batteries, which handle regular charging and discharging better than lead acid models. This not only extended its own RAN back-up capacity from three to nine hours, but, with the implementation of AI-driven analytics, enables it to provide energy balancing services in the automatic frequency restoration reserve (aFFR) market. After trialling DES across two hundred base stations in its Finnish network during 2022, it received technical pre-qualification approval from the Finnish transmission service operator TSO (Fingrid) and has gone live in Finland.
Does closer collaboration with CSPs work for utilities?
Utilities have been focusing on modernization of power grid infrastructure and operations: improving reliability, and absorbing renewable, distributed energy resources into the grid, and preparing for transformative usage such as the electrification of transport. To support this, power grids need to be more intelligent and more distributed to enable real-time communication across millions of devices. . . an obvious parallel to the direction of travel for telecom networks.
New use cases for energy utilities that rely on communications networks include collecting data for asset analytics and visualization, controlling energy flows from distributed generation, undertaking predictive maintenance of physical infrastructure and monitoring environmental conditions to ensure the safety and efficiency of work crews. To provide this pervasive coverage, utilities have mostly built their own mesh networks, often from a patchwork of WiFi and other technologies such as narrowband IoT (NB-IoT) and LoRaWAN. But mobile networking has become a viable option as the cost of connectivity has decreased, whilst connection latency and bandwidth have improved, giving utilities the opportunity to accelerate digital transformation by leveraging a proven technology—potentially making CSPs the partners of choice.
Fruitful exchange
Increasingly, CSPs provide private 5G or LTE networks, and in time, will offer network slicing services, for enterprises, campuses and other large customers seeking a better-than-Wi-Fi experience and cellular-grade quality, availability and security. So far, utilities are among the leading customers for private mobile networks, moving from their proprietary networks to a standardized technology with a larger device ecosystem. Potentially, this could eliminate the need for large (redundant) telecom teams within the utility. The addition of AI to private networks should drive adoption of new use cases, further improve efficiency and reduce energy requirements, whilst enabling the utility to better secure and digitize its assets, and pave the way for more co-innovation and convergent partnerships.
Power grids often need modernization, which requires huge investment–much of that being in digital technology but also in physical infrastructure, which could push prices even higher. This brings a risk of creating a different version of the ‘digital divide’ seen in telecoms—in which lower income households are unable to afford broadband connectivity—only this time the divide being centred those that can afford electricity and those that cannot, or only to a limited extent.
Both sectors are capital-intensive providers of critical infrastructure and services, and the current cost and pace of technological transformation are highlighting areas of symbiosis and potential future benefits for both sectors, their customers and most importantly, the planet.