How MNOs plan to green the network
MNOs are mandating new renewables, implementing emission reduction targets and tapping green finance
MNOs have set their sights on decarbonisation, and the passive telecom infrastructure industry must support that mission if it is to be successful. TowerXchange has reviewed the public targets and strategies of 25 MNOs from Americas, Europe, Asia, MENA and Africa and identified the strategies for greening the network adopted by MNOs over the last year (see Appendix). The strategies deployed include investing in distributed solar and wind generation, energy storage, smarter genset cycling, lower energy base stations, better energy control systems and power purchase agreements. MNOs are setting themselves for GHG reduction targets, renewable energy mix targets and tapping green finance to ringfence funds to invest in green priorities.
In February the GSMA announced that the industry had agreed to a Net Zero carbon emissions target by 2050. By adopting new Science-Based Targets (SBT) MNOs will adopt sector-specific decarbonisation pathways that allow them to set targets in line with the latest climate science.
Twenty nine operator groups representing 30% of global mobile connections have committed to SBTs, but many are yet to publish their own targets. TowerXchange will track MNOs as they announce their plans and record them here.
Those committed to publishing their plans are Movil, AT&T, BT, Bharti Airtel, Deutsche Telekom, Elisa, Far Eastone, KPN, Magyar Telekom, NTT DOCOMO, Orange, Proximus, Reliance Jio Infocomm, Safaricom, Singtel, SK Telecom, stc, Swisscom, T Mobile USA, Taiwan Mobile, TDC, Tele2, Telefónica, Telekom Austria, Telenor, Telia, Telstra, Verizon, and Vodafone. Many more are expected to follow.
The operators committed to SBTs are committed to a minimum reduction of 45% in GHG emissions by 2030. The companies are required to set one target for their combined Scope 1 and 2 emissions, with additional guidance provided for managing Scope 3 emissions. Scope 3 emissions refer to emissions in the supply chain and are where an MNO would record emissions produced by towercos.
The decarbonisation of grid power is expected to account for the majority of this reduction, but MNOs cannot be complacent. Energy efficiency is essential, especially the improvements in network efficiency of moving from 3G to 4G, or from 4G to 5G.
The telecom sector enables over 2mn tonnes of GHG emissions reduction annually, according to The Carbon Trust, but telecom networks themselves are a significant source of emissions. Recent figures show that the ICT sector produces 2.3% of global carbon emissions.
Telecom towers are the source of 24% of those emissions and network emissions are predicted to grow at a rate of 4.6% annually. Electricity used by telecom networks alone is predicted to grow at a rate of 10% per year.
TowerXchange has identified 15 MNOs with their own emissions reduction targets which commit them to varying degrees of decarbonisation. In some markets, it is currently impossible to keep cell sites online without relying on diesel generators, and so operators in developing world markets like MTN Group have thus far only committed to decarbonisation by 2050. In other markets, grids are not decarbonising quickly, and carbon-based fuels remain cheap, explaining Zain’s modest but realistic goals.
In other areas, like Scandinavia, hydroelectricity is enabling Telia to set a zero target for Scope 1, 2 and 3 emissions as early as 2030. In Europe, grid greening and energy efficiency drives are enabling Telenor, Telefónica and Deutsche Telekom to commit to all but eliminating their emissions by 2030. And in Asia, Telenor is committed to a 50% reduction in its emissions by 2030, showing that with innovation and green investment serious progress is possible over the next ten years.
Figure 1 highlights the commitments made to investors by MNOs’ boards, illustrating the major role of decarbonisation and investment in green operations. This list will only grow.
Figure 1: TowerXchange has identified 15 MNOs that have set specific emissions reduction targets
Decarbonisation targets cannot be met without investment in non-carbon based generation. Most mobile operators draw most of their power from the grid, and across the world, grids are becoming greener. However, telecom networks cannot rely on the grid alone and many operators are setting renewable energy targets for the proportion of energy used which is drawn from renewable sources (see Figure 2).
Back-up power requirements will increase as intermittent generation from solar and wind increases the need for resilient networks. 5G use cases like telemedicine and autonomous cars also make uninterruptable service far more important than before, and back-up power utterly essential. Similarly, back-up generation by diesel generators is also being phased out as diesel-based fuels become less acceptable.
Coverage targets in the developed and developing world markets are pushing telecom networks into increasingly remote locations. These remote sites would once have relied on diesel generators with expensive refuelling and maintenance requirements. Now a combination solar, wind and storage can keep remote sites active with minimal intervention. For example, 5G coverage requirements require thousands of offgrid sites in Germany and if they are not built with renewables then they will meaningfully contribute to the carbon intensity of the network.
To ensure that renewables are given due prominence, seven MNOs have set renewable energy targets, as identified by TowerXchange. As with emissions reductions targets, we expect the number of MNOs with renewable energy targets to grow over the course of this year as more MNOs announce their plans.
Orange is working with ESCOs to facilitate investment in renewables in its MEA business, where thousands of sites are being modernised with on-site renewable energy. Other operators are investing in distributed renewable generation at their sites, some are partnering with solar farm operators and others have direct Power Purchase Agreements with renewable generators connected to the grid.
Figure 2: TowerXchange has identified seven MNOs with renewable energy targets
Using greener energy is one way to reduce telecom’s effect on the environment, using less energy overall is another.
Around 24% of telecom emissions are from the network, principally telecom towers, and principally from the power used to run base stations. Modernising RAN infrastructure can be a significant source of energy efficiency; older base stations are significantly more power hungry than newer base stations. However, replacing base stations is a capital intensive process and this is rarely possible except when technology upgrades demand it.
Newer base stations can combine multiple Gs in one system, typically use more up-to-date hardware and have more advanced software powering them. 5G network equipment from Ericsson, Nokia, Huawei and ZTE is orders of magnitude more efficient than old systems on a Kilowatt Hour per Tonne of Carbon basis. OpenRAN vendors argue that their equipment is even more power efficient, something which has enabled Africa Mobile Networks to run sites on incredibly low power draws.
Innovation in energy management is ongoing too. Optimising power consumption through smart energy controllers which vary site power consumption, manage cooling, cycle batteries efficiently and switch energy usage intelligently also make even old base stations much more efficient
Outdoorisation has also enabled much greater energy efficiency by reducing the need for HVAC energy consumption. The introduction of free air cooling is another energy saver which is seeing increasing adoption by MNOs seeking to cut their energy usage.
This investment in renewable energy and energy efficiency requires new capex. Two trends are reinforcing investment in greening the network by MNOs.
On the one hand, investors are increasingly emphasising Environmental, Social and Governance (ESG) matters when agreeing investment. Investors are no longer solely interested in the return on invested capital, although this is still a primary concern. The impact of a firm on the environment, its interactions with society and its governance structures are all now critical to signing off investments in private and public companies.
On the other hand, MNOs are specifically tapping pools of green finance to fund investments in renewables, upgrade old and inefficient networks and support the construction of new networks which are green by design. Investors have raised funds which are specifically aiming to invest in a green transformation of global infrastructure and MNOs are happy to take advantage of the favourable terms on offer.
Over the last two years Vodafone, Telefónica, Verizon, Millicom and Swisscom have raised US$5.6bn through Green Bonds, with frameworks in place which allow for those MNOs to raise more. Once again, TowerXchange expects the value of money raised and the number of MNOs issuing green bonds to significantly increase. This is money earmarked for green investments, and will lead MNOs to up their investment in renewables and new network equipment.
Figure 3: MNOs Raise US$6.2bn through Green Bonds
Impact on the passive infrastructure industry
Much of an MNO’s emissions occur in its network, and if that network infrastructure is owned by a towerco then attention will soon turn there. Across the world, towercos have been investing in renewable energy for many years, which is an achievement MNOs have noticed and begun to emulate. Towercos and ESCOs have led the telecom world in using renewables to reduce total cost of ownership and reduce opex on remote sites. But more will need to be done.
In addition to this operational pressure, towercos will begin to feel pressure from their tenants to explain where their power comes from and how green their operations are. MNOs’ Scope 3 emissions are largely produced by their towerco, and as MNOs struggle to reduce their impact on the environment they will turn to their towercos with new demands.
For suppliers of renewable energy equipment, network equipment, energy storage and controls, the focus of MNOs on their emissions will be welcome. The combination of investor pressure, MNO initiatives and towerco capital deployment will mean that the next decade will see a renewed push in investment to green the network.
What are scope 1, scope 2 and scope 3 emissions?
Scope 1 emissions describe direct emissions from owned or controlled sources. Scope 2 cover indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by a company. Scope 3 emissions cover all other indirect emissions that occur in a company’s value chain. For example, an MNO reports emissions from a leased tower as Scope 3 emissions. But the towerco generating power at the site would report those emissions as Scope 2. An MNO which owns its own offgrid sites would report most of its emissions under Scope 2.