Powering change

Operators are taking a second look at renewable energy as costs in emerging markets soar

Tags: Alcatel-LucentFrost and Sullivan Middle EastNokia Siemens Networks
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Powering change Lindsay McDonald: Operators need to consider green initiatives.
By  Roger Field Published  August 2, 2010

While green technology might not be viewed as a priority by most telecom operators around the world, the growing cost of powering off-grid base stations as networks spread into rural areas looks set to create a sea change in attitudes to renewable energy.

Indeed, the GSMA, a trade association for the GSM industry, has already thrown its weight behind a global effort to promote the use of renewable energy to power base stations with its ‘Green Power for Mobile’ programme, which was launched in 2008 to advance the use of renewable energy sources by the mobile industry.

The organisation hopes to see 118,000 base stations powered by renewable energy in developing countries by 2012, which it claims would save up to $2.5 billion on diesel and cut annual carbon emissions by up to 6.8 million tons.

In Africa and the Middle East, many operators and vendors are also making a concerted effort to introduce renewable energy, particularly solar, as a means to power base stations located in remote areas.

The growing attraction of renewable energy is being driven more by economics than concern for the environment, with operators, particularly in Africa, facing significant cost and effort to run remote off-grid sites with diesel. Indeed, according to estimates from network vendor Alcatel-Lucent, a base station powered by average diesel powered generator costs about $20,000 to $40,000 a year to run, taking into account fuel and its delivery, and maintenance of the generator.

When considering that hybrid base stations that use a combination of solar power with a back-up diesel generator can give a return on investment in as little as two to three years based on current oil prices, it is surprising that more operators have not embraced the technology.

But while some operators have adopted solar power for some base stations, usually in remote areas, it is clear that the technology is far from mainstream, with only a handful of operators, including STC in Saudi Arabia, and Orange and Zain in Africa, having deployed base stations that use renewable energy.

For analysts at Frost & Sullivan, a consultancy that is monitoring the environmental policies of telecom operators in the Middle East and Africa, the case for using renewable energy is clear.

Lindsey McDonald, consultant, ICT Practice, MENA, Frost & Sullivan, says that the company’s research has shown that in the MEA region, diesel for base stations emerged as one of the biggest contributors to opex for operators, along with staff wages.

While the case for using renewable energy might be strongest in remote off-grid sites, McDonald also points out that many countries in the region, such as Nigeria, also suffer from unreliable power grids, which means that base stations in many urban areas often rely on diesel generators for significant periods.

Despite this scenario, operators that have tested or started to use renewable energy to power parts of their network remain in the minority, and Frost & Sullivan has identified a number of reasons for this.

One problem is that the decision makers at many of the region’s telecom operators have a “short tenure of responsibility” according to McDonald, which in turn can lead to more short term thinking.

Senior managers are also nervous about making decisions that involve such as big sum of money, particularly when they might not be around to see the results.

“There is a lot of caution in the market for making that initial investment and essentially a lack of long term thinking. That is one of the biggest challenges that vendors face,” McDonald says.

But there is also a lack of knowledge about renewable energy and its potential benefits and reliability. “Another side of things is perhaps the perception that renewable energy isn’t as reliable as diesel, so the worry that solar panels might not always work, the worry that wind generation might not always work,” McDonald says.

The situation is also exacerbated by the fact that many operators in the region remain in a growth phase where issues such as renewable energy – and other wider environmental issues – simply do not feature.

“What we see is that a lot of operators in the Gulf are still in their expansion phase and are concerned with getting the network up as quickly as possible,” McDonald says. “They want to use tried and tested methods so that they know their network is going to work.

“That is their first priority. After that they are concerned with upgrading their network to deal with increased capacity, and then they want to get to the point where they think about putting in 3G, and only then do they think about how to power those base stations.”

Given the cost savings and benefits that hybrid base stations can bring, McDonald adds that it is vital for telecom operators to consider the issue earlier rather than later. “We are trying to make operators understand that they don’t have to go through that legacy type of lifecycle – they can jump start their network if they invest now. It is going to be more cost effective than if you invest in seven years or so.”

However, McDonald also concedes that use of renewables would perhaps be much greater in Africa and the Middle East if regulations were in place to drive operators to reduce their carbon footprints and boost sustainability.

Indeed, one of the main drivers of the practice of sustainable business is compliance and this is something that is lacking in the region.

“Coming from a European perspective, there has been a culture of eco sustainability for a good 10 years and there are a lot of regulations around this, but we don’t have the same level of regulations here in the Middle East. It is something that we are slowly starting to see – but it is patchy at this stage and not really a concerted approach,” McDonald says.

While major network vendors are becoming increasingly active in terms of developing and marketing base stations that incorporate renewable energy, they also face the challenge of convincing telecom operators of the merits of these systems.

“Indeed, according to McDonald, one of the problems the vendors face is a lack of hard data on the return on investment that can be achieved by renewable energy. This is partly because the systems are new, and also because the needs of different operators vary widely, as do the environments they operate in.

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