Vodacom powers Africa operations with 100% renewables

From the newsletter

Vodacom Group has become the first multinational telecoms operator in Africa to power its operations entirely with renewable electricity. This achievement was made possible through a combination of on-site renewable energy installations, power purchase agreements (PPAs), and the purchase of renewable energy certificates (RECs).

• African market demand for telecom towers is still growing as mobile phone ownership increases. Yet the grids that are supposed to power them have proven unreliable and costly. Renewables are becoming a reliable alternative.

• Many telecom operators are adopting solar power. In DR Congo, Orange and Vodacom plan to build 2,000 solar-powered mobile base stations across the country in six years to connect at least 19 million people.

More details

• Vodacom Group operates across seven countries in Africa, including South Africa, the Democratic Republic of Congo, Egypt, Lesotho, Mozambique, and Tanzania. Additionally, through its associate Safaricom, it has a presence in Kenya and Ethiopia. They manage over 9,500 towers and serve over 200 million customers. (Pictured is the Vodacom team opening offices in Cape Town, South Africa)

• In the past financial year, the company's total energy consumption reached 2,076 GWh. Of this, 1,275 GWh was purchased electricity. To mitigate the environmental impact of the 906 GWh that came from grid electricity, Vodacom acquired RECs. The company aims to achieve net-zero greenhouse gas emissions in its direct operations by 2035.

• The broader African ICT sector contributes approximately 1.5% to 4% of global greenhouse gas emissions, a footprint comparable to that of the commercial aviation and maritime transport sectors. This contribution is set to increase as the number of telecom towers is expected to rise by at least 50,000 in the next five years. And AI and 5G networks, which are highly energy-intensive, will add more demand.

• Currently, the majority of telecom towers still depend on diesel generators for power. Over 3 billion litres of diesel are consumed annually to run these towers across the continent. This reliance is proving costly for governments that depend on fuel imports, significantly depleting their foreign reserves.

• For telecom companies, running diesel generators can account for 30-60% of their total operational expenditure. Additionally, theft is a significant problem, with about 30% of the diesel getting stolen. The GSMA, a global association of mobile operators, estimates that this adds an extra 10-15% to the cost of supplying fuel to towers. 

• Switching to alternative energy sources like solar could therefore lead to substantial savings. For instance, in Nigeria, a country frequently affected by power outages, transitioning to renewables could help the telecom industry save up to $1.4 billion annually. For context, Nigerian telecoms consume about 40 million litres of diesel per month.

• Many telecom operators in Africa are increasingly adopting solar power. Safaricom, based in Kenya, currently powers 1,432 of its towers with solar energy and aims for renewables to account for 50% of its over 5,000 sites by 2050. MTN is powering at least 3,000 sites with solar and is committed to achieving net-zero emissions by 2040. Orange is also powering  5,400 telecom sites with solar entirely and other hybrid systems, resulting in an annual saving of 55 million litres of fuel.

Our take

• AI and 5G networks, despite being energy-intensive they can play a big role in energy optimisation. 5G network can facilitate AI-driven optimisation, and AI itself can reduce network power consumption through predictive analytics.

• Transitioning to renewable energy sources offers the chance to increase profitability for telecom providers. With prices of solar and lithium-ion batteries declining, the savings margin will increase. These cost savings could potentially translate into lower calling and internet rates for consumers.

• Telecom providers should explore new business models like "energy as a service." This allows them to focus on their core business and transfer the complexities of energy management to specialised providers.