Why Are Telecoms Transitioning to Renewable Energy?

In the face of escalating demand for data, telecommunications enterprises must adopt a strategic approach to their energy consumption, and renewable energy sources combine the best of both worlds: mitigating environmental impact while simultaneously reducing operational costs.

The telecommunications sector, renowned for its substantial energy footprint due to the perpetual operation of infrastructure, confronts an intensifying challenge as data demand increases. 

A comprehensive analysis by Statista reveals that the volume of digital data generated or replicated globally has experienced a more than thirty fold increase over the past decade, from two zettabytes in 2010 to 64 zettabytes in the previous year. This trajectory is expected to exceed 180 zettabytes by 2025, reflecting an average annual growth rate of nearly 40% over five years. 

The proliferation of IoT (Internet of Things) devices, the rollout of 5G networks, and the intensive use of social media platforms are behind this boom in data traffic.

This exponential growth trajectory portends an unparalleled acceleration in energy consumption, potentially jeopardizing climate mitigation objectives. On a global scale, ICTs (Information and Communication Technologies) already account for 3% to 4% of CO2 emissions, twice as much as the aviation sector, according to Boston Consulting Group (BCG) research. 

Furthermore, BCG predicts that mobile data demand will increase by 60% in the coming years, potentially rendering the industry responsible for a staggering 14% of global CO2 emissions by 2040. Notably, 90% of this volume is associated with energy consumption.

Consequently, the adoption of renewable energy sources is emerging as a strategic imperative to reduce environmental impact. This shift offers another significant advantage: the reduction of operational costs, particularly in Brazil, where favorable conditions exist for generating wind and solar power at competitive rates. The 5G network itself can serve as a technological ally in this endeavor. BCG’s analysis underscores that the implementation of 5G technology, when coupled with renewable energy sources, has the potential to reduce the sector’s energy intensity by up to 70%, thereby yielding substantial cost reductions.

Brazilian Telecoms Bet on Renewables

According to the 2024 Statistical Yearbook of Electric Energy by EPE, the telecommunications sector ranks as the fifth-largest consumer of electricity within the commercial class in Brazil, consuming 4,322 gigawatt-hours (GWh), which represents 4.8% of the segment. 

This significant energy footprint has catalyzed major telecommunications operators in Brazil to proactively neutralize their emissions through various strategic initiatives. These include distributed generation with battery storage systems, Power Purchase Agreements (PPAs), and renewable energy certificates to replace diesel generators.

In Brazil, Telefónica has set ambitious targets to reduce its scope 1 and 2 emissions (operations and energy consumption) by 90% by 2030, as well as achieve a 56% reduction across its entire value chain. The climate action strategy of the company, operating under the Vivo brand, includes the deployment of more energy-efficient networks such as fiber and 5G, increased adoption of renewable energy sources, and a concerted effort to minimize fossil fuel utilization.

Claro, through its innovative program ‘Energia da Claro’, has made substantial investments in power plants leveraging renewable sources – including hydroelectric, solar, biogas, and cogeneration – to decarbonize its consumption profile. The operator has also strategically engaged in purchasing energy from wind projects in the free market. The goal is to transition to exclusively clean energy sources for its large-scale operations.

TIM has articulated a bold vision to become a “zero carbon” company by 2040. The operator has identified “energy efficiency and the utilization of renewable energy sources, when economically viable” as a critical pathway to achieve this ambitious goal. 

The company’s 2024-2026 ESG Plan maintains  its goals related to the theme: to attain “zero carbon” status (encompassing scopes 1, 2, and 3) by 2040, to achieve “carbon neutrality” (scopes 1 and 2), and to effect a 42% reduction in scope 3 emissions by 2030, using 2023 as the baseline year.

We present below three reasons why the strategic adoption of renewable energy sources presents several compelling advantages for telecommunications companies:

– Operational Efficiency and Cost Reduction

The adoption of solar and wind energy significantly mitigates dependency on fossil fuels and their associated volatilities, such as fluctuations in international oil prices and currency exchange rates. The International Renewable Energy Agency (IRENA) reports that 86% of renewable energy capacity contracted in 2022 demonstrated lower costs than electricity produced from fossil fuels, underscoring the economic viability of this transition.

A case in point is Claro’s renewable generation strategy, which satisfies 70% of the company’s low-voltage consumption needs. This powers over 25,000 consumer units and more than 70% of Claro’s antenna infrastructure. 

By leveraging long-term contracts in the free market, the transition to renewable sources can also protect telecom companies from the volatility inherent in regulated market energy prices, where hydroelectric plants account for more than 50% of the electricity supply. Recent water crises have accentuated the risks associated with reliance on a single energy source and highlighted how diversifying the energy portfolio can yield substantial long-term cost savings. For further insights, refer to Atlas Renewable Energy’s comprehensive PPA guide.

– Corporate Reputation and Consumer Demand

Sustainability is a growing concern in consumer decision-making processes. According to a report on the future of mobile telephony by GSMA, an international association representing more than 750 mobile operators globally, 73% of consumers now consider environmental factors in their purchasing decisions. Consequently, the adoption of renewable energy not only enhances operational efficiency but also strengthens corporate reputation, rendering companies more attractive to both consumers and investors in an increasingly eco-conscious marketplace.

– Contribution to Climate Goals

The integration of renewable energy sources is crucial for the telecommunications sector to achieve its ambitious sustainability targets and make a meaningful contribution to the reduction of global CO2 emissions. Through strategic initiatives such as distributed generation, advanced battery storage systems, Power Purchase Agreements (PPAs), and renewable energy certificates, Information and Communication Technologies (ICTs) can move towards greener and more sustainable operations.

Future Vision

The integration of renewable energy into the operational framework of telecommunications companies represents not only a response to pressing environmental and economic imperatives but also a strategic positioning for future market dynamics. Companies that lead this transition will be better positioned to navigate operational and regulatory challenges while simultaneously meeting consumer expectations and contributing to a more sustainable planet.

This article was created in partnership with Castleberry Media.. At Castleberry Media, we are dedicated to environmental sustainability. By purchasing Carbon Certificates for tree planting, we actively combat deforestation and offset our CO₂ emissions threefold.