Telecom Operators Turn To Renewables As Monthly Energy Bill Hits N56bn

Telecommunication companies have increased their reliance on renewable energy sources as the soaring cost of diesel, which reached N56.24 billion in monthly expenses, continues to strain operators.

The Association of Licensed Telecommunications Operators of Nigeria (ALTON) reports that diesel accounts for 35 percent of telecom operating expenses.

Due to the unreliable electricity supply in Africa’s most populous nation, the industry heavily relies on off-grid power from generators.

According to industry estimates, telecom operators use an average of 40 million litres of diesel per month to power their sites. The price of diesel surged to N1,406.05 per litre in August 2024, representing a 64.58 percent increase from N854.32 per litre in August 2023, according to the National Bureau of Statistics (NBS).

This implies that the cost of powering Nigeria’s communication infrastructure increased from N34.17 billion in August 2023 to N56.24 billion in August 2024.

As of the end of 2022, the Nigerian Communications Commission (NCC) stated there were 34,862 towers and 127,294 base stations in the country. Industry sources indicate that each base station has two generators. The telecoms industry spent N2.09 trillion on operational costs in 2022, based on the latest data from the NCC.

Harmanpreet Dhillon, Airtel Nigeria’s chief technical officer, revealed that the telco spent N28 billion on diesel in May 2024.

During a media roundtable, Dhillon mentioned that the company is exploring hybrid solutions—lithium batteries and solar—to lower its energy bill.

McKinsey recently noted that companies could save up to 30% on energy costs by adopting renewable energy solutions and other technologies.

“The biggest constraint in the telecom industry is high energy costs. If the government had continued to fulfil its part of the bargain made in the early 2000s to provide 18 hours of electricity, the heavy logistics and capital we spend today on powering sites would not be necessary,” Adebayo said, adding that these energy challenges threaten the sector’s sustainability.

In its 2023 audited results, MTN Nigeria Communications Plc highlighted how “the combined effects of naira devaluation, higher inflation, and rising energy costs” led to increased operating expenses.

High energy costs in May 2022 prompted telcos to request a 40 per cent increase in calls, SMS, and data prices due to rising operating costs. At that time, they stated that their energy costs had increased by 35 percent.

A combination of these factors led Karl Toriola, chief executive officer of MTN Nigeria, to declare that the industry is “in a big crisis.”

Aside from Airtel, other telecom companies are shifting to alternative energy sources such as solar, lithium batteries, CNG, and LPG to reduce their dependence on diesel.

“Even when you have alternative energy, they do not provide 24-hour backup; you must seek other energy sources,” said Adebayo of ALTON.

In 2023, WATT Renewable Corporation, the parent company of First WATT Renewables Limited, signed a $13 million deal with Empower New Energy to reduce diesel usage.

“To start, we are looking to modernise over 200 telecom sites within 10 months, and part of that plan is to reduce diesel consumption by 3 million litres annually,” said Oluwole Eweje, CEO of WATT Renewable Corporation.

Kazeem Oladepo, vice president at IHS Towers, highlighted that while diesel remains a major energy source, many tower companies are integrating alternative energy sources such as solar, LPG, CNG, and others.

During a Nairametrics Industry Spotlight webinar with the theme: “Beyond Connectivity: Telcos and the Future of Financial Inclusion in Nigeria,” Chukwuebuka Ezewuzie, senior manager of growth and new business tech platforms at MTNN, noted that the telco is exploring renewable energy.

“A lot of advancement is occurring at the moment in adopting renewable energy because the infrastructure powered by diesel and petrol is massively expensive. So, how are we going to use the free energy from the sun and wind to power this equipment and reduce costs? This is one of the key areas telcos are currently exploring,” he said.

Chris Wood, CEO of West Indian Ocean Cable Company (WIOCC), also emphasised that alternative energy sources such as tidal and wind power could contribute to a more sustainable energy mix.

“It is not just about solar energy, but all levels of sustainable power, including the gas supply,” he stated.

Adebayo of ALTON noted that infrastructure companies (Infracos) are more vulnerable to rising diesel costs.

Recently, MTN renegotiated its tower contracts with ATC and IHS, with energy being a key consideration.

“But beyond efficiency, we will also focus on cost optimisation, green energy utilisation, and sustainability,” Toriola of MTN emphasised.

However, the shift to renewable energy faces challenges, particularly theft.

“People steal solar cells and batteries,” Adebayo remarked.

Although renewables have the potential to reduce costs, industry experts believe that telecom service prices must be adjusted to ensure the sector’s sustainability.