Telcos explore renewables as monthly energy bill hits N56bn

Telecommunication companies are increasingly turning to 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) says that diesel accounts for 35 percent of telecoms operating expenses. The industry heavily relies on off-grid power from generators due to the unreliable electricity supply in Africa’s most populous nation.

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

This implies that the cost of powering Nigeria’s communication infrastructure surged 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) said there were 34,862 towers and 127,294 base stations in the country. According to industry sources, each base station has two generators. The telecoms industry spent N2.09 trillion on operational costs in 2022, based on the last data uploaded by the NCC.

Gbenga Adebayo, President of ALTON, confirmed the current diesel consumption, stating, “It will be over that now.” According to Harmanpreet Dhillon, Airtel Nigeria’s chief technical officer, the telco spent N28 billion on diesel in May 2024.

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

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

“The biggest constraint in the telecom industry is high energy cost. If the government had continued to fulfill its part of the bargain it made in the early 2,000s to provide 18 hours of electricity, the heavy logistics and the capital we spend today from powering sites would not be there,” said Adebayo of ALTON.

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He stressed 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 caused telcos to ask for a 40 percent increase in calls, SMS, and data prices because of rising operating costs. At the 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 other energy sources such as solar, lithium batteries, CNG, and LPG to reduce their dependence on diesel usage. “Even when you have alternative energy, they do not provide 24-hour backup; you must get other energy sources,” noted 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 off, we are looking at modernising over 200 telecom sites within 10 months and part of that plan is to reduce consumption of diesel by 3 million litres on an annual basis,” said Oluwole Eweje, the 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 themed, ‘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 going on at the moment in adopting renewable energy because the infrastructure running on diesel and petrol is massively expensive. So, how are we going to use the free energy from the sun and the wind to power this equipment to reduce cost? This is one of the key areas that the 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.

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Adebayo of ALTON noted that infrastructure companies (infracos) are more vulnerable to the rising diesel costs. Recently, MTN renegotiated its tower contracts with ATC and IHS, with energy 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 of ALTON said. Although renewables have the potential to reduce costs, industry experts believe that telecom service costs must be adjusted to ensure the sector’s sustainability.