Telecommunications businesses are increasingly turning to renewable energy sources as the cost of diesel, which has risen to N56.24 billion per month, puts pressure on operators.
According to the Association of Licensed Telecommunications Operators of Nigeria (ALTON), 35 percent of telecom operational costs are attributed to diesel. The inconsistent electrical supply in Africa’s most populous country means that the industry is mainly dependent on off-grid power from generators.
Industry estimates state that telecom companies power their installations with 40 million liters of fuel on average each month.
According to the National Bureau of Statistics (NBS), the price of diesel increased by 64.58 percent from N854.32 per litre in August 2023 to N1,406.05 per litre in August 2024.
This suggests that the cost of powering Nigeria’s communication infrastructure increased from N34.17 billion in August 2023 to N56.24 billion in August 2024.
The Nigerian Communications Commission (NCC) reported that as of the end of 2022, the nation had 127,294 base stations and 34,862 towers. Industry reports claim that each base station has two generators. The most recent data from the NCC indicates that 2022 the telecom sector incurred operational costs totaling N2.09 trillion.
ALTON President Gbenga Adebayo acknowledged the current diesel consumption, noting, “It will be over that now.” The chief technology officer of Airtel Nigeria, Harmanpreet Dhillon, stated that the company spent N28 billion on diesel in May 2024.
Dhillon stated during a media roundtable that the corporation was looking into hybrid solutions—solar and lithium batteries—to reduce its energy costs.
According to a recent McKinsey report, businesses that use alternate technologies and renewable energy sources might reduce their energy expenses by up to 30%.
“High energy costs are the telecom industry’s main barrier. If the government had kept its end of the bargain it made in the early 2000s to provide 18 hours of electricity, the heavy logistics and capital we spend today on powering sites would not exist,” Adebayo of ALTON explained.
He emphasised that these energy-related issues threaten the sector’s sustainability. In its audited results for 2023, MTN Nigeria Communications Plc noted that “the combined effects of naira devaluation, higher inflation, and rising energy costs” resulted in higher operating expenses.
Telcos requested a 40% hike in calls, SMS, and data rates in May 2022 due to growing operational costs brought on by high energy costs. They claimed that their energy expenses had increased by 35% at the time. Karl Toriola, the CEO of MTN Nigeria, said that the sector is “in a big crisis” as a result of a number of these issues.
Other telecom companies—aside from Airtel—are switching to alternative energy sources like solar, lithium batteries, CNG, and LPG to lessen their reliance on diesel. Adebayo of ALTON stated, “Even with alternative energy, they do not provide 24-hour backup; you must get other energy sources.”
The parent company of First WATT Renewables Limited, WATT Renewable Corporation, and Empower New Energy inked a $13 million agreement in 2023 to curtail the use of diesel.
Oluwole Eweje, CEO of WATT Renewable Corporation, stated, “To start, we are looking at modernizing over 200 telecom sites within 10 months and part of that plan is to reduce consumption of diesel by 3 million liters on an annual basis.”
While diesel is still a popular energy source, many tower businesses are incorporating other energy sources, including solar, LPG, CNG, and others, according to Kazeem Oladepo, vice president at IHS Towers.
The CEO of West Indian Ocean Cable Company (WIOCC), Chris Wood, also underlined the potential contribution of alternative energy sources, such as wind and tidal power, to a more sustainable energy mix. He said, “It’s not just about solar energy; it’s about all forms of sustainable power, including gas supply.”
According to Adebayo of ALTON, infrastructure firms, or infractions, are particularly susceptible to the growing cost of diesel. Energy was a major factor in the recent tower contracts that MTN renegotiated with ATC and IHS. MTN’s Toriola highlighted, “But beyond efficiency, we will also focus on cost optimization, green energy utilization, and sustainability.”
However, there are obstacles to the switch to renewable energy, especially with regard to theft. Adebayo of ALTON stated, “People steal batteries and solar cells.” Industry analysts feel that in order to maintain the sector’s viability, telecom service charges need to be modified, even though renewable energy sources have the potential to lower costs.
