With recent developments in Europe vis-à-vis Russia and Ukraine, energy prices have been soaring. With winter upon the continent, this energy inflation is set to continue. The energy costs are going sky-high as crude oil prices have increased by 350 percent from April 2020 to April 2022 — the largest increase seen in any two-year period since the 1970s oil crisis.
Studies show that the annual energy inflation rate in the EU (European Union) has reached 41.1 percent (as of July 2022), 14.1 percent up from the start of this year. These energy prices affect every EU citizen, from corporations to the entire economy.
This spike in consumption is also affecting the telecommunications companies (telcos). Research shows that telcos already consume almost 3 percent of the world’s energy, largely due to the rapid growth in traffic that comes with the growth of 5G services. With the global shift to 5G, telcos are expanding their networks and data centers; and their energy costs are also spiraling.
It is against this backdrop that telcos have reaffirmed the value they see in creating sustainable business models, with a greater focus on renewable, green solutions. As power demands continue to rise, telecom operators must be willing to take the necessary steps to meet the challenges ahead and ensure operational continuity for the future.
The Need To Go Green
Purpose-driven enterprises attract higher customer interest and retain high-level talent in line with their overarching brand value. As a part of this initiative to stand out in a competitive market, telcos are actively working toward implementing policies and systems that align with the mandated ESG goals. To lower greenhouse gas emissions and energy consumption rates in particular, telcos are seeking sustainable sources of energy as alternatives. Many major telcos across the globe have also committed to reducing their carbon footprint to zero by 2050, a goal that the Global System for Mobile Communications Association (GSMA) supports. Here are some of the prominent examples of these sustainable initiatives:
- Deutsche Telekom is implementing green policies as a differentiator in the market and aims to be entirely climate-neutral as early as 2040
- Vodafone plans to eliminate carbon emissions from its activities, energy, uses and purchases by 2030
- Proximus has targets to achieve a CO2-neutral supply chain by 2030
Achieving these and similar goals has become a major priority for telcos. A study by McKinsey highlights how telecom operators can reduce their energy costs by at least 15 to 20 percent over the course of a year if they strategically deploy AI and IoT solutions.
Positive projects such as this can incentivize enterprise leaders to make significant investments required to reduce energy consumption and acquire electricity from only renewable sources.
How Will Telcos Pull Off This Green Feat?
First and foremost, telcos need a systematic and multi-pronged approach to go green. While the methods will differ across organizations and locations, standard guiding points can be used to navigate the course towards a sustainable future.
For example, Vodafone’s Digital for Green services have helped corporate customers to reduce carbon emissions by using applications that specifically target energy, logistics and agriculture. This has resulted in smart systems that helped reduce 68 percent energy use in key parts of Africa, one of the telecom giant’s largest markets. To drive the rapid and tangible gains in any such relevant effort, There is also a rising need for governance and executive sponsorship..
Telcos, like other industries, are focusing on Scope 1 items and then extending to Scope 2 and 3 items, as these items require a higher degree of complex collaboration across the entire supply chain. Some of the initiative examples include:
- Shifting to a public cloud and automating operations to reduce an enterprise’s carbon footprint
- Leveraging data and insights from tools such as Augmented Network Automation (ANA) and Net Zero Intelligence Operations (NIO) to identify efficiency improvements and drive down energy consumption from specific infrastructure
- Leveraging data for decision-making, implementation of policies and investment approval that aligns with enterprise ESG goals
- Using available data to showcase the company’s progress toward sustainability and identifying new opportunities for sustainable operations
Benefits Of A Greener Telco Industry
The Telco industry’s green paradigm shift will bring long-lasting benefits for their profitability and the planet. From a business standpoint alone, some of the primary advantages of green initiatives for Telcos include:
- A reduced dependency on coal-based sources of energy
- A greater dedication to constant innovation and ideation when developing sustainable solutions
- The ability to cater to the growing demand for sustainable products and leverage new market opportunities
- The tax incentives that come with complying with regulatory guidelines set by institutions such as the UN
- Marked reduction in operational energy costs
- The resiliency and flexibility derived from an optimal and sustainable enterprise framework
While it’s true that the business and financial benefits are mostly projections and the definite outcomes are not always clear, telcos must take the risk of investing in the implementation of these policies without always knowing the exact return.
Strategic planning, coupled with a leap of faith, can prove to be the deciding factor in ensuring a sustainable future for enterprises. But the end goal is a responsibility for all and organizations across industries must take steps to achieve.
The HCLTech Advantage
HCLTech has collaborated with enterprises such as Proximus to help supercharge their progress by reducing their energy consumption and carbon footprint under the umbrella of Smart Energy. With Proximus, we’re researching quick-win ideas that will enable enterprises to reduce energy consumption within the next few quarters. Leveraging tools such as ANA and NIO, we can help telcos achieve their sustainability goals through minimum investment.
Under its green umbrella, we offer various sustainability solutions that enterprises can avail. These include responsible market design and manufacturing, re-engineering and re-imagining, monitoring sustainability performance and reporting and management of energy and emissions.
Telcos can measure their total energy consumption at a granular level with the UnityOne solution, which helps to observe, monitor, manage, audit, support and automate enterprises. HCLTech has also developed other strategic methods that require higher investments for enterprises looking to make a significant shift towards a greener future and fulfill their long-term goals.