Lagos, Nigeria – November 21, 2024 – Nigeria’s telecommunication companies spent a staggering N57.65 billion on diesel alone in October 2024, underscoring the sector’s dependence on expensive and unsustainable energy sources. However, according to a report from the Global System for Mobile Communications Association (GSMA), adopting renewable energy solutions could help telecom operators reduce their energy costs by 30-50 percent, or around N17 billion annually.
The GSMA report, titled ‘Rural Renewal: Telcos and Sustainable Energy in Africa,’ highlighted the potential for renewable energy to deliver significant cost savings while also reducing carbon emissions. It aligns with Nigeria’s climate goals and the telecom industry’s sustainability targets. McKinsey previously noted that businesses integrating renewable energy into their operations could save up to 30 percent on energy expenses, and sources within the Nigerian Communications Commission (NCC) have confirmed that telecoms could achieve at least 20 percent savings by transitioning to renewables.
Energy Challenges in Nigeria’s Telecom Sector
Nigeria’s telecommunications sector, which serves approximately 154 million subscribers, is heavily reliant on diesel-powered generators due to a persistent power supply crisis. Despite the country having a national grid capacity of 13,014 MW, it is only capable of delivering less than 5,000 MW due to aging infrastructure and inefficiency. This power deficit forces businesses and individuals to rely on alternative energy sources like petrol and diesel generators.
The telecom industry, which operates around 34,862 towers as of 2022, consumes over 40 million litres of diesel monthly to power its infrastructure. Diesel has become a major operational cost for telecom companies, accounting for 35 percent of total operating expenses, as revealed by the Association of Licensed Telecommunications Operators of Nigeria (ALTON). The price of diesel, which increased by 43.41 percent year-on-year from N1,004.98/litre in October 2023 to N1,441.28/litre in October 2024, has further compounded the financial burden.
Rising Energy Costs Amid Growing Demand
With the rapid expansion of internet usage in Nigeria—monthly internet traffic surged by 579.39 percent from 125,149.86 terabytes (TB) in December 2019 to 850,249.09 TB in September 2024—the demand for energy continues to rise. Despite global energy efficiency averages of 0.17 kWh per GB, Nigeria’s networks operate at a higher energy consumption rate of 0.24 kWh per GB, reflecting the challenges of energy inefficiency across the continent’s telecom infrastructure.
The high energy cost is exacerbated by the volatile nature of the national grid. Telecom operators, such as MTN Nigeria and Airtel, are therefore increasingly exploring renewable energy solutions, including solar power and lithium batteries, to mitigate the rising costs of diesel.
Transitioning to Renewable Energy
In response to the soaring cost of diesel, which accounted for N57.65 billion in October, telecom giants are gradually shifting towards more sustainable energy solutions. Harmanpreet Dhillon, Chief Technical Officer of Airtel Nigeria, revealed that the company spent a significant N28 billion on diesel in May 2024. Airtel is now exploring hybrid energy solutions, combining solar and lithium batteries, to lower energy expenses and ensure long-term sustainability.
Additionally, MTN Nigeria and Airtel have renegotiated their tower contracts with ATC and IHS, respectively, placing a strong emphasis on energy efficiency. MTN expects to save between N100 billion and N110 billion as a result of these new contracts.
A Sustainable Future for Telecoms
The Nigerian telecom sector faces a significant challenge in balancing its energy needs with the escalating costs of diesel and other fossil fuels. However, by embracing renewable energy, telecom operators not only stand to cut their operational costs but also align themselves with Nigeria’s climate change goals and broader sustainability initiatives.
As the energy demand grows and diesel prices continue to rise, renewable energy adoption could become an essential strategy for the long-term viability of telecom companies in Nigeria, contributing both to financial savings and environmental sustainability.