The mobile industry’s boom in the developing world could mean good news for the 1.3bn people still lacking access to energy—and it all has to do with telecom towers. As of 2014, nearly 320,000 of them were in off-grid areas, relying on expensive diesel generators whose capacity is often underutilised—in some instances by a factor of 5.
Such extra capacity could be used to power microgrids and serve nearby communities lacking electricity, thus leapfrogging the expensive and centralised grids of the developed world. The potential is large: More than 40% of the unconnected own a mobile phone, suggesting that just as many—if not more—are within the reach of a telecom tower.
The source of energy for these tower microgrids is often clean, renewable energy. Diesel-based electricity, in fact, is often too expensive for off-grid communities – many of them live under $2 per day and diesel prices are usually above $1 per litre. Solar-based electricity, by contrast, is increasingly affordable thanks to its low cost and simplicity of system design. In just three years, for example, an India-based company, OMC, has connected nearly 40 towers to renewables-based microgrids, providing electricity to some 30,000 households. The telecom tower serves as an anchor client, with the residual power sold at an affordable price to the communities.
That is not to say that this model has no challenges. Lack of visibility over national plans for grid extension, in particular, can bring uncertainty to the investment case for such microgrids. “Off-grid power producers and investors need to feel safe that their business plan isn’t going to be pulled out from under them when the grid arrives,” says Evan Scandling, Sunlabob Renewable Energy’s managing director in Myanmar.
“In Myanmar, where there is going to be an inevitable convergence in the coming years between the national grid expansion and off-grid power producers, the most significant ‘policy enabler’ at this point would be a secure guarantee from the government that the private-sector off-grid power producers could still sell power once the main grid arrives,” he adds.
For microgrid developers, one option to ensure a solid ROI is to target rural areas where grid extension is unlikely to occur—or at least unlikely to occur within the time frame of the investment. Governments, meanwhile, can help drive demand by requiring a shift to renewable power for telecom towers—as did India—as well as by providing a clear vision of and access to their grid extension plans and how this will impact the operation rights of micro-producers should the main grid reach their vicinity.
With diesel accounting for 70-80% of an off-grid tower’s operational cost, and the industry’s total bill expected to reach $19bn by 2020, the mobile industry is already actively moving away from diesel. Microgrid developers would be wise to move quickly to secure a piece of that market as well as an opportunity to light up nearby communities. If the opportunity is to be tapped, it needs to be tapped now.
This article is published in collaboration with GE Look Ahead. Publication does not imply endorsement of views by the World Economic Forum.
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Author: Zachary Shahan is director of CleanTechnica.com and Planetsave.com, as well as founder of SolarLove.org,EVObsession.com, and Bikocity.com.
Image: Men are silhouetted against a video screen as they pose with smartphones. REUTERS/Dado Ruvic