Insight: Take Charge of Your Energy Storage Assets in 5G Networks

Take Charge of Your Energy Storage Assets in 5G Networks

Take Charge of Your Energy Storage Assets in 5G Networks

Despite being the most energy efficient telecommunications technology to date, 5G will require larger amounts of energy than any previous system. The deployment of 5G thus poses a pressing energy cost challenge that mobile network operators (MNOs) need to address. Meanwhile, the transition to a more sustainable energy system creates new opportunities for forward thinking MNOs to monetize their power backup capacity as much sought-after energy storage assets.

5G infrastructure will require larger amounts of energy due to the dramatic increase in data traffic and the need for denser networks. More base stations will be needed to provide 5G coverage to the equivalent-sized 4G area. According to a global survey of telecom executives, 90 percent believe 5G will result in higher energy costs. The increase in total network energy consumption is projected to be up 150-170 percent by 2026.1

As energy consumption already amounts to 20-40 percent of network operating expenditures2, keeping energy costs down will be paramount for MNOs in the 5G era.

Changing Energy Landscape
In recent years, we have witnessed a change in the technology, market design, and resource mix that make up today’s power grid. Many people are calling this change the “energy transition,” which refers to a shift in the structure of the electrical grid from centralized, carbon-intensive power plants to more decentralized, renewable energy resources.

To put the ongoing energy transition into perspective, keep in mind that in 2010, the US had 42.6 GW of wind and solar capacity. In 2020, it had 213.2 GW, about five times as much, with 33 GW added in 2020 alone. But this progress is a mere prelude to what is set to come in the 2020s. According to a Princeton study, wind and solar capacity would need to expand each year through 2025 by about 40 GW before hitting 70-75 GW a year between 2026-2030 — more than double the record rate of 2020.3

The influx of renewable energy to the mix has led to an increase in energy price volatility all over the world. This, in turn, creates new ways in which energy storage capacity – such as power backups – can be monetized.

1. Energy Arbitrage – Charge Batteries When Costs Are Low and Discharge When Costs Are High

In markets with time-of-use (TOU) rates, MNOs can leverage the price volatility of electricity by using the battery storage capacity to store energy when prices are low and use the stored energy when prices are high. Markets with TOU rates typically have both time of day and seasonal factors that affect the rates, with rates during peak times as much as four times higher than off-peak times. With intelligent on-site lithium battery storage, the operations can be optimized to charge the batteries whenever electricity rates are at their lowest and discharge during the most expensive times of the day.

2. Peak Shaving – Reduce Costly Demand Charge

MNOs can utilize energy storage to reduce demand charges associated with electricity usage. Demand charges are additional fees that utilities in some markets charge non-residential customers for maintaining constant supply of electricity. In contrast to TOU rates, demand charges are not based on energy consumption, but on the highest amount of power drawn during any billing period interval, typically 15 minutes. Demand charges often make up a third of overall electric bills. Similar to operation with energy arbitrage, by charging batteries in off-peak time, the batteries can be discharged during peak periods to reduce demand charges. By optimizing battery discharge cycles, an MNO can save money by demand charge reduction.

3. Demand Response – Earn New Revenue by Responding to Grid Conditions

Utilities in the US, and in some European and Asian markets, offer financial incentives for end-users to reduce their energy consumption during peak hours. MNOs can utilize energy storage to participate in so called demand response programs, and ancillary services such as frequency regulation, to create new revenue opportunities. By utilizing batteries to reduce demand in response to grid signals, MNOs can earn new revenue from otherwise idle assets.

4. Virtual Power Plant – Produce and Sell Excess Energy Back to the Grid

The decentralized energy system of the future creates opportunities for telecom companies to use energy storage paired with renewable energy not only to cater to their own power supply, but also to sell excess energy back to the grid. Simply put, telecom companies can turn their energy assets into a virtual power plant (VPP). It’s a cloud-based distributed power plant that aggregates the capacities of distributed energy resources – e.g. wind and solar power – for the purposes of enhancing power generation, as well as trading or selling power on the electricity market.

Japanese telecommunications group Nippon Telegraph and Telephone, NTT, is about to transform itself as the global trend of decarbonization accelerates. NTT consumes one percent of the electricity generated in Japan to run its telecom infrastructure. It now plans to use this infrastructure as part of its new businesses involving decarbonization.

For example, NTT is considering installing lithium-ion batteries at its 7,300 telecom service buildings across Japan so it can store electricity produced from local renewable energy sources such as solar and wind power and use it when the sun doesn’t shine, or the wind doesn’t blow. Together with Mitsubishi Corp, NTT also plan to break into the business of virtual power plants, connecting distributed renewable energy through a cloud-based control center and selling excess electricity directly to consumers.4 This is part of a major push into the renewable energy sector by the company. In the summer of 2020, NTT announced it would invest more than one trillion yen ($9.3 billion) by 2030, with the ambition of providing more than 10 percent of the nation’s renewable energy capacity at that time.5

All the above examples demonstrate how MNOs can monetize their power backups as energy storage assets in the 5G networks of the future – cutting energy costs as well as creating new revenue streams.

Want to know more about how to rethink power backup in the 5G era? Download our full report here!

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  1. Vertiv: Will 5G and edge increase network energy consumption or improve efficiency?,
  2. GSMA: Energy Efficiency: An Overview, 2019.
  3. The Economist: Joe Biden’s climate-friendly energy revolution, 2021.
  4. Financial Times: Japan’s NTT bets on battery storage and the green transformation, 2021.
  5. Nikkei Asia: NTT to join Japan’s renewable-energy sector with $9bn investment, 2020.

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