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Can Telecom Services Tackle Energy Costs and Carbon Reduction?

April 29, 2024 by PwC

The telecommunications (telco) sector continues to focus on business transformation amid multiple market pressures, competition from new entrants, and evolving consumer and business needs.

But the challenges don't end there. According to our UK Energy Survey 2024, one in three telcos anticipate that high energy costs will reduce their working capital and drive up costs over the next two years. The consumer affordability conundrum this presents will be a challenging one in this economic climate but having a resilient energy strategy will assist in balancing pricing with service quality.

An increasing demand for energy

Running a network -- with myriad towers, antennas, offices and fleets for installation and maintenance across the UK -- requires substantial energy. There is also the huge real estate footprints of telco networks to consider, from retail stores and branch offices, to customer contact centres and maintenance hubs to name a few.

And, the energy demand in this sector is only set to grow. Consumers are expected to drive significant growth for telcos as home ecosystems continue to develop, with devices controlling lighting, heating, media and security. The demand this has on energy sources is huge. This adds to the hundreds of millions of phones, tablets and routers which are an extension of the telco network and also raise energy demand substantially.

Transitioning from 4G to 5G networks is a welcome step towards energy resilience and net zero. But, given evolving business and consumer relationships, telcos are likely to be a huge consumer of Generative AI (GenAI) in the future – and that has a significant energy appetite. The associated energy requirements cannot be overstated. In fact, one study by The New York Times, highlights that if current trends continue, AI may require more power than many small countries by 2027.

With the need for a resilient, 24/7 energy supply on tap, and sufficient back up resources in place to ensure connectivity is maintained, it’s perhaps no surprise that 36% of telcos expect high energy costs to reduce their ability to compete in the next two years.

Tackling cost and carbon together

How telcos manage this energy challenge will be vital, with a significant investment of time, strategic thinking and resources needed. Energy efficiency, security, supply, demand, and decarbonisation are all interconnected and need to be addressed together and not in isolation.

Vicky Parker, power & utilities leader, PwC UK

Vicky Parker, power & utilities leader at PwC UK and author of the UK Energy Survey, highlights this conundrum: “We need a multi-dimensional, Rubik’s Cube approach to solving the UK’s energy system. By taking control of supply and demand, and looking at both direct energy and carbon costs, UK organisations can find tangible ways to decarbonise in a challenging economic climate.”

Considering the full ‘cost-carbon’ equation is crucial for mitigating future issues and resolving current concerns. Reducing carbon emissions and energy cost mitigations can be mutually beneficial. Particularly, where organisations can reduce both energy usage and direct costs along with carbon emissions and indirect costs.

Generating energy efficiencies, site consolidation and real estate management are already in the crosshairs for telcos, as is the potential for using renewable energy sources and investing in renewables. But, with 68% of telcos more likely to cite availability of renewables as a top energy concern compared to the UK industry average (56%), it’s not always an easy path to tread.

Nevertheless, telcos remain committed to achieving net zero. With more than half stating they will fulfil their net zero targets by 2050 and a third setting a date pre-2030, they could even be seen to lead the way. Instilling robust and measurable environmental, social and governance (ESG) goals across the network will support this energy transition and with over half of telcos reporting customer and investor pressure as driving their decarbonisation plans, it could help with retention in the long term too.

Read more of our findings in the UK Energy Survey 2024.

Author Russell Taylor, pictured top of page, is UK telecommunications leader at PwC United Kingdom. More: Read more PwC guest blogs here.

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