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The compelling case for solar-powered telco towers

  • Electricity coverage is poor in most African countries. This means telcos rely on off-grid solutions

  • Higher diesel costs and the mobile industry's ambition for net-zero carbon emissions makes the case for renewable energy

  • Africa’s unexplored photovoltaic potential and falling solar costs makes solar a compelling renewable energy option

The compelling case for solar-powered telco towers
Ayobami Omole
Ayobami Omole

Research Analyst

Janet Ogunkoya
Janet Ogunkoya

Senior Research Analyst

Tellimer Research
18 June 2022
Published by

Energy has always been a significant expense item for telcos, and now even more so given the higher diesel costs, driven in part by the Russian-Ukraine war. In Africa, the electrification rate is poorer than other regions, and telecoms coverage often outstrips the electrification rate, meaning that some telco towers must be off-grid or 'bad-grid'.

As we have previously highlighted, Africa has high photovoltaic capacity, making solar energy a good alternative for power generation. In this report, we examine tower companies' current power arrangements and explain why solar should become more prevalent in African telecoms.

Diesel generators

Most off-grid and bad-grid towers are powered by diesel generators

The electrification rate in Sub-Saharan Africa is poor, and it is worst in rural areas. Asides from Southern Africa, the rural electrification rate in other sub-regions is below 50%. Telco coverage, in most cases, exceeds the electrification rate, meaning that telcos and tower companies (towercos) must rely on off-grid solutions to power their tower sites. According to GSMA, c88% of off-grid and bad-grid towers in Sub-Saharan Africa are powered by diesel.

The rising cost of diesel this year has increased energy costs for telcos and towercos. For instance, the total power generation cost for IHS Towers grew by 82% yoy in Q1 22, which is a c40% increase in average energy generation cost per tower.

Diesel prices have increased significantly in the past few months

IHS Towers' energy model is cutting energy costs and carbon footprint

The tilt in IHS Towers' energy mix towards sustainable energy sources provides a good model for other tower companies (especially in Africa) to adopt. As is typical in the industry, IHS's towers run on behalf of mobile network operators (MNOs) and need to ensure minimal downtime. Africa’s unreliable on-grid power supply poses a unique challenge.

Only 12% of IHS's towers in Africa are powered solely by the grid, as of end-2021. The rest rely on generators and hybrid power systems (which combine diesel generators with solar and battery systems). The interesting point is that, over the years, IHS has reduced its reliance on diesel generators and ramped up the use of hybrid solutions.

As a result, 42% of IHS's towers now run on these hybrid systems, which has translated into lower carbon footprints and operating costs. In Nigeria, for example, incorporating hybrid solutions in 7,400 sites out of 9,000 resulted in a 50% reduction in diesel consumption.  

IHS Towers' energy mix in Africa markets

These power systems require annual maintenance expenditure of US$2,000-7,000 per tower in IHS’s African and Middle Eastern businesses. However, the long-term savings from these hybrid systems is worth the investment, and IHS is looking to ramp them up.

Opportunity in solar?

There is an economic and environmental advantage for telcos and towercos in Africa to consider renewable energy for their tower sites and other telco infrastructures. First, although Africa contributes very little to carbon emissions, its population is very vulnerable to the impact of climate change. Therefore, reducing carbon emissions from the telecom industry is not only crucial in reaching the mobile industry’s net-zero ambition but also can help to lessen the dangers of climate change in Africa.

Second, the current high cost of diesel and the declining cost of solar energy is improving the economic justification for switching. Although the initial capital expenditure for switching can be discouraging, it will allow the telcos and towercos to reduce the cost of site maintenance over time. 

The cost of solar energy has been on a decline over the years

Last, Africa is blessed with high photovoltaic practical potential that has not been explored. There are strong cost, quality and environmental reasons to make use of this under-utilised resource.

Africa has high solar photovoltaic practical potential yet to be explored

ESCOs could be beneficiaries

Energy service companies (ESCOs) are companies that provide energy solutions for their clients. In the context of telecoms infrastructure, they implement energy savings projects, and offer power generation, energy supply and risk management services to telcos and tower companies.  We highlighted the increasing adoption of ESCOs as a likely theme in 2022 given the increasing switch to asset-lite business models, greater consideration for ESG and low electricity access in the region.

We think telcos and towercos are likely to start considering ESCOs for the implementation and management of the switch to solar power for towers.


Use of on-site renewable energy solution for towers remains low in Sub- Sahara Africa