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January 18, 2011

Piggyback or Leapfrog? Cell Phone Towers and Community Power

By 2030 the International Energy Agency (IEA) predicts there will be 1.2 billion people lacking access to electricity, which gives the world 1.2 billion reasons to get energy lending right. Getting it right means making the future of rural electrification decentralized renewable energy systems for off-grid populations.

In fact, the IEA predicts that for universal energy access to occur, 70% of rural populations worldwide will rely on decentralized renewable energy – not the failed centralized power generation and grid extension model. This has spurred a new generation of Indian entrepreneurs to ask, why new coal?
Unelectrified populations Graph
In an emerging era of fossil fuel price volatility, answering this question is as important as ever. One of the most exciting examples of an alternative vision of rural electrification involves delivering renewable energy to rural populations by piggybacking on mobile phone infrastructure in rural areas. According to GSMA – the group representing the global mobile communications industry - the number of global mobile phone connections will reach 6.2 billion by 2013, with the majority of future growth expected to come from developing world markets.

The rapid increase in mobile phone users in rural parts of the developing world will lead to the construction of 639,000 off-grid "base stations" - radio towers that convert electricity into radio waves - by 2012. In India alone there are an estimated 240,000 towers projected to grow to more than 350,000 by 2012.

Off grid base stations graph

In off-grid areas these base stations have traditionally been powered by costly diesel generators. The rise and increased volatility of fossil fuel prices is driving mobile phone providers – one of the few industries investing in off-grid infrastructure - to seek stable, reliable, and less costly renewable energy alternatives. For example, the Green Power for Mobile program plans to use renewable energy sources to power 118,000 new and existing off-grid base stations in developing countries by 2012.

While replacing fossil fuels at these towers can reduce nearly five million tons of global warming pollution per year in India alone, the real opportunity lies in the potential "Community Power" these base stations can provide. Community power simply requires building excess capacity into these systems which can then be sold to local communities via mini-grids, transportable batteries, or by directly charging applications on site. The cell phone operators provide anchor demand and a stable revenue stream, third party entrepreneurs own/operate these renewable energy plants, and local communities receive electricity and provide revenue for the entrepreneur. In essence this model leapfrogs the need for centralized grid infrastructure by piggybacking on the most successful leapfrog technology to date – mobile phones. 
Community Power Business Model Diagram
Source: GSMA

According to GSMA, with a typical base station producing an excess of five kW of power "at a minimum, operators can provide excess power to the community for small needs like charging up mobile handsets, large household batteries and rechargeable lanterns. At a maximum, the consistent power requirements of a mobile base station provide a stable 'anchor' demand for a bigger investment by a third party company in a village energy system, powering both the base station as well as local homes and businesses.'

What's more, the business case for this approach is sizeable. Community power provides extra revenue, lowers site running costs, and provides a credible corporate social responsibility initiative. Indeed these co-benefits are increasingly attractive to mobile phone operators seeking to un-tether themselves from the price volatility associated with fossil fuels.
Cell tower diesel vs renewable price graph
The GSMA Development Fund has already announced a partnership with Lighting Africa, a joint IFC/World Bank program, to take advantage of the tremendous co-benefits of Community Power. They forecast the potential for 200,000 Community Power projects worldwide, providing electricity to 120 million people. Some 70,000 of the forecasted 200,000 projects are forecasted for India alone.
India Cell tower opportunity graph
(click image to enlarge)
It is important to realize that this is just one of many opportunities that exist for alleviating energy poverty and combating climate change. But it requires freeing rural electrification, indeed development, from the box it has been placed in. Now is the time to move beyond the failed policies and perceptions of the past and to unleash innovative solutions as the developing world leapfrogs and piggybacks its way to a better future.

--Justin Guay, Sierra Club International Program

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