Universal internet access requires more reliable electricity

More than 4 billion people are not connected to the internet today, representing a huge opportunity for both development and business. Bridging the ‘digital divide’ for these un-networked billions requires affordable and reliable access to electricity. Power is a crucial element at all stages of providing internet access: from running backhaul services to the core of the network and base stations to powering the devices that consumers use to get online. Yet, across much of the developing world, reliable electricity remains expensive and hard to get.

Achieving universal access to the internet will require expanding access to affordable and reliable electricity, especially for people living in the remote areas in emerging economies, finds a new report by Bloomberg New Energy Finance in collaboration with Facebook.

The report Powering Last-Mile Connectivity outlines some of the challenges the developing world faces in giving more people access to the grid and the implications for the mobile industry if billions of people continue to lack that access.

Five key insights from the study are:

  1. Bridging the ‘digital divide’ for the four billion people without internet access, especially those in remote areas in emerging economies, requires affordable and reliable access to electricity.
  2. Electricity access is key for both provision and consumption of connectivity services. Power is needed across the value chain, from backhaul to access networks, to the devices that people use to get online.
  3. Globally, mobile network operators and cellular tower operators spend $3.8 billion on diesel fuel for remote sites annually. These costs make up a significant component of the operating budget.
  4. Solar and battery storage are now cheap enough to play a key role in expanding internet access.
  5. Partnerships between the telecommunications industry and the energy sector will enable both sectors to scale more rapidly towards universal access.

Powering the consumers of new connectivity

Without access to electricity in the home, connecting to internet services is a significant challenge, primarily due to the difficulty and cost of device charging. Even though people might live in communities covered by 3G networks, their smartphone use will be limited if they lack electricity at home. Off-grid consumers travel up to 15 km per week to charge their phones at small kiosks. Depending on the location, kiosk charging can constitute over a third of the total cost ($2-7 per month) of owning an internet-capable device, and a significant portion of household income. Such conditions make daily charging prohibitive and curb smartphone ownership and use.

Small-scale PV and storage have started to gain traction as primary energy sources for remote infrastructure and communities, particularly when innovative financing structures bring them to market. The critical components for such systems are rapidly becoming cheaper. Energy access companies are using these technologies to power connectivity with various business models, from small portable solar kits for individual households to village-scale micro-grids that can power local businesses and cellular infrastructure.

Powering connectivity infrastructure

Expanding a cellular network typically requires the construction of new towers for the base stations that connect mobile phones to the wider network. However, in remote areas, towers need expensive power and generate limited revenue due to low population density. A combination of cheaper, distributed solar-powered energy for conventional cellular infrastructure, and smaller, more efficient base stations designed to plug coverage gaps in the main network could reach more people at lower cost.

More than a million cellular towers in developing countries are off-grid or have at best extremely unreliable grid supply. These towers typically rely on diesel generators for primary power during large parts of the day to avoid interruptions to the mobile network.

Composed of a mix of solar, diesel generator, and batteries, hybrid power systems can save MNOs or tower operators up to 54% of the energy cost for an off-grid tower that a conventional diesel generator would incur.

Opportunities for partnerships abound

A combination of technological advances and innovative business models now provide alternative approaches to powering connectivity at the ‘last mile’. There are plenty of opportunities for both large companies and start-ups to make the most of them. Partnerships between telcos, energy companies and start-ups on innovative business models, alternative communication infrastructure and early stage venture capital can drive energy and network connectivity for billions of people.