Minimizing carbon intensity in telecom networks using TCO techniques

ericsson white paper284 23-3137 Uen Rev A | February 2010

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TCO2 • A GROWING CHALLENGE

Climate change is one of the most compelling global challenges of our time. Compared to other sectors

such as travel and transport, buildings and energy production, the ICT sector is relatively energy-lean,

responsible for about 2 percent of global energy use and subsequent carbon emissions (with telecom

representing just 0.6 percent).

While telecom is relatively energy-lean, telecom networks are still energy-driven and energy costs

represent a signifi cant opex item that is increasingly important as energy prices rise and energy effi ciency

continues to be in focus. The challenge for operators is to pursue growth in telecom networks, while

ensuring the 2 percent of global emissions does not signifi cantly increase over the coming years.

This environmental challenge cannot be met in a static commercial or operating landscape. New

technologies and applications are driving growth in both mobile and fi xed broadband data networks.

These networks are expanding to serve more subscribers and increasing traffi c per subscriber. From

an environmental perspective, this means that while the absolute amount of energy consumed by

telecom networks is growing – along with associated CO2e emissions – the carbon intensity of the

network traffi c is lower than the activities the traffi c replaces. The goal then is to increase energy

effi ciency in driving additional traffi c so the carbon intensity differential between that traffi c and the

activities it replaces is as great as possible.

Due to the nature of networks, telecom operators need to employ a framework that not only includes

metrics to minimize carbon intensity, but also caters to network effects: the most effi cient network

design draws together the maximum amount of traffi c in the fewest nodes, given a set of constraints,

including transmission costs, spectrum limitations, radio link budgets and/or optical limits.

Each of the elements in an operator’s cost structure has an associated environmental impact.

Traditionally, this impact has been given relatively little consideration by operators when making network

investment decisions. Additionally, a methodology has not been in place for operators to understand

cost and environmental dimensions simultaneously.

There are many investment trade-offs to be studied along the way, and the approach that allows

these to be investigated in the most straightforward way is TCO. By linking CO2e and associated cost

evolution estimates into the TCO framework, an operator has a powerful tool to use when considering

alternative network designs and power-saving features, evaluating traffi c enhancements and minimizing

environmental impact while improving competitiveness.

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TCO2 •

A TOTAL APPROACH

In addition to cost-effective operations, operators are also recognizing the need to respond to the

climate change challenge by reducing the environmental impact of their operations.

Life-cycle assessment (LCA) is the most complete methodology used when a company is considering

its carbon footprint – in other words, its complete impact on CO2e emissions. For telecom equipment, the

LCA framework includes carbon impacts from raw materials, manufacturing, transport and operations

until it is decommissioned and disposed of.

In the future, operators will need to fi nd ways to balance investment decision-making so that it

is based on both economic and environmental grounds. The approach can be referred to as TCO2,

and it can help telecom players

lower costs while simultaneously

reducing their carbon footprint.

LCA studies indicate that

more than two-thirds of all CO2e

emissions associated with network

equipment during its lifetime

are attributed to its operation.

The TCO2 approach focuses

specifi cally on network operations

and effi ciency gains that will lower

the carbon impact.

Today, TCO and CO2e emissions

associated with network operations

are the primary focus for operators.

Operators, however, will need to

make investment decisions in the

long term that consider the total cost and total CO2e impacts.

Telecom operators can use the TCO2 methodology in network operations to evaluate carbon emission

and energy consumption savings from different solutions and network scenarios.

When an operator is building a network – or rolling out more capacity or coverage – there are choices

and trade-offs to evaluate in designing and implementing the solution. When the issues primarily

involve costs, then TCO is an

effective framework to use when

evaluating different options.

TCO is useful when evaluating

two or more solutions that result

in the same potential to generate

revenues: in other words, build one

way and the annual cost structure

will be A, or build another way

and the cost structure will be B.

Both cases can have the same

revenue-generating potential, but

the profi ts and cash fl ows will differ

depending on the effi ciency of

the implementation.

The cost mapping shown in

Figure 2 outlines a categorization

of annual costs in an operator’s

income statement. All capital

expenditures have been converted

Figure 1: The TCO2 model

Figure 2: A network operator’s cost structure

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TCO2 •

A TOTAL APPROACH

to depreciation, which is useful

when making comparisons

and trade-offs between

annual operating costs and

investment costs.

Business-driven costs are

those driven by the relationships

between the operator and

its customers, and between

the operator and other

operators (as well as corporate

overheads). The result of the

operator’s decisions relating

to its dealings with customers

and other operators can be expressed in terms of traffi c, which is met with a given level of coverage,

capacity and quality. The operator must make decisions on how to build and operate a network to

fulfi ll those demands. The costs related to that demand fulfi llment are network-driven, and these costs

are the object of the analysis.

The model illustrated in Figure 3 is used to calculate alternative scenarios in order to make

a cost comparison of dimensioning and building the network in different ways. TCO is used to

form an understanding of the cost dynamics (trade-offs) of employing a particular set of features or

design methods.

The result can be expressed in a number of ways. In addition to showing it as an absolute number,

it can also be divided by capacity or coverage, or the number of subscribers served by the underlying

network. This can result in a number of useful metrics: TCO per Erlang, megabyte (MB) served, square

kilometers (km2) of coverage, and/or per subscriber.

Environmental impacts, CO2e and carbon intensity also need to be calculated with the costs for

each scenario. The energy consumed, in terms of annual kilowatt hours (kWh), can be multiplied by

a carbon intensity fi gure for the power mix supplied by the electricity grid (metric tons of equivalent

carbon dioxide per megawatt hour or MTCO2e/MWh) giving an amount of CO

2e for each scenario. Any

other operationally related CO2e amount should be added to these fi gures. This includes any CO

2e

emitted by locally produced power, as well as fi gures from maintenance vehicles.

The sum total CO2e for each scenario can be related to network traffi c in terms of Erlangs, megabytes

of data per subscriber or per revenue unit to arrive at carbon intensity.

ENERGY EFFICIENCY

The TCO framework – along with associated carbon intensity fi gures – can be applied when minimizing

environmental impact. In a landscape of growing subscriber numbers and traffi c, this means maximizing

the energy effi ciency and minimizing the CO2e costs of the delivered traffi c. The approach is used in

a stepwise fashion starting with network design, which explores alternative ways to build a network

with the required coverage, capacity and quality, and which has the least environmental impact and

demands the fewest physical resources.

Figure 3: The TCO model

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TCO2 •

A TOTAL APPROACH

This approach is not limited

to “greenfield” network build-

outs, though that is where the biggest

savings can be made. It also applies to

capacity expansions, modernization,

network transformation and new

service offerings.

When designing and deploying

networks a key distinction should

be made between static and

dynamic power demands.

All electronic telecom equipment

consumes power when it is

switched on. Power supplies, basic

operating functions and signaling

between nodes (and in the case

of mobile communications,

between radio base stations

and mobile handsets) consume

power even when the network is

not carrying any traffi c. In broad

terms, power-saving features

are designed to lower this static

power consumption. There are

many features today that monitor

network activity and successively

power down unneeded equipment

during times of low traffi c without

degrading quality of service.

A signifi cant portion of power

consumed by a network can be

termed “dynamic,” as it varies in

direct relationship with the amount

of traffi c being handled in a network

at a given time. This portion of the

power consumption can be made more effi cient – that is, more traffi c can be handled with a given

amount of energy – by employing capacity-enhancing features. Most network equipment vendors have a

range of features designed to deliver more traffi c through a given network. The effect of employing these

features is that less power is needed

for any unit of traffi c. In growing

networks it is both cost effective and

environmentally friendly to deploy

as many capacity enhancements

as possible before adding more

sites or nodes. Examples of such

features are the use of AMR-HR

in mobile voice networks, and of

higher-order modulation schemes

for data transmission. Figure 4 is a

conceptual illustration of the way in

which energy effi ciency is increased

through the use of a capacity-

enhancing feature.

Once all capacity-enhancing

features have been considered,

the next task in the step-by-step

approach is to consider power

solutions at the site and node level.

EFFICIENCY OPTIONS

Operators focusing on the effi ciency of their existing networks, have various options.

Three of these are:

• modernizing and optimizing networks, including upgrading to energy-effi cient network

hardware as part of network evolution, and reducing energy consumption in the installed

base by using energy-reducing software and capacity-enhancing features

• sharing assets and resources to leverage economies of scale and reduce CO2 from

higher utilization of assets and resources (by sharing operational resources, passive or

full network operators can substantially lower costs and environmental impact)

• changing the energy mix by supplying the network with less carbon-intensive energy

sources from the electrical grid, or by directly investing in renewable energy sources

such as solar and wind powered radio sites.

Operators must choose the best combination of these investment options to support their

business objectives.

Figure 4: Enabling energy-effi cient growth through capacity enhancements

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TCO2 •

CONCLUSION

Exploring power on a site level is critical in developing regions, where many sites do not have

access to the electricity grid, or the grid supply is unstable. In such places, it is common to employ

diesel gensets to supply power locally. In these cases, it is especially useful to use the TCO2 approach

to optimize both costs and CO2e emissions on the site level. Here there are many trade-offs to be

considered. For example:

• raising the allowable operating temperature on site wherever possible to lower the cooling

requirements, and lead to the use of smaller diesel gensets and to the associated reduction in fuel

consumption and CO2e emissions

• adding appropriate battery capacity on site and regularly cycling the batteries to signifi cantly

reduce genset running hours (both directly reducing CO2e emissions, and indirectly by minimizing

fi eld maintenance visits)

• using wind and solar solutions to further reduce genset running hours and, consequently, diesel

consumption and associated CO2e emissions.

Note that each step under consideration entails a number of investments as well as savings. These

trade-offs can be thoroughly evaluated by using the TCO2 approach.

An additional area of potential savings, both in terms of costs and environmental impact – which is

specifi c to mobile networks – is network optimization. There are many network features and services

aimed at reducing interference and streamlining cell handovers, which are not immediately recognized

as contributing to energy effi ciency. Their combined effect, though, is to maximize the amount of traffi c

through a radio access network with a given amount of installed resources. Applying a TCO2 approach

to investments in these features and services generally indicates both an attractive cost trade-off

(versus adding more radio base station capacity) and better CO2e emissions metrics.

Finally, the area of shared resources provides a number of alternatives to further reduce costs

and environmental impact. Resource sharing encompasses a wide spectrum from outsourcing fi eld

maintenance and network operations, to network sharing on a passive or active basis. Each step

along the continuum can mean savings in both cost and CO2e emissions. Both savings are derived

from sharing resources with other operators.

TCO is a powerful tool for isolating and calculating the fi nancial impacts of employing a solution or

set of features in a network build-out or capacity expansion.

Each of the elements in an operator’s cost structure also has an associated environmental impact.

Traditionally, this environmental impact has been given relatively little consideration by operators when

making network investment decisions. Additionally, a methodology has not been in place for operators

to understand cost and environmental dimensions simultaneously. The TCO2 approach provides this

methodology, resulting in an ideal framework to assess both fi nancial and environmental impacts of

building and operating networks.

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TCO2 •

GLOSSARY, REFERENCES

AMR-HR Adaptive Multi-Rate – Half Rate: AMR was adopted as the standard speech codec

by 3GPP in October 1998, and is now widely used in GSM and UMTS

capex capital expenditure

carbon intensity the amount of CO2e emitted per unit of activity, for example, kgCO

2e/kWh of electricity

produced, kgCO2e/km driven, kgCO

2e/subscriber, kgCO

2e/Erlang or kgCO

2e/MB

CO2e the concentration of CO

2 that would cause the same level of radiative forcing as a

given type and concentration of greenhouse gas; examples of such greenhouse gases

are methane, perfl uorocarbons and nitrous oxide

depreciation the reduction in the value of long-term assets over their useful life

Erlang a unit of traffi c in a network equivalent to one voice hour

ICT information and communications technologies

LCA life cycle assessment

opex operational expenditure, a measure of recurring costs

TCO total cost of ownership

TCO2 total cost of ownership + CO

2e emissions

GeSi, SMART 2020: Enabling the low carbon economy in the information age, Global e-Sustainability

Initiative, 2008.

http://www.gesi.org/LinkClick.aspx?fi leticket=tbp5WRTHUoY%3d&tabid=60

Measuring emissions right – assessing the climate-postive effects of ICT. Ericsson white paper,

December 2009

http://www.ericsson.com/technology/whitepapers/pdf/methodology_high2.pdf