BESS & Grid Storage Developed 2025 · C13 4 min

Behind-the-Meter BESS Potential in Telco Networks

Behind-the-meter BESS in telco networks turns backup batteries at cell towers and data exchanges into assets that can earn revenue rather than sit idle. Telecom operators run thousands of sites that need reliable power, and this case study examines whether upgrading those sites to lithium-ion and aggregating them into virtual power plants can lower energy costs and open new income. The reader plays the head of network optimisation and energy management deciding which market to enter first.

The telecom energy problem

Networks account for around 90 percent of a telecom's energy use, and towers alone make up roughly 80 percent of that. Energy already represents 20 to 40 percent of operating expenses, and the shift to 5G can push consumption up by about 30 percent, since data volumes grow even though 5G is more efficient per bit. Electricity prices are increasingly volatile as renewables grow on the grid. Operators also run to a demanding reliability standard, often cited as five nines, or 99.999 percent uptime, which forces heavy investment in backup power. Historically that backup came from lead-acid batteries, which bring operational, financial and environmental drawbacks. Moving to lithium-ion is a large capital outlay, so the case argues for extracting more value from the upgrade than simple replacement provides.

From backup batteries to virtual power plants

The central idea is a battery energy storage system feeding a virtual power plant (VPP), where many distributed battery assets are aggregated and dispatched together to participate in energy markets. Done well, this can offset the upfront capital of the lithium-ion upgrade, cut ongoing energy costs through peak shaving and time-of-use optimisation, generate capacity and trading income, and improve the sustainability profile. The strategic question is which market to prioritise for a first VPP investment: Australia or Germany. Both lead on renewable transition and grid modernisation, yet their policies, constraints and returns differ enough to make the choice non-trivial, with different capital and return-on-investment profiles in each.

Comparing Australia and Germany

Australia has seen VPPs expand across residential, commercial and industrial segments, helped by some of the world's highest rooftop solar penetration. The South Australia VPP, built with Tesla and Energy Locals, is set to scale to 50,000 homes, and commercial operators such as the Royal Automobile Club of Victoria run battery systems participating in Frequency Control Ancillary Services (FCAS) and energy arbitrage. Industrial players including Rio Tinto and aggregators like Enel X have brought large loads and storage into the market. Australian telecoms Telstra and Optus have deployed batteries at remote base stations for resilience and added BESS in data centres for peak shaving and demand response. Germany's strength lies in residential and industrial aggregation, with examples such as the sonnenCommunity and Next Kraftwerke pooling batteries and flexible loads for frequency control and reserve markets. German telecoms including Deutsche Telekom and Vodafone are moving to lithium-ion for backup and grid participation at data centres, and Deutsche Telekom has launched a large VPP collaboration integrating 300 MWh of storage for peak shaving and arbitrage. Australia offers higher volatility and incentives that can make participation more profitable, while Germany offers a stable grid and a strong regulatory framework supporting ancillary services.

What it means for telecom operators

For a telecom, the backup fleet is a stranded asset until it can earn in energy markets. The revenue logic combines demand-side savings, peak shaving and time-of-use avoidance, with supply-side income from capacity payments, frequency response and arbitrage. Market choice comes down to a trade-off between Australia's higher-volatility, incentive-rich environment and Germany's stable, ancillary-services-oriented framework, each carrying a distinct capital and return profile. The global VPP market was expected to reach around 2 billion US dollars by 2025, and telecom sites are well placed to contribute distributed capacity. The broader lesson is that a mandatory lithium-ion upgrade can be reframed as an investment that pays back through market participation rather than a pure cost.

Key Takeaways

Networks drive about 90 percent of a telecom's energy use, with towers alone near 80 percent, and energy is 20 to 40 percent of OpEx.

The move to 5G can raise energy consumption by roughly 30 percent despite better per-bit efficiency.

Aggregating upgraded batteries into a virtual power plant can offset lithium-ion upgrade capital and add capacity and trading revenue.

Australia offers high volatility and incentives, exemplified by the 50,000-home South Australia VPP with Tesla and Energy Locals.

Germany offers grid stability and strong ancillary-services rules, with Deutsche Telekom integrating 300 MWh of storage into a VPP.

Telecom operators such as Telstra, Optus, Deutsche Telekom and Vodafone are already deploying batteries for resilience and grid participation.

The global VPP market was projected to reach about 2 billion US dollars by 2025, positioning distributed telecom assets to capture value.