Elisa turns RAN assets into virtual power plant

Around two years ago the Finnish service provider Elisa saw a business case for making its mobile network part of the national virtual power plant (VPP) infrastructure. Now its AI-driven Distributed Energy Storage (DES) has gone live in Finland and it is not only saving Elisa money, it’s also having the unforeseen benefit of knocking a few percentage points off the average Finn’s electricity bill.

A VPP is a cloud-based power plant that plays a crucial role in balancing the supply and demand of intermittent renewable energy sources. It works by aggregating power from distributed, and often small, fluctuating sources, such as wind, solar or hydroelectric plants and stores it in batteries to release when energy production dips or demand rises.

Henri Korpi, Executive Vice President, International Digital Services at Elisa, believes mobile network operators (MNOs) are well-placed to compete in the VPP infrastructure market. “There are huge investments going into setting up big batteries to participate in reserve [electricity] markets. Telcos already have the distributed assets, as well as another use case, namely load shifting.”

For a start, MNOs have a distributed network of power batteries to back up their base stations. According to Elisa, the telecommunications sector is the world’s second largest user of batteries, with most regulators requiring radio access networks (RAN) to maintain backup power. In addition, the national distribution of RAN batteries complements the power balancing requirements of the grid.

As a result, Elisa’s DES enables it “to convert a traditional cost center – mandatory back-up energy storage” – into cost savings in the form of cheaper energy. In contrast, a utility company building a VPP has to both invest in batteries and connect them to the electricity grid, says Korpi. As a telco, however, “you can actually reuse the connections … [already in place] for operating the base station. Telcos save a very large part of the investment in setting up a VPP because you only invest in the battery chemistry.”

Indeed, batteries accounted for most of Elisa's capital expenditure on DES. It upgraded its RAN energy storage infrastructure to lithium-ion batteries, which handle regular charging and discharging better than lead acid models. It also extended its RAN back-up capacity from three to nine hours. After a trial of DES across 200 base stations in its Finnish network during 2022, it received technical pre-qualification approval from the Finnish transmission service operator TSO (Fingrid), to provide balancing services in the “automatic frequency restoration reserve” (aFFR) market.

Return on investment

One of the principal financial benefits of the system for Elisa is that it facilitates “load-balancing’, which means the network can optimize its energy consumption, buying energy at night when it is cheaper and using it during peak times when prices are higher. Cost reductions through “load-balancing alone is sufficient to support the business case,” according to Elisa. In addition, the aFFR designation opens up a new revenue stream of selling power into the grid, although Elisa did not provide any information on the size of revenues.

“In the energy markets of 2022, the payback time on the hardware and software investment is between one and three years,” according to Elisa. Energy prices, however, were unusually high in 2022. Nonetheless, Elisa believes energy price volatility will endure as the world switches to renewable energy production, making investment in the system still worthwhile longer term.

Korpi also stresses the environmental and social benefits of DES. Once Elisa fully deploys DES across its networks it expects to achieve annual reductions of more than 20,000 tons of CO2. In addition, electricity markets base pricing on margins, which is the amount of spare capacity on the electricity system. Since MNOs are heavy users of electricity it can drive down costs for everyone if a large national operator makes intelligent use of electricity storage during peak times, thereby leaving more capacity in the grid.

“A significant side benefit of this of this system, which we didn't even think about at first, is that … because telcos are big users of electricity, using batteries to run the base station when electricity is very expensive lowers the price for everybody in society by a few percentage points,” says Korpi.

Cloud-based energy optimization

The other key element of a VPP is cloud-based data analysis. Elisa developed its own cloud-based AI/ML system to continually analyze when best to store or sell energy and at what price, based on Elisa’s network’s needs, as well as movements on the external energy market. To do so, it drew on its experience of being an early industry leader in using ML/AI to automate its IT and network operational systems. “It wouldn't have been possible for us to pull off without our experience on our back end,” claims Korpi.

Since VPPs take part in electricity auctions daily for every hour of the next day, DES “needs to be able to handle a very distributed set of assets and constantly optimize decision-making using thousands of simulations,” says Korpi. “It's a fairly complex optimization problem. You need to decide on a second-by-second basis … which of the batteries you are using for what - which ones you are charging, or discharging, or running the base stations from the electricity grid.”

Elisa’s DES optimizes the timing of electricity purchases by scheduling when to charge and discharge batteries so that Elisa can ensure it is buying electricity at the lowest price. It also releases capacity to Fingrid, which typically sends a request based on their needs every few seconds. The DES system then decides which of the thousands of base station power units should be adjusted in real time, while ensuring the batteries constantly perform their principal function of ensuring Elisa has backup energy capacity across its RAN.

Now that Elisa has developed DES, Korpi says it will be possible to roll it out on other telcos’ national mobile networks with little in the way of integration.

“It's a cloud-based system that connects to the rectifiers on the mobile site, which is fairly simple to set up and start implementing,” explains Korpi. “We install a very, very little piece of software on premises and then establish a VPN connection to the cloud.” Thereafter, “every base station is prompted for security reasons and if something happens to the cloud service, the on-site software makes sure the base station will continue to function independently.”

Elisa’s experience in automation isn’t the only reason it was able to launch DES. It has the good fortune to operate in one of the most open electricity markets in the world. In addition, the use of renewables in Finland is growing. However, Korpi expects regulation across Europe’s energy markets to align with that of the most advanced countries within the next couple of years.

“EU market regulations are being harmonized around the market-oriented systems we see in Northern Europe.”