Defining the challenge
Orange has two main targets defining its energy strategy: We aim to use less energy at less cost and reduce our carbon footprint. Achieving these goals is aligned with the group’s broader goal of giving everyone the keys to a responsible digital world. Addressing challenges with energy efficiency, supporting the best use of energy, and minimizing our contribution to climate change are instrumental to determining how we move forward.
Taking 2015 as our baseline, Orange's Engage 2025 strategic plan commits to reducing carbon emissions by 30% by 2025 and acquiring 50% of the group’s energy from renewable sources. The plan will enable us to reach our objective of being net zero by 2040 – a commitment that we are pleased to say has been approved and validated by SBTi.
In 2019, we shifted our focus to energy, underpinned by the premise that energy demand will rise by 26% from 2019 to 2023. Moreover, energy consumption tends to increase in parallel with traffic, which is forecast to rise dramatically – the impact on energy consumption will be huge if we fail to act.
Given that 80% of energy consumption is linked to networks and IT, we need identify the drivers of change. One of the primary drivers is good governance, which is central to our action plan. Governance acknowledges that energy sits at the junction of CSR, finance, technology, and sourcing – all must push in the same direction to have a meaningful impact on the energy challenge.
Four KPIs for energy
To reach our targets, each of the countries and business units in which we are active are tasked with implementing an effective, context-specific action plan. To drive this program, we have set up a high-level energy dashboard comprising four KPIs.
The first is the economic KPI "ENOV", which is a ratio of IT and energy OPEX in relation to revenue. A decrease of one point in this KPI results in a corresponding one-point loss in EBITDA.
The second is the technical KPI "RAN kWh/Gb", a key energy ratio for RAN efficiency that benchmarks and then charts how we evolve year-on-year, and evaluates how different countries perform. As some countries are less efficient than others, much room for progress exists.
The third – and second technical KPI – is the key metric of PUE (Power Usage Effectiveness). PUE is technical parameter central to energy efficiency and a major focus of the industry, including GAFAM. We’re currently developing a dashboard to compare nations and identify ways in which they can improve.
The fourth KPI is ecological efficiency, which is measured through renewable energy ratio (RER) and is a key driver supporting Orange Group in achieving our net zero objectives.
Our energy goals can be embodied in a simple equation: reduce both CO2 and cost.
Both elements of this equation are driven by energy consumption. Energy type directly impacts emissions, while cost is determined by overall energy procurement. In this context, our energy sourcing strategy is vital because it’s the major determinant that influences energy cost and type. By buying energy-efficient equipment, we can optimize energy usage metrics.
Our energy action plan sets out how we will improve the energy efficiency of our network and IT, and it’s helping us reach our first objective of stabilizing total energy consumption. In Europe, we are well on the way to achieving this. However, Africa and the Middle East present more of a challenge, because both regions are undergoing an intensive period of network development characterized by geographical coverage increases and very rapid rises in data traffic.
One of the key drivers for stabilizing total energy consumption is to consider energy in every key decision, including sourcing and how we technically deploy our network and IT equipment. Energy-saving features must be built in to network deployment at the design stage. If deployment begins without these features designed-in, as is very often the case, it's highly inefficient because they need to be added at a later stage. All the equipment Orange sources is assessed from the perspective of energy-efficiency, which in turn guides decision-making in investment and operations.
50+ key actions
Our energy action plan is based on a full catalogue of recommended, field-proven actions designed for countries to implement. We have identified more than 50 key actions across our technical domains, with each country selecting the one that’s most relevant to them. We then output a quarterly report that benchmarks every country, and work with the poorest performers to formulate and implement improvement strategies.
An additional action point is establishing energy plans with our main partners such as TowerCos, energy service companies (ESCO), and RAN-sharing JVs. Our net zero by 2040 target includes our partners. They must be aligned with our energy-efficiency strategies and support us in achieving our 2040 net zero objectives.
Today, energy costs in Europe are highly volatile, requiring a robust sourcing strategy that can help reduce carbon emissions. To support this, forecasting capabilities are required to precisely calculate energy needs, cost, and carbon impact. By running forecast, tracking, and analysis processes that compare forecast gaps against the actual situation, we can move forward with a coherent strategy.
Increases in energy costs need to be solved by embedding a strategy across organizational domains, including finance, CSR, IT, and sourcing. We can then conduct effective analysis and implement pilot programs for energy-efficient action plans that include using the right equipment, equipment swapping, and retirement.
Thus, the first focus of our action plan is to reduce the overall amount of energy spent and the second is to optimize sourcing costs. Our strategy mainly focuses on Scope 1 and Scope 2 of the carbon emissions scale set by the Greenhouse Gas Protocol. Our next challenge will be to extend this action to Scope 3, and thus drive ecosystem-wide improvements that fully support Orange Group’s strategy.
Read more about Orange's commitment to the environment.