Energy

[G4-EN3], [G4-EN6 Energy consumption by the Group is presented according to the guidelines proposed by the Global Reporting Initiative regarding direct consumption for heating, electricity generation and transport (Scope 1, according to the GreenHouse Gas Protocol1) and indirect consumption for the purchase and use of electricity (Scope 2).

Heating systems

Group breakdown by Business Unit (%) and % variation compared to the previous 2 years
Group Domestic Brazil Media
Energy generated by heating oil MJ 59,486,649 100% 0% 0%
Energy generated by natural gas MJ 488,602,104 100% 0% 0%
Total energy for heating MJ 548,088,753 100% 0% 0%
2015 v. 2014 (24)% (24)% 0% 0%
2015 v. 2013 (31)% (31)% 0% 0%

The data in the table shows that in 2015 a significant reduction with respect to 2014 and 2013 can mainly be attributed to the review of the methods for reporting on fuel consumption, but also the climatic conditions that occurred during the year of reference and to real estate rationalisation and energy efficiency improvement actions.

In Brazil, given the particular climate conditions throughout the year, indoor heating is not used. INWIT, the company of the Group that operates in Italy in the electronic communication infrastructure sector, is much smaller than the Group and is therefore part of the Domestic BU.

Transport(*)

Group breakdown by Business Unit (%) and % variation
compared to the previous 2 years
GroupDomesticBrazilMedia
Energy generated by unleaded petrol MJ 53,395,166 19% 80% 1%
Energy generated by diesel fuel MJ 652,677,678 99% 0% 1%
Energy generated by LPG MJ 5,182,862 100% 0% 0%
Energy generated by natural gas MJ 328,017 100% 0% 0%
Total energy for transport(**) MJ 711,583,723 93% 6% 1%
2015 v. 2014 1% 2% (10)% (5)%
2015 v. 2013 (2)% (1)% (14)% (3)%
Total number of vehicles no. 19,571 95% 5% 0%
2015 v. 2014 (2)% (2)% 0% (2)%
2015 v. 2013 (2)% (2)% (3)% (9)%
Total distance travelled km 308,809,797 95% 4% 1%
2015 v. 2014 2% 3% (6)% (10)%
2015 v. 2013 (1)% 0% (12)% (9)%

(*) The data shown in the tables and graphs relating to transport refer to all the Group’s vehicles (industrial, commercial, used by senior managers/middle managers/sales people), both owned and hired. The vehicles, consumption and mileage of vehicles owned or in use by the sales force of Tim Brasil have been included only where usage is significant and continuous.

(**) Represents conversion into Megajoules of the consumption of unleaded petrol, diesel and LPG (expressed in litres) and natural gas (expressed in kg).

In general the energy uses for transport and the travel times are slightly up compared to the previous year, and slightly down compared to 2013. In Italy a project is underway to renew the operational fleet, which involved around 1,500 vehicles between November and December 2015.

Consumption figures for electricity used to operate telecommunications and civil/industrial technological plants are shown below.

Electricity procured and produced

Group breakdown by Business Unit (%) and % variation
compared to the previous 2 years
GroupDomesticBrazilMedia
Electricity from mixed sources kWh 727.868.891 19% 77% 4%
2015 v. 2014 20% 47% 16% (1)%
2015 v. 2013 (69)% (93)% 39% 37%
Electricity from renewable sources kWh 1.906.9700.185 100% 0% 0%
2015 v. 2014 0% 0% 0% 0%
2015 v. 2013 4.774% 4.774% 0% 0%
Total electricity consumed kWh 2.634.8390.076 78% 21% 1%
2015 v. 2014 5% 2% 16% (1)%
2015 v. 2013 10% 3% 39% 37%

Electric energy use across the Group has risen as a result of the increased volume of traffic and services offered to customers. In particular, the rate of growth is significant in Brazil as a consequence of the expansion in the network and the market.

In 2014, Telecom Italia entered into an agreement, that also covered 2015, to buy guarantees of origin that certify the electricity generated by renewable sources. This explains in the table the significant percentage changes in the quantities of electricity used, by type, in 2014 and 2015 compared to 2013.

In 2014, to offset its direct emissions, TIM Brasil purchased 6,000 tCO2 of carbon credits by financing a forest protection project, and aims to offset the direct emissions produced in 2015 with the remaining credits added to the credits that will be purchased in 2016. The process to select the project that will be funded in 2016 is currently underway.

The Group continued with the ongoing research to improve its energy performance by means of:

  • temperature alignment and redefinition of Group policies, improving the efficiency of the existing cogeneration plants and energy stations, recalibration of set-points in multi-system sites, cogeneration refrigeration systems, free cooling and disconnection of obsolete equipment;
  • technological upgrading and distributed generation work, with investments aimed at achieving “less use at a lower cost”, including new free cooling technologies, prioritising air conditioning, lighting of offices and industrial sites, trigeneration plants (including micro plants), geothermal and other renewable sources;
  • communication and involvement measures aimed at the Company’s staff to make everyone aware of the impact of their behaviour and to emphasise the “enabling factors” that help to save energy and reduce the carbon footprint, defining dedicated roles aimed at guiding the implementation of initiatives, disseminating the results achieved at all levels and promoting a culture of energy-saving and environmental respect within the Company.

Technological developments launched in 2015, related mainly to the NGAN (Next Generation Access Network) implementation plan and LTE technology, are generally leading to an increase in energy consumption. 2015 in particular saw a significant boost being given to the technological development of the fixed and mobile networks and a significant growth in new installations in the internal and external market in the field of Information Technology, as well being characterised by exceptional weather conditions, with average temperatures, during the summer months, well above the levels in 2014. All these factors resulted in a significant increase in energy demand for both fixed and mobile communication.

The increase in the demand for energy in 2015 was estimated to be approximately 165 GWh, 21% (35 GWh) of which was associated with the increase in temperatures.

This increase was offset by the savings made possible by a series of energy efficiency improvement measures undertaken and completed in 2013 and 2014, as well as new measures undertaken and completed during 2015, including, in particular, projects involving the replacement of obsolete equipment with new, more efficient systems. A significant boost to electricity generation has been achieved by co- and tri-generation - resulting in an estimated increase of 45 GWh on 2014 - implementing measures to improve the efficiency of currently operating systems and bringing a further 6 into service, in addition to existing ones.

It is important to underline that cogeneration and trigeneration systems use around 30% less energy than traditional electricity generation systems, and play a by no means negligible role for Telecom Italia, particularly in industrial sites, typically data processing centres (DPCs), which have notable energy requirements and high heating/cooling requirements, allowing losses due to transfer from production site to consumption site to be minimised.

  • trigeneration: the 3 large co-generation plants and the 3 Plug&Play plants launched in 2014 were brought into operation. Efforts to improve the performance of systems were also put in place to achieve an average rate of operation of 87% for high power plants and 75% for those with power below 600 kw (small co-generation);
  • lighting: the plan to replace conventional (neon) light fittings in the main office premises with LED technology and motion sensors has achieved 50% of the initial target of 41,000 lighting fixtures. In line with the expectations, the plan to replace 100,000 traditional light fittings (neon) in the fixed network exchanges with LED tubing technology was completed. It is important to point out how the use of a LED tube, which produces a cold light, also permits energy savings on air conditioning;
  • power systems: operations on power stations were completed in accordance with the plans, by both replacing older equipment with new stations with a higher performance, and by retrofitting which led to the replacement of just the rectifier modules;
  • air conditioning systems: works to replace obsolete cooling and air conditioning systems with new higher performance equipment and, in the mobile network area, Dedicated Free Cooling works, namely the installation of air ducts directly onto the chassis of a Radio Base Station (Ericsson model 6000) to extract heat, allowing an even more efficient use of Free Cooling and the air conditioner, were completed according to plans;
  • DPC: in 2016 optimization works will continue in the Data Centres identified following energy audits;
  • trials:
    • the CAGE project: the testing of the CAGE system on a site in the Milan area was finalised with the creation of a row of exchanges for 7 incremental racks in indoor containers (cages) with the distribution of “cool side” conditioning, a fire-fighting system and a controlled access system. The aim of the project is to reduce the energy consumption of the air conditioners directly associated with the row containing the cages and to further reduce the consumption of the remaining conditioners in the room by eliminating the thermal energy no longer developed by equipment that was once compartmentalised (the energy saving is obtained from the room layout);
    • Vigilent: this solution was tested in a room of the Oriolo Romano Data Centre with the aim of optimizing the cooling system in the room. The project involves installing a probes system and the respective actuators on the air conditioning equipment in DPC rooms.

Over the year, during the summer period, further unscheduled work was carried out to combat the increase in drawings linked to the exceptional temperatures recorded in 2015 with respect to previous years.

In detail:

  • the cleaning of air conditioner filters before the planned date (approximately 1,100 cases);
  • ignition tests for the telephone exchange generators (around 420 cases);
  • increase of 1° C of the room temperature in the plants (in August this affected around 3,800 rooms);
  • summer closure of around 900 offices.

It is expected that in 2016 innovative infrastructural solutions will be implemented, the designs of which were launched in 2015.

In detail:

  • ■ modernisation of the hydronic circuit2 of the refrigeration units from fixed capacity to variable capacity with an inverter to modulate the working speed of the pumps;
  • ■ Rotary UPS3: the project includes the introduction of dynamic UPSs on a vertical axis with the aim of eliminating static UPSs in the telephone exchange, increasing the power plant’s reliability by streamlining the mains-Power Generator exchange system and reducing or eliminating batteries in the telephone exchange;
  • ■ management of the temperature set-points using the “well-being button” to ensure suitable climatic conditions during targeted and temporary work carried out by technicians.

During 2015, Telecom Italia was awarded energy efficiency certificates (Titoli di Efficienza Energetica - TEE) for 34 projects, corresponding to around 40,000 TOEs (Tonnes of Oil Equivalent) per year saved and an estimated financial value, at current prices, over 5 years, of around 40 million euros.4

The certificates, also known as white certificates, certify the achievement of energy savings in the final use of energy as a result of work and projects carried out to improve energy efficiency. Established by ministerial decree of July 20, 2004, these certificates are issued by GSE5 to reward entities carrying out innovative projects resulting in a significant saving of electricity or fuel. One “White Certificate” corresponds to 1 Ton of Oil Equivalent (TOE) saved, and its economic value is negotiable. In fact, electricity and gas distribution companies – known as “required” entities as they are required to achieve specific annual quantitative targets for primary energy saving – can fulfil their obligation through energy efficiency projects that entitle them to white certificates or by purchasing TEEs from other entities on the energy efficiency certificates market organized by GME6.

1 The Greenhouse Gas (GHG) Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), defines the standards of reference for measuring, managing and recording greenhouse gas emissions.

2 A hydronic system uses water to transport thermal energy, both to heat and to cool the atmosphere.

3 UPS is the acronym for Uninterrupted Power Supply, or continuity unit; in this case it involves dynamic units fitted with a flywheel that is kept at a constant speed when the system is powered from the mains and therefore stores kinetic energy that is transformed into electricity in the event of a black-out.

4 The reduction with respect to 2014 is mainly due to the fact that in 2015 the Authorities imposed the application of different regulations to already approved projects. These

regulations involve a reduction in the assessments of the reporting planned for the upcoming years.

5 Gestore Servizi Energetici – www.gse.it.

6 Gestore del Mercato Elettrico, GME S.p.A. – www.mercatoelettrico.org.