Better ways to engage with your supply chain
It may feel like it sometimes, but supply chains are
The Renewables industry has seen record levels of investment in recent years. Across the utilities sector, climate change and the race to replace fossil fuels have placed alternative energy sources high up on the agenda for governments and investors alike. The lockdown measures implemented during COVID-19 reduced electricity demand significantly making grid operators opt for the cleanest and cheapest supply source to balance the lower demand. This sudden change saw renewable sources (mainly wind and solar) experience a rapid increase on their electricity share reaching record levels in many countries. In less than 10 weeks, the USA increased its renewable energy consumption by nearly 40% and India by 45%. Other European countries like Italy, Germany, and Spain also set new records for various renewable energies.
The speed and scale of the expansion of the renewables sector is creating challenges for operators. Many do not yet have the experience or skills to handle the increasingly complex renewable energy projects needed to scale the sector further. The sector needs to develop stronger supply chain management capability in order to completely unlock the full potential of renewable energy opportunities.
This rapid growth of the sector creates a number of distinct challenges, particularly for smaller, younger entrants into the market. As these companies start to manage increasingly large-scale projects and complex supply chains, the wealth of insight the utilities sector can provide is a valuable resource. In turn, the renewables sector has a lot to teach more established sectors about using technology to drive innovation.
Ultimately, this kind of cross-sector collaboration and knowledge sharing is going to play an important role in energy transformation and in limiting the worst impacts of climate change.
The Renewables industry is currently in a period of accelerated growth. A preference for electricity over other energy sources, the Paris Climate Change Agreement low-carbon targets, and the UN’s Sustainable Development Goals (SDGs) are all driving increased demand.
However, global investment in renewable energy has been falling since hitting a peak in 2017. This decline is the result of decreases in wind and solar costs, that have dropped significantly following expansion in the EU, India, Vietnam, China and the US, but has been made worse by capacity issues which can only be resolved through further investment.
The utilities sector is highly experienced in scaling and dealing with capacity issues quickly. This experience could be invaluable to renewables operators looking to professionalise certain parts of their operations.
Raising the health and safety standards of new renewable energy projects is another area where insight from the utilities sector could add real value, especially when it comes to workers operating in challenging environments.
Effective management of health and safety allows companies to reduce operational risks throughout the entire lifecycle of a project. Utilising new engineering solutions to reduce the amount of maintenance required or reduce the time operational workers spend in potentially dangerous situations can help lay the groundwork for future growth.
Supply chain logistics and management is essential for achieving the global visibility needed to secure contracts, shorten transit times, anticipate bottlenecks and increase asset utilisation. These are all areas that utilities companies have prioritised for decades and where renewables could benefit from making improvements.
Following a boom period, the conventional utilities sector is now facing a challenging future. This is despite significant capital investment in grid infrastructure, for example the NOK 40-50 million investment by Statnett into the Norwegian transmission grid. Government legislation, shareholder demands and consumer expectations are squeezing profits and increasing the need to improve efficiencies.
One important feature of the renewables sector is the prevalence of smaller, more agile and digitalised companies. These operators have a lot to teach large utilities companies about how to adopt innovative technology and use it to drive improved performance and efficiency.
Another challenge larger companies face when trying to implement digitalisation is skills gaps and cultural barriers that can stop new solutions becoming embedded. Utilities companies should look to the renewables for guidance on how to create effective strategies around big data, analytics and how to build internal skills and capacity.
Digitalisation is playing a major role in the ongoing growth of wind energy, underpinning operational efficiency, decision-making and lower operational costs. An example of this is the use of wind farm data to enable a predictive approach to anticipating faults and maintenance planning. This helps ensure that operators reduce their spend and experience less down time. The industry needs to direct innovation at the challenges of data sharing and access, and the solutions it creates could help a wide range of industries improve their performance.
We think that collaboration and knowledge sharing between different sectors helps raise standards for every industry. Insight and expertise that can help companies operate more effectively and sustainably shouldn’t be siloed.
The transition to a low carbon future requires working towards common goals and making sure that every company involved in a supply chain is working to the highest standards. This is what our communities are all about, helping buyers create stronger and better performing supply chains. As more utilities companies begin to explore renewable energy opportunities, this kind of collaboration will be more important than ever.
To see how our communities can foster upskilling, knowledge sharing and cross-sector collaboration, contact us today.