After years of exponential growth, renewables may be close to a tipping point when they become the main source of energy powering economies and industries.
Supply chains have been central to this success, delivering the technologies and economies of scale needed to make the energy transition possible.
But there are signs that this progress could be stalling, at least temporarily.
Rising raw material prices are reversing the downward trend in the cost of renewables, while shortages, bottlenecks and delays in the supply chain are lengthening project lead times, putting future plans at risk.
To find out how the sector is navigating this changing landscape, we surveyed 100 risk and supply chain leaders in companies providing technologies, infrastructure and power generation in areas including hydro, solar, wind, biofuels, geothermal, battery storage and heat pumps.
How do they see the supply chain landscape? What are the main challenges and risks they face? What are they doing to overcome obstacles and to try to build resilience? And what will the supply chains of the future look like?
Uncertainty and obstacles on the road to the energy transition were reflected in the risks that arose most prominently in our supply chain survey.
Shortages, delays, economic issues and geopolitical instability were all top of mind for respondents.
Wider external factors such as cyber security and supply chain sustainability were also leading concerns.
74% of businesses said losses related to the supply chain had been higher or much higher than expected over the last two years.
84% said they have made at least some improvements in their approach to supply chain management in response to the pandemic.
85% said a lack of data, knowledge and understanding were among the factors posing the greatest challenge to addressing risks over the next three to five years.
80% agreed or strongly agreed that a lack of alternative suppliers impeded their ability to implement an effective dual or multisource strategy.
Progress towards the energy transition has faltered as project costs spiral and the world seeks additional short-term sources of oil and gas for energy security following the global energy crisis.
The road to a fully renewable future is also strewn with a range of supply chain challenges, from shortages of raw materials and critical minerals shortages to capacity constraints and a lack of alternative sources and suppliers.
Our survey shows that businesses are working to overcome these problems and considering a range of strategies to increase resilience.
However, they're hampered by an inability to obtain enough accurate data on the supply chain to manage their risks.
Working more closely with suppliers as partners can help companies understand their supply chains better and address these risks.
“Diagnostic mapping and monitoring tools and analytics can help to visualize, quantify and assess risks across the chain and in specific locations.”
William Helander | Head of Natural Resources North America & Houston Corporate Broking
Diagnostic mapping and monitoring tools and analytics can help to visualize, quantify and assess risks across the chain and in specific locations.
WTW has an experienced team of experts with the tools and competencies to help clients understand their supply chain vulnerabilities and align their production with financial risk.
We can also help you manage and transfer risks for both property-related and pure economic losses, helping you build greater resilience against future shocks.
To learn more, download your free survey report by completing the short form at the top of this page.
1 Energy Technology Perspectives 2023, International Energy Agency
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