In today’s world, where reducing carbon emissions is crucial and global political tensions are high, governments have a big role in supporting new industries and creating strong local supply chains. This change might bring more risks in getting materials and products, but it’s important for governments and companies to work together to handle these risks well.
Rystad Energy, an energy research company, suggests that companies in the energy sector should give more attention to their procurement (the process of finding and getting materials and products) and that governments should better understand trade and industrial markets.
Procurement is really important in managing supply chains, focusing on getting things done cost-effectively and in an environmentally friendly way. This means doing a lot of research, negotiating well, and keeping a constant eye on the process to make sure everything is working smoothly and not costing too much. A good procurement strategy can really help energy companies save money, reduce their carbon footprint, and be more sustainable.
When it comes to risks, renewable energy sources like solar and wind have lower risks compared to oil and gas. This is because renewable energy projects often have fixed agreements on how much they’ll sell their power for, and they’re usually built closer to where the power is needed, which reduces political and geopolitical risks.
However, the supply chain for renewable energy is mostly controlled by a few countries, which can be risky. This is different from oil and gas, where the supply chain is more spread out across different countries. Because renewable energy depends a lot on specific countries for materials, it’s really important for those in charge of procurement to manage these risks carefully.
In recent years, the costs for developing renewable energy technologies like solar panels, wind turbines, and batteries have gone up a lot because of the Covid-19 pandemic and other global conflicts. This has led to higher costs for projects, delays, and even some projects being canceled. Supply chain issues, like not having enough equipment or skilled workers, have also been a big problem.
The renewable energy supply chain is mainly based in China and a few other countries, making it more vulnerable to risks than the oil and gas supply chain, which is more spread out. Natural disasters, unexpected events, and political actions can all disrupt the supply chain for renewable energy.
Governments need to understand these sectors and supply chains well so they can help guide and support companies through these changes. By doing this, governments can help companies succeed in a world that’s moving towards more renewable energy.
https://oilprice.com/Energy/Energy-General/Renewable-Energy-Faces-Supply-Chain-Bottlenecks.html