Renewable energy facing supply chain maelstrom, report says

WTW report says progress on renewable energy is being imperilled by supply chain problems, including war, inflation and availability

There are worrying signs continued progress on renewable energy will be hit by supply chain problems, a report from global financial services company WTW says.

Supply chains have been central to the success of renewables,” the 2023 Renewable Energy Supply Chain Risk Report says, but goes on to warn: “Rising raw material prices are reversing the downward trend in the cost of renewables, while supply chain shortages, bottlenecks and delays are lengthening project lead times, putting future plans at risk.”

To find out how the renewables sector is navigating these challenges, WTW surveyed 100 risk and supply chain leaders in companies providing technology, infrastructure and power generation in areas including hydro, solar, wind, biofuels, geothermal, battery storage and heat pumps.

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.

Geopolitical risk was among the factors thought to have the greatest impact on supply chain risks, rated by 57% as medium and 25% as high impact.

With China producing up to 60% of mass-manufactured clean energy technologies, tensions between it and the West is seen as posing a risk to the supply of critical equipment and components.

But it is shortages of raw materials that tops (44%) the list of factors seen as likely to impact the renewables sector over the next two years.

Logistics and warehousing shortages (39%) and component shortages (35%) also rank highly.

The findings underline the sector’s dependence on critical supplies, where the lack of even one essential item can hold up work on an entire project, which can be costly at a time of high demand.

Cybersecurity is also cited as a big worry, with 39% ranking this as high risk and 49% saying the impact is ‘medium risk’.

Wind turbines and solar farms are typically in isolated locations and are controlled remotely by centralised computer systems, which increases their exposure to cyber crime.

Cybersecurity a major renewables supply worry

Contractors, suppliers and equipment manufacturers working on major projects also frequently share systems, adding potential entry points for malware into sensitive equipment.

Economic uncertainty (32%) is another top factor underlying supply chain risks. Soaring energy prices are hitting suppliers and contractors hard and could put manufacturing capacity for components in areas such as solar and batteries at risk.

The rising cost of materials and labour – coupled with volatile energy prices – can also influence projections of income and growth, potentially reducing the scope for future investment.

More than half (56%) also say climate change is another serious trend affecting supply chain risks.

And supplier difficulties in attracting and retaining talent (32%) also figures prominently.

The industry faces major workforce challenges as demand for green jobs outpaces the availability of qualified workers across the supply chain.

REPORT FINDINGS
REPORT FINDINGS
Share

Featured Articles

Aniebo Etudor from Baker Hughes to speak at P&SC LIVE Dubai

Aniebo Etudor, Executive Director of Supply Chain Operations at Baker Hughes, is set to appear at Procurement & Supply Chain LIVE Dubai

She is PepsiCo Celebrates the Best of Women in Supply Chain

PepsiCo is celebrating the work and success of women working across supply chain, procurement and manufacturing through its She is PepsiCo initiative

DHL Unveils Global Connectedness Report for 2024

DHL's report reveals globalisation reached a record high in 2022 and remained close to that level in 2023, despite a series of global shocks

Alberto Medina, Founder of Telescope at P&SC LIVE Singapore

Digital Supply Chain

Panasonic Connect: Using AI to Solve Logistics Challenges

Logistics

Sphera: The Top Risks Impacting Global Supply Chains

Supply Chain Risk Management