Eight out of ten believe that the lack of alternative suppliers has negatively impacted the supply chain resilience of their companies.
The most recent analysis from WTW showed the most significant obstacles that will be faced by the renewable supply chain industry in 2023. The report also revealed crucial results regarding the risks that are involved in renewable energy at a time when an increasing number of businesses are aligning themselves with the net-zero programme.
According to the findings of the 2023 Renewable Supply Chain Risk Report compiled by the insurer, 74% of companies surveyed reported that losses associated with the supply chain had been greater or significantly higher than planned over the course of the previous two years. As was to be predicted, a shortage of raw materials was highlighted by 44% of respondents as the most significant supply chain factor that will have an effect on firms in the next two years.
Among the other findings are:
As a direct result of COVID, 84 percent of respondents reported having made at least some adjustments to their approach to the management of supply chains.
85 percent of respondents responded that a lack of data, information, and understanding was one of the issues that will pose the greatest obstacle to addressing risks within the next three to five years.
80 percent of respondents concurred that their ability to adopt an efficient dual or multi-source strategy was hindered by the absence of alternative providers.
Concerns regarding the future of renewable energy sources
The survey of supply chains conducted by the insurance shed light on the unpredictability and roadblocks that stand in the way of the energy transformation. The following are some of them:
57% of respondents assessed geopolitical tensions as having a medium impact, while 25% ranked them as having a high impact on supply chain risks. It is believed that geopolitical tensions have the biggest influence. For example, the current crisis in Ukraine has caused a source of lithium that is required for batteries to become unavailable.
Critical shortages The critical shortage of raw materials was ranked first on the list of variables that were believed to have the biggest influence on renewables in the next two years. It is also scored highly because there is a lack of components, as well as a shortage of logistics and warehousing, which highlights the dependency of the sector on essential supply.
Renewable energy sources, including as wind turbines and solar farms, are frequently constructed in inaccessible areas. As a result, they must utilise centralised computer systems in order to be controlled remotely, which exposes them to the possibility of being compromised by cybercriminals. Cyber is also named the most profound impact on supply chains, with 39% of organisations identifying it as a high-risk factor for their operations.
Economically speaking, the skyrocketing cost of energy is having a significant impact on both suppliers and contractors, which is leading to more uncertainty over industrial capacity. The fluctuating costs of energy and materials, as well as rising labour and material costs, are all factors that can impact forecasts of future income and growth.
More than half of respondents responded that climate change and environmental factors are among the top trends driving supply chain resilience. This is principally caused by worries regarding the carbon footprint, which are made all the more essential by the fact that the industry is supposed to create a cleaner future through the use of renewable energy.
ESG – 82% of respondents responded that ESG is a specific selection consideration when selecting new supply chain providers. ESG stands for environmental, social, and governance. The pressure on the industry to acquire its materials in a responsible and environmentally conscious manner is increasing as renewable energy sources become more widespread.
Workforce challenges include those encountered when attempting to recruit and keep talented individuals in the renewable energy industry. At the moment, the sector is confronted with significant manpower issues as a result of the demand for environmentally conscious occupations outstripping the supply of competent individuals.
Pandemics — while it’s possible that the world as a whole has already experienced the worst of COVID, the risks of new strains, or perhaps an altogether new pandemic, are still seen by many as one of the most significant sources of discomfort.
“Companies may improve their understanding of the risks posed by their supply chains and take action to mitigate them by working more closely with suppliers as partners. According to WTW, diagnostic mapping and monitoring tools and analytics can provide assistance in visualising, quantifying, and evaluating risks across the chain as well as in particular places.
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