LOGISTICS OF THE ENERGY REVOLUTION: FIVE IMPERATIVES FOR THE NEW ENERGY LOGISTICS
A net zero energy system will be structured very differently from today’s fossil-fuel based approach. Demand for energy is expected to remain high, but it is set to undergo a profound shift towards electrification.
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Building Essential Capabilities
Power generation will shift from coal, oil and gas to renewable energy technologies such as wind and solar. Rising demand, and the lower capacity factors of these technologies, mean that installed wind power capacity will need to increase by a factor of four, and solar PV by a factor of seven, between 2020 and 2030.
The shift from large, centralized fossil fuel power plants to networks of smaller, widely distributed renewable generating equipment will result in a dramatic increase in the volume and variety of logistics services required to deliver each unit of generating capacity. Addressing the logistics challenge will be critical to the success of the net zero transition. Companies need to consider logistics as a key factor influencing business viability and profitability. Here are five key areas of focus for any organization involved in the energy revolution.
Collaboration is key
Robust, resilient logistics systems for renewables will require intelligent coordination between multiple stakeholders, including energy companies, equipment manufacturers, and logistics service providers. To deliver the best solutions, those collaborative relationships should begin early. Including logistics engineers during the initial design of future wind turbine models will be essential to address the logistics requirements associated with transporting and maintaining them, for example.
Logistics for renewable energy development presents companies with a series of discrete – and difficult – problems. Solving those problems one-by-one will lead to sub-optimal solutions, however. Instead, companies need to take an end-to-end perspective on their logistics systems. Such thinking should address the full lifecycle of energy infrastructure, including logistics requirements for service and maintenance, as well as the handling of assets at end-of-life.
Focus on visibility and digitization
High performing supply chains can’t afford blind spots. Energy companies need to invest in smart digital platforms, capabilities and tools to help them manage logistics execution and optimize supply chain design. Full supply chain visibility is a critical enabler for many of the approaches that can have the biggest impact on end-to-end costs.
Identify transferrable skills from adjacent industries
With so much to do and little time to get it right, the energy sector can’t afford to spend time finding solutions to problems that have already been solved elsewhere. Instead, it should be willing to seek out, replicate and adapt successful existing approaches wherever they can be found. It is doing some of that already, especially in the transfer of offshore skills and technologies from oil and gas to wind energy, but there are opportunities to go much further.
Pursue sustainable logistics solutions
Energy companies have both an opportunity and an imperative to support the development of sustainable logistics solutions. In the medium term, energy companies can partner with the logistics sectors to develop early use cases for key emerging technologies, from synthetic fuels to electric aviation. In the immediate term, logistics providers can help the industry reduce both costs and supply chain emissions through operational changes such as route optimization and improved utilization of transport assets.
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