Responsibility

Mapping out the clean energy transition

In many places, the transition to clean energy is well underway. But the road to renewable energy is long and requires a massive transformation of the global energy system, with far-reaching implications for energy sector supply chains. Here’s how logistics will be the catalyst for decarbonizing the energy industry.

Logistics of the Energy Revolution

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If you could go back and walk around a North Sea dock in the 1950s, you would likely see crates of fish, stacks of timber, and containers of coal on the quayside. Today, just 70 years later, the North Sea Port has been reimagined: custom-made vessels now set sail carrying wind turbine blades made, distributed, and serviced at the very place where the morning’s catch once landed.

Wind turbines like these headed for offshore farms play a critical role in the transition to a clean energy system. But as the world takes a sharp turn away from fossil fuels like coal and oil and toward renewable energy sources like wind and solar, we need to take a critical look at energy supply chains.

It’s no secret that transition to renewables will pose massive logistical challenges: today’s large, centralized fossil fuel power stations will be replaced by a much larger number of small-scale plants in rural areas, solar farms, and onshore or offshore wind installations. The limited availability of transportation assets and services is already driving up costs in the energy sector. As a result, the energy sector will need better visibility and control to manage rising supply chain complexity. The logistics industry can power the transition to clean energy. But it’s going to require agility, innovation, and the will to work together.

A net-zero energy system will be structured very differently from today’s fossil-fuel-based approach.

Michael Wiedemann, President DHL Energy Sector and Head of CSI EMEA DHL Customers Solutions and Innovation

Clean energy transition: the time is now

The next three decades must see dramatic cuts in greenhouse gas emissions if we are to limit global warming to the levels targeted by the Paris Agreement. The production of electricity and heat from fossil fuels is the single largest generator of carbon emissions today, making the energy sector’s pathway to net-zero particularly significant and likely fraught with difficulties.

10 years

The damage done by global warming may become irreversible in less than a decade

31.5 billion

Global energy-related carbon emissions (in tons) 1990-2020

80%

Of the world’s offshore wind resource potential lies in waters deeper than 60 m

1 Gigawatt

Expected annual floating wind turbine energy generation by 2026

The good news: energy companies are not setting off on this journey alone. Logistics providers will be vital enablers of the transition to clean energy, helping deliver increasingly diverse renewable energy components to remote locations – on both land and sea. There’s simply no way around sustainable logistics: optimized routing, maximizing the use of logistics assets, switching to less carbon-intensive modes of transportation, and more.

Fortunately, the energy sector has made the transition from fossil fuels to renewables a priority, as businesses worldwide and across all industries work to reduce their environmental impact. The clean energy transition brings us closer together, and that’s a good thing, too. We need partnerships if we want to see this through.

The transition to renewable energies is bringing the energy and logistics industries closer together.

Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions and Innovation

Turning tides in the energy sector

Reducing global CO2 emissions is a daunting challenge, particularly since emissions have been rising for decades. Scenarios drawn up by the International Renewable Energy Agency (IRENA) and the International Energy Agency (IEA) indicate that emissions must drop around 40% from current levels by 2030 and halve again by 2040 to achieve the net-zero target or even negative emissions by 2050. This means transitioning to clean energy will require a two-pronged approach: demand for energy must fall (by changing consumption behaviors and improving energy efficiency), and the amount of greenhouse gas emitted to meet that demand must decline.

Today, fossil fuels are still the largest source for generating electricity. But that will change soon. By 2020, renewable energy sources already accounted for 38% of total generation capacity. By 2050, wind, solar, and other renewables could provide between 80% and 90% of electricity capacity within a much larger electricity system. This transition will require massive investments in clean energy solutions like wind and solar power to ramp up capacity to the levels needed.

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Clean energy logistics will be costly and complex

Harnessing wind and solar power will have enormous implications for logistics. The transition will require the energy sector to upgrade its supply chains and adopt more sophisticated approaches to logistics management. That’s because replacing fossil fuel generation equipment with renewable technology of the same capacity can result in a 1000x increase in logistics volumes. For instance, energy companies will need 50 wind turbines or 500,000 solar panels to generate the same electricity as a single 200 MW gas-fired power plant.

Generating 200 megawatts of energy

Gas turbine

Wind turbines

500,000

Solar panels

Clean energy logistics will also be more complicated and expensive. Shipping costs for renewables assets are already high because of the COVID-19 pandemic. Transporting renewable technology poses additional difficulties due to the limited availability of specialized vessels and infrastructure needed to ship larger wind turbines, longer blades, and heavier nacelles through ports that normally handle smaller loads. Consider the fact that blade length and tower diameters have quadrupled over the past 30 years, and it’s clear that the transition from fossil fuels to renewable energy hinges on innovative supply chain solutions. Manufacturers, developers, and logistics services providers must work together to harness expertise, unlock potential, and drive the clean energy transition.

Clean energy transition will be digital

Innovation is a must if the renewable energy sector is to secure the rapid increase in scale that the clean energy transition demands. Companies will have to manage the manufacture, storage, and transportation of thousands of critical components by using technology like smart sensors. These sensors give businesses the data they need to optimize logistics assets, make arrival time forecasting more accurate, and identify delays and issues during transportation.

Along with deploying smart sensors, companies can also gain insights into the status of their renewables technology by using a digital twin – a sophisticated computer model of a physical asset that is constantly updated with real-time data. Digital twins can even be connected to the supply chain, for instance, automatically ordering replacement parts if they spot a problem. And the industry is now exploring flying drones to inspect wind turbines, which takes less time and avoids deploying technicians to remote and dangerous locations.

Robust, resilient logistics systems for renewables will require intelligent coordination between multiple stakeholders, including energy companies, equipment manufacturers, and logistics service providers.

Amadou Diallo, CEO Middle East & Africa, DHL Global Forwarding

Where do we go from here?

Energy sector companies, government bodies, logistics providers, and other stakeholders need to work together to drive the transition to clean energy and shape a more sustainable future. We need new thinking, capabilities, and solutions – time and commitment from every link in the value chain.

With the right logistics support in place, energy companies can spearhead efforts to mitigate climate change. Together, energy and logistics companies can become incubators of innovation, developing and delivering early use cases for what might be the next vital piece of emerging renewable technology to leave the dock.

The transition to clean energy is not some distant time and place. It’s right now. And it’s our job to join together and map out the road ahead.