Cost Model Analysis: How it Helped a Leading Alternative Energy Company to Understand the Key Cost Elements Across Their Supply Chain
Overview of the alternative energy industry: Alternative energy sources are renewable sources of energy. It can be defined as any non-traditional source that meets the energy needs of consumers. Also, they do not cause any undesirable changes to the environment. To meet the growing energy needs of the global population, several researchers around the globe […]
Overview of the alternative energy industry:
Alternative energy sources are renewable sources of energy. It can be defined as any non-traditional source that meets the energy needs of consumers. Also, they do not cause any undesirable changes to the environment. To meet the growing energy needs of the global population, several researchers around the globe are focusing on developing and discovering new alternative energy sources.
Traditional sources of energy include fossil fuels, such as oil and natural gas, whereas alternative energy sources are those that do not require the use of fossil fuels. Although most alternative energy sources are considered renewable, a few are non-renewable. Alternative energy sources used for generating electricity include solar energy, wind energy, and geothermal energy sources. However, the leading alternative energy source for transportation fuel is biofuels, with ethanol leading the market.
The different sources of alternative energy include:
- Solar Energy
- Hydroelectric Energy
- Biomass Energy
- Wind Energy
- Tidal Power
- Geothermal Energy
The Business Challenge and Journey
The client, a leading player in the energy industry, specializing in the alternative energy segment was looking at leveraging SpendEdge’s cost analysis solution. The client wanted a detailed outline of the potential risks and gains in the alternative energy industry.
The company’s supply chain management executives recognized the tremendous benefits of leveraging SpendEdge’s cost analysis solution. As such, they were developing the lowest possible cost mix using our cost analysis solution. Moreover, the client wanted to gain detailed insights and recommendations that will help them achieve the lowest possible cost mix.
To identify challenges in supply chain functions, the cost analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the alternative energy industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.
Fundamental questions answered in this cost model analysis study include:
SpendEdge’s cost analysis solution offered relevant insights that helped the alternative energy industry client in identifying the essential cost elements across their supply chain. Moreover, with the help of our cost analysis solution the alternative energy firm was able to determine the ability of their current cost model and tools to meet stakeholder’s needs for calculating and comparing financial data across their business segments.
Why should you leverage cost analysis?
Cost analysis is a practical approach to evaluate the strengths and weaknesses related to organizational spend. It helps in determining the best approach to achieve maximum benefits while improving overall savings.
Alternative energy industry trends:
- Growth of the electric vehicles market– The electric vehicles market is growing rapidly across economies. The drop in battery costs and affordability are driving the widespread use of electric vehicles. This enables the development of new energy stability solutions, including wind-solar hybrid generation, grid management using utility scale batteries, and plausible alternative power storage options such as pumped hydro or a gas grid to create an adequate balancing mechanism.
- Change in primary energy demand– An unprecedented drop in the cost of clean energy production has occurred in the last couple of years. Solar energy and wind power generation have undergone an annual average percentage drop in the cost of production. Moreover, owing to the affordability, use cases of alternative energy have broadened. Alongside electricity production, it is also offering new and enhanced solutions for mobility and energy security worldwide.
To know more about our cost analysis solution solutions for the alternative energy sector firms