Mankind has used fossil fuels to meet its energy requirements throughout the entire modern era. Oil, coal, and natural gas have powered machinery and lit homes for decades, driving civilization ahead. But with the acceleration of human development, the unsustainability of such energy sources became apparent. Consequently, the hunt for renewable sources of energy started to ensure a sustainable future. In the years to come, a cluster of factors will pave the way for the sustainable growth of the renewable energy market. This is opening new avenues for investments and resulting in the emergence of disruptive technologies that might trigger important changes in the renewable energy market strategy. In their latest procurement intelligence report on the renewable energy market, the experts at SpendEdge have discovered that the increasing focus on energy management to lower the carbon footprint of industrial infrastructure is one of the most important reasons behind the growing adoption of renewable energy sources. Moreover, the analysts also found that the subsidization of different types of renewable sources of energy is helping suppliers to offer renewable energy at lower costs compared to non-renewable energy. This procurement report also identifies various renewable energy trends impacting its market growth and offers a detailed insight into the renewable energy market.
Overview of the Solar Energy Industry
Solar energy is an efficient form of unconventional energy and a convenient renewable energy source to reduce greenhouse emissions and global warming.
Globally, the demand for solar energy is driven by an increase in environmental pollution and the provision of government incentives and tax rebates. Also, the decrease in water footprint associated with solar energy systems has fueled their demand in power generation sectors. Also, the demand for solar cells has increased drastically owing to a surge in rooftop installations, followed by an increase in applications in the architectural sector. Moreover, the demand for solar power towers and parabolic troughs for electricity generation is expected to fuel the demand for concentrated solar power systems.
However, our analysis of the latest trends affecting the renewable energy sector shows that the solar energy providers are facing challenges in terms of:
Oversupply: As solar energy installations began to grow across the globe, providers typically rush to produce materials and panels that are needed to generate renewable electricity. Even with record growth in the industry, the entry of new solar energy suppliers has created a situation of oversupply. Since the supply is so much higher than the demand, many of these companies have gone out of business.
Inefficiency: Although the cost of solar power has decreased over the years, it’s still an expensive investment, considering its inefficiency. This issue is mainly because most solar panels are stationary and can’t move to meet the sun’s direct rays.
To counter such challenges, renewable energy suppliers are optimizing their supply chain and cutting down on operating costs. With the aid of supply chain analysis, renewable energy suppliers can map out specific activities within the generic value chain activities and look for ways to create efficiencies. Supply chain analysis also helps companies capture the competitive advantage and increases their overall profit.
The Business Challenge and Journey
Client background: The client is specializing in advanced solar technology and distributed solar power systems. They wanted to streamline supply chain and logistics operations and identify the best third-party logistics (3PL) provider to manage their growing logistics operations in Asia-Pacific.
Client issue: The client’s existing logistics process was complicated due to the presence of numerous entities at various stages of the supply chain. Also, the lack of a central control tower impacted coordination and time management. As a result, they wanted to reduce average logistics spend per project by 25% and increase customer satisfaction with the improved quality of service.
To help the solar energy provider identify the ideal logistics approach, the supply chain analysis experts at SpendEdge, conducted a comprehensive research and carried out discussions with prominent suppliers of solar energy. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to help the client find the right third-party logistics provider.
Client journey: During the course of this supply chain analysis engagement, the solar energy provider was able to identify the ideal logistics approach to select the right third-party logistics provider. Also, the client was able to devise a sophisticated, uniform reporting tool that allowed them to control the supply chain and reduce logistics spends.
Key questions answered in this supply chain analysis engagement
With the help of this supply chain analysis engagement, the client realized a reduction of about $5.5 million on its estimated spend of $25 million for logistics. The client not only achieved savings but also improved its policies and processes across business units.
To know more about how our supply chain analysis solutions can help renewable energy suppliers
Overview of the Renewable Energy Industry
The renewable energy industry at large comprises of energy sources including wind, hydroelectric, solar, and liquid bio-fuels. Today, organizations within the renewable energy space are investing heavily in R&D to meet the growing demands for cost-effective and environment-friendly energy sources despite the availability of fossil fuels. Apart from the regulatory government support, the growth of renewable energy industry is also marked by the growing concern to minimize the steadfastness of fossil fuels for energy consumption.
However, several factors are expected to disrupt the growth of this sector. The factors include:
- Increasing competition: With the entry of global leaders, the renewable industry is witnessing an increasing level of competition with new entrants attempting to gain a major segment of the industry by providing cost-effective solutions. Additionally, the shift from monopoly to a more competitive environment is opening up the space for new market entrants in this sector.
- Increasing customer expectations: Today, renewable energy providers across the globe are facing relentless pressures to maintain an affordable, reliable, and secure supply to the customers owing to the increase in the demand for renewable energy services. As a result, leading companies are facing the need to switch suppliers frequently to meet the demand of the customers while being cost-effective.
Many such factors are forcing companies to leverage the use of spend management solutions. Spend management solutions help companies implement best-in-class procurement platform to enable strategic sourcing, manage contracts, suppliers and increase compliance. These solutions also help firms accomplish a competitive edge over the peers operating in the industry space by assisting them to reduce maverick spends across their business units.
The Business Challenge and Journey
The client, a leading renewable energy provider with business operation spread across the globe, wanted to develop a bespoke spend analysis platform to reduce the time taken for their sourcing and procurement activities. With the help of spend management solution, the client also wanted to implement a procurement platform to enable strategic sourcing, increase compliance, and manage contracts and suppliers across their business units.
The spend management experts at SpendEdge developed a robust market research approach. The research included primary and secondary research coupled with qualitative and quantitative data collection methodology to help the client gain better insights into their purchasing activities.
During the course of this spend management engagement, the renewable energy provider developed a customized spend analysis platform and made full use of the internal data for improving their management skills and procurement expertise. Additionally, the client was able to implement a strategic sourcing roadmap to drive significant savings in a short time and achieve corporate goals.
Fundamental questions answered in this spend management study include
With the help of the spend management engagement, the client reduced their operating costs for analysis and reports, which meant the enterprise was getting significantly more business value for less investment. This helped them generate savings of over 3 million dollars.
To know more about our spend management solutions
Overview of the Renewable Energy Industry
The global renewable energy industry is witnessing a transformation towards a service-driven economy due to the recent technological improvements and environmental concerns. Additionally, at the fundamental level, rising population and energy efficiency improvements across the globe are influencing establishments to shift toward renewable sources of energy. As a result, firms within the renewable energy industry space are insisting on supplying energy with higher productivity and efficiency.
However, there are a few fundamental factors that are impacting the overall growth of the renewable energy industry. These factors include:
- Initial capital investments: Although the process of bringing about developments in the renewable sources requires a significant amount of capital investment, companies operating in this industry space are moving toward alternate renewable energy sources as most of the underdeveloped countries across the globe rely on fossil fuels for their everyday energy consumption.
- Heightened customer expectations: Companies across the renewable energy industry space are facing relentless pressures to maintain an affordable, secure, and reliable supply to the customers. As a result, firms are compelled to switch suppliers frequently to cater to the needs and demands of the target audience.
These factors are compelling firms in the renewable energy industry space to leverage the use of supplier profiling solutions. Supplier profiling solutions help firms in identifying and profiling the potential suppliers across the industry based on their strengths and weaknesses. These solutions also help companies increase their focus on supply management in terms of sourcing and procurement functions.
The Business Challenge and Journey
The client, a leading renewable energy industry player with business functions spread across the globe, wanted to leverage a supplier profiling solution to decrease procurement and excess inventory costs and deliver high-quality product and service offerings while enhancing economic opportunities. The client also wanted to identify the most profitable suppliers from a pool of suppliers and mitigate the risks associated with them.
The primary objective of the client was to seek ways to engage with the best suppliers and compare their offerings with that of the competitors.
To help the client address rising concerns and reduce supply costs, SpendEdge’s supplier profiling experts tailored a comprehensive research methodology. The research methodology included primary research coupled with qualitative and quantitative data collection procedures. The research methodology also comprised of interviews and discussions with leading procurement experts. SpendEdge’s supplier profiling experts also compiled information across a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to profile potential competitors.
During the course of this supplier profiling engagement, the renewable energy industry client identified the high-performing and low-risk suppliers and service providers to regulate costs associated with compliance. The client was also able to profile the suppliers better, based on their performance and efficiency, and gain improved visibility into the supply chain process. This helped the client improve cross-functional collaboration to endure collaborative partnerships with key suppliers.
Fundamental questions answered in this supplier profiling engagement include
The supplier profiling engagement helped the client differentiate the suppliers based on their categories and the quality offered. The client was also able to successfully evaluate supplier performance in terms of the risk management, cost management, and operational improvements.
To know more about our supplier profiling engagement for the renewable energy industry
In this era of constant innovation and compliance regulations, firms operating in the power and energy space have started looking for renewable and alternative sources of energy. Additionally, the with the demand for fossil fuels reaching its saturation point, firms operating in the alternative energy space are seeking ways to address flaws and reduce their overall operational costs across the supply chain. Consequently, to understand and devise means to tackle challenges across the supply chain, renowned businesses in the alternative energy space are advocating the need for robust supply chain risk assessment studies. Supply chain risk assessment studies help firms gain real-time actionable strategic insights into the flaws in the supply chain and formulate effective strategies to stay on par with the competition.
With years of experience in offering a wide range of supply chain solutions, the supply chain risk assessment specialists at SpendEdge help players across the alternative energy space to gain better flexibility into the current supply chain process; thereby, helping them improve business performance.
The Procurement Pain Point and Insights Offered
A leading alternative energy supplier client was facing predicaments in identifying the supply chain flaws. As a result, the client wanted to gain better visibility into their supply chain operations and formulate strategic ways to mitigate disruptions across the supply chain. Additionally, the client wanted to categorize the key performance indicators to curtail logistics costs and improve service quality.
To address the specific predicaments faced by the alternative energy supplier client and help them address flaws and curtail supply chain costs, the supply chain risk assessment specialists at SpendEdge tailored a unified research methodology, which involved primary and secondary research coupled with quantitative and qualitative data collection methodologies.
During the course of this supply chain risk assessment engagement, the alternative energy supplier client was able to devise robust supply chain risk mitigation strategies to curtail supply chain costs. Additionally, the client was able to accomplish better traceability of their services, in turn helping them gain a deeper understanding of the regulatory and compliance requirements.
Fundamental questions answered in this supply chain assessment engagement include
This supply chain risk assessment engagement helped the alternative energy supplier client improve operational objectives consequently aiding them to curtail costs across the supply chain. Additionally, the client also deployed better sourcing and procurement strategies which helped them strengthen their supplier relationship.
To know more about our supply chain assessment solutions
There’s only a finite amount of energy resources such as fossil fuel, oil, and natural gas which is getting depleted each year. This has compelled the world leaders to consider alternative sources and utilize renewable energy sources that are naturally replenished. Sunlight, rain, wind, tides, waves, and geothermal heat are some of the major sources of renewable energy. Renewable energy is slowly gaining an edge over the non-renewable energy’s contribution to the global energy consumption. Although a significant amount of investment is required to setup energy production from renewable sources, the cost pays for itself in the longer run.
#1 – Fortune 500 Companies Demand Sustainability Measures
A majority of Fortune 500 companies are setting up targets to increase renewable energy dependence. Most of the companies within this space have already pledged to go 100 percent renewable as a part of the RE100 campaign. For instance, Apple launched a 2-gigawatt clean energy initiative in China to meet its 100 percent renewable energy promise. Similarly, Foxconn has also started investing in solar energy.
#2 – Location Specific Pricing
The availability of renewable energy is scattered across different parts of the world. For instance, some regions may experience strong winds and show great potential for wind energy, and some may potential for solar energy. As a result, investors are exploring variable pricing strategies to produce and sell energy in high-cost areas.
#3 – Development of Battery Technology
Although companies invest heavily in renewable energy, consumers’ demand will fluctuate as per seasonality. The companies will then have to store the excess energy using a battery for future use. The current battery technology has not progressed much, especially when compared to the developments in other technologies. As a result, companies have started looking for new battery technologies to increase the energy efficiency. Hydrogen storage, molten salt, and other forms of batteries are some of the alternatives receiving significant investment in recent times.
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