Resiliency Strategies for the Energy SectorPosted to Guidehouse
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- Apr 14, 2020 8:30 pm GMT
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As the coronavirus outbreak worsens in Europe, most governments have declared a national emergency. While governments are preparing for economic disruptions and implementing efforts to flatten the curve, a reliable power and electricity supply is needed to prevent any additional disruptions. Energy suppliers across the continent are working to ensure that they can meet customer needs, particularly those in vulnerable situations who may need to self-isolate. Business continuity across the energy industry is critical to make certain people don’t experience any hardships in heating and lighting their homes. Of the players across the energy value chain, utilities are the most likely to be affected as a large percentage of workers are affected by this pandemic.
Ensuring continuity of supply and dealing with uncertainty of payments are key concerns across utilities. For power developers that have extensively relied on sourcing from China without hedging their risks, supply chain disruptions and decarbonization are the most serious issues. As contractual commitments are influenced and the impacts ripple across the value chain, utilities can further mitigate any revenue erosion by diversifying risks that will arise due to supply chain and sourcing bottlenecks across their operations.
Resiliency Planning In a Pandemic
Utilities must take proactive steps to ensure that the building blocks of critical infrastructure—electricity, heat, and water—continue to be delivered despite these new challenges. The demand for power will shift from commercial and industrial segments to residential consumers as remote schooling and work from home arrangements become the new norm. The change in energy consumption patterns across Italy and China illustrates this. As consumption shifts across customers and peaks at different hours in a day, the energy system may be strained to keep the lights on in homes and essential businesses. To ensure greater resilience, accessibility, and energy security across consumers, power generators will need efficient energy management technologies that support business continuity. Energy stakeholders will need to think ahead of the curve to ensure their systems offer the flexibility and agility needed to deal with these challenges. Redefining and reprioritizing strategies across the energy sector may include the following:
- Distributed energy resources (DER) can offer the energy industry an opportunity to meet increasing local demands while meeting emission mitigation goals and dampening increasing price rises. The proliferation of DER should no longer be viewed as a disruptive trend to the traditional energy industry but as one that can offer energy companies an opportunity to prevent revenue erosion by facilitating energy efficiency, demand side optimization, and deployment of distributed generation technologies.
- Self-generation can help utilities reduce costs, improve reliability and resilience, and achieve the environmental benefits of emission reduction. Distributed storage is likely to witness an uptick as the global energy system continues to operate in the new normal. Behind-the-meter storage solutions that provide backup power can take the pressure off overloaded transmission networks and grid reliability risks.
- Digital technologies and DER energy management tools can help utilities take control of potential disruptions from supply chain optimizations to storage for managing intermittency. The use of innovative technologies and solutions, including advanced energy management systems, can enable greater control and interoperability across disparate and heterogeneous components of the energy ecosystem. This orchestration is necessary to facilitate and encourage generators and service providers to operate efficiently across the energy value chain. Resource management coupled with logistics is a critical area to assess. This will ensure that the roles and responsibilities of essential personnel are supported with efficient crew management tools and solutions.
- Local sourcing can relieve supply chain issues and save transport-related carbon emissions around the world. Cross border supply chain disruptions triggered by the coronavirus outbreak have energy stakeholders reassessing their sourcing strategies and taking initiative to build back investor confidence. The power generation sector usually has long-term project development timelines. Construction of a typical 300 MW solar farm project could take up to a couple of years to build. Therefore, project developers must reevaluate their supply chains and identify bottlenecks due to suspended manufacturing activities. Trina Solar, one of the largest Chinese solar PV panel manufacturers, has alerted its customers about production delays. Its shipments from China are likely to be affected as factories have not come back to full capacity.
The Energy Sector Can Unlock Opportunity Post-COVID-19
The energy industry is one of the most resilient industries. Driven by technology and digital tools, the energy sector can identify opportunities to make their end-to-end value chain more efficient and agile. In the long-term, COVID-19 has set the stage for positive and efficient changes in how energy stakeholders strategize and operate. Once the pandemic has run its course and power demand stabilizes, the energy sector may have unlocked new opportunities through efficient operations, innovative technologies, and an agile supply chain.