Procurement Strategies Vital as Geopolitical Risks Shape Global Energy Landscape

As global energy dynamics shift to reduce carbon footprints and geopolitical tensions rise, Rystad Energy emphasizes the crucial role of robust procurement strategies. Companies must prioritize procurement within their organizational framework, while governments need to enhance trade intelligence to navigate risks effectively. Procurement’s significance lies in shaping cost-effective and sustainable supply chains through rigorous market research and skilled negotiations.

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While low-carbon resources present lower uncertainties than oil and gas, the concentration of renewable energy supply chains in specific countries elevates procurement risks. Governments play a key role in regulating and understanding sector-specific supply chains, providing essential support for corporations navigating these complex global shifts. Balancing cost-effectiveness and resilience is essential for success in the evolving energy landscape.

Procurement Strategies

“The cost formation – the cost of development or pricing – within solar, wind, and batteries has been volatile in recent years. The Covid-19 pandemic and ongoing conflicts led to a surge in costs due to lockdowns and sourcing issues, pushing some renewable technology costs to jump by 50-100%. As a result, projects have exceeded their budgets and suffered delays, cancellations and financing difficulties. Supply chain bottlenecks have also been a major headache for developers.

“A lack of supply chain capacity has caused issues with high-voltage electrical equipment, skilled grid connection construction firms, wind installation vessels, data chips, and critical minerals. As a consequence, many developers are at risk of not receiving critical deliveries on time,” says Audun Martinsen, head of supply chain research at Rystad Energy.