Renewable or Traditional? An Outlook of the Global Energy Industry
The energy and utilities industry is in the midst of change.
Businesses are facing pressure from the government and consumers alike for more renewable energy while also balancing that with grid reliability and traditional energy sources. Meanwhile, electricity demands are expected to skyrocket. Other wild cards are supply chain disruption, labor shortages and more.
But within those challenges, we always see opportunities. Let’s take a closer look into the outlook for energy.
Continued focus on renewables. The demand for clean energy will continue to rise. Governmental regulations are mandating the focus on clean energy and decarbonization, including enacting green-friendly legislation and incentives for companies to transition to cleaner sources like solar and wind. The industry made great strides in solar power and the energy storage it necessitates in 2023, but more is needed and the focus will continue in 2024 and beyond. Consumers are demanding it as well, with climate change among people’s top concerns. All of it has led many companies to push the timeline to cut carbon emissions by 80% from 2050 up to 2030.
Energy storage. The push for solar requires an enormous amount of battery storage capacity to, in very simple terms, store all of that energy for times when the sun’s not shining. It means innovation in battery technology, and 2023 saw much of that, with storage capability doubling in 2023 and set to nearly double again in 2024.
Electricity surge. According to industry sources, the demand for electricity is expected to triple by 2050. It means planning now for this increased load on what is likely aging infrastructure, resulting in costs to shore up that infrastructure to ensure grid reliability. It’s also necessary to consider expanding the grid to meet that demand.
Aging grids + extreme climate. We all saw the worst-case scenario play out in Texas when their grid failed when the state experienced a rare deep freeze. But weather extremes are becoming the norm, with heat, wildfires and drought on the one hand, floods and record snowfall on the other. The industry is modernizing the grid, and made progress in that area in 2023, but reliability is still a large concern.
Supply chain uncertainty. The recent geopolitical unrest in Ukraine and the Middle East has underscored the need to reshore this nation’s oil supply.
Labor shortages. Like many industries today, energy is battling a labor shortage and facing the double whammy of their most experienced workers retiring and taking institutional knowledge with them, and having too few younger people in the pipeline to pick up where they left off.
It’s a full plate for the energy sector in the coming years, that’s clear. But within these challenges, we see opportunities to bolster processes, making operations more efficient and guard against supply chain snafus. Reducing operating costs, improving productivity and increasing efficiency will help the industry navigate these challenging times.
This is where USC can help
Management Operating Systems. A solid Management Operating System is a must for efficiency, time savings, employee productivity and so much more. For a real-world example on how USC helped an energy producer save time and money by implementing an MOS, read “Energy Producer Generates Savings with Smarter Labor Practices.”
Reskilling employees. All of this innovation and growth in renewables, not to mention AI entering the mix, requires more workers with new skills. This can be very good news for your current employees, who can move up the food chain with new training, and the ability to attract highly qualified workers.
Resource planning. If you know anything about our company, you know we are great proponents of SIOP – Supply, Inventory and Operations Planning. It gives companies a roadmap to the future, so they’re not reacting to events, they’re anticipating them. With the exponential growth of the energy and utilities sector in the coming years, solid planning for the resources needed for that growth, like increased storage capacity and grid strength, is a must.
Bottom line, delivering reliable, affordable and sustainable energy is the goal for the energy and utility industry. It takes efficient operations, a handle on resources, and a clear eye toward the future. Contact us today to find out more about how USC Consulting Group can help.
