Renewable energy can be used throughout the supply chain to decrease long-term costs, mitigate risk, drive new revenue, enhance brand value, and improve employee engagement.
As technologies and regulations mature, companies should be re-evaluating their energy procurement strategy to take advantage of these potential benefits.
Renewable Energy in The Supply Chain
Renewable Energy is now more accessible and affordable than ever. The cost of the technology itself has decreased. New financing vehicles have improved access and lowered capital requirements. And favorable regulation in parts of the United States has provided incentives for selling excess supply back to the grid.
The most promising types of alternative energy for the heavy-duty sector include battery electrics and hydrogen. Batteries are becoming cheaper, more energy dense, and able to recharge on faster timelines. Because battery electric trucks are cheaper to fuel and maintain in the long run compared to diesel trucks, some short-range applications may be cost-effective already, and longer-range trucks will soon be as well.
Shippers should consider them for the economic benefits, as well as the improved driving experience with the fast electric acceleration and quiet ride, which could help attract drivers during a time of labor shortages. Hydrogen fuel cell vehicles are currently expensive, lack fueling infrastructure, and may not bring the same environmental benefits as electricity due to the energy loss from using energy to generate hydrogen, which then has to move vehicles.
But that said, it may have an important role to play in long-distance heavy-duty freight, given the limitations of batteries. Honorable mention goes to biofuels like biodiesel. Depending on the source of the feedstock, some of these fuels can actually be carbon negative. The question marks revolve around cost and availability of the feedstocks, as well as policy commitment.*
Benefits of Renewable Energy:
- Produce clean and reliable power
- Insulate against commodity price volatility risk
- Mitigate potential implications (cost and reputational) from shifts in regulation
- Reduce long-term energy costs and energy spend (improves gross margins)
- Enhance revenue by unlocking opportunities for new products, services, or business models
The time for companies to assess their supply chains for renewable energy adoption is now. Access to renewable energy is better than it has ever been. Overall technology costs have decreased and new financing structures are providing flexibility for dynamic implementation.