Sustainable Energy Solutions

Trend Definition 

What is the essence of this trend? What is its impact? 

• Essence: Alternative Energy Solutions involve energy sources and infrastructure that are connected to less carbon emissions compared to established fossil-fuel-based solutions 
• Impact: Companies must change their energy sourcing and infrastructure in accordance with emission limits, not only reducing the carbon footprint but also facing potential supply challenges due to the availability of renewable sources

Trend Drivers 

Why is this trend emerging now? What’s changing? 

• Energy Availability Risks: The volatility of fossil fuel prices and availability due to political tensions pose a substantial risk to energy security and require diversification 
• Regulatory Compliance: Governments around the world expect companies to lower emissions in order to mitigate the risks connected to climate change in the long term 
• Cost Limitation: Since certain taxes are likely to be tied to carbon emissions, a continuous reliance on fossil fuel will be connected to economic disadvantages in the future

Use Cases 

How to apply this trend? 

• Sustainable Aviation Fuel (SAF) in the Aviation Industry: Slowly replacing fossil fuel
  Example: Lufthansa and SWISS partnered with Swiss-based Synhelion to supply them with SAF which requires procurement teams to negotiate with new players and control the use of SAF since it is still much more expensive compared to fossil fuels 
• Factory Design: Thinking sustainable energy sources from scratch 
  Example: In its Sindelfingen-based Factory 56 but also elsewhere, Mercedes uses energy generated from solar panels on the roof which it stores in a stationary energy bank, requiring procurement teams to rethink the entire energy sourcing

Procurement Relevance & Response Strategies 

How should Procurement adapt its Processes, Organisation, and Strategy?

• Procure Renewable Energy: Sourcing renewable energy will be of growing importance in the future, either through external partners or own installations, both will require massive shifts in day-to-day tasks of procurement teams compared to the status quo 
• Ensure Energy Supply: Since renewables also fluctuate in availability, procurement teams should sign flexible contracts with suppliers of more reliable energy sources