Supply chain managers are particularly aware of the impact power outages can have on operations and revenue. If we think of a supply chain as a network, then increasing the number of nodes within the network should increase resilience. This resilience, however, can only be assured to the extent that the individual nodes are prepared to weather both literal and proverbial storms.

Putting an energy resilience plan in place for a single business or industrial location requires starting with three pieces of knowledge:

1. How to articulate the business problem.

2. How organizational goals and regulatory environments impact the plan to address the business problem.

3. How to evaluate which energy solutions will best achieve the goal.

The cost to develop an energy resilience plan is often a concern for managers and business owners. Though energy resilience may sound new and disruptive, in practice it is rather simple to integrate an energy resilience plan into the daily operations of even the most complex supply chain. Resilience measures can be leveraged to generate revenue when the power is on by taking advantage of market mechanisms. For a network of buildings and infrastructure within a supply chain then, resilience becomes an insurance policy that pays for itself, even in the absence of power outages.

Energy quality, resilience, and energy costs must be coordinated and optimized for severe weather events and sudden power outages. However, depending on what energy companies have to offer and what customers profess to need, they approach energy problems in different ways. The right energy service provider can help navigate the business problem, organizational goals, and regulatory environment when evaluating energy solutions. These issues compound in the context of complex, cross-border supply chains; one solution does not fit all.

For example, to mitigate wildfires in California, utilities in that state have preemptively shut off power for as many as four days, for tens of thousands of customers – reducing revenue and drawing the ire of understandably-upset customers who now rely on energy in ways not assumed when the California electric grid was built, or even two decades ago.

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It is a near-universal truth that being proactive instead of reactive with energy resilience costs less.

Kate Sherwood

VP, Head of Sales North America at Centrica Business Solutions

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In the future, utilities may cut power as a matter of policy, no matter how close or far away a building is to the threat of fire. Pacific Gas & Electric (PG&E), for instance, cites several possible factors that may trigger a preemptive power outage: strong winds, very low humidity levels, critically dry vegetation, and/or observations from field crews.

This risk is the new normal for California, and businesses that do not adapt will suffer the consequences. But these risks were not knowable — they were the "unknown unknowns" when planners made their transmission and distribution grids — so how were planners decades ago supposed to plan for (and incur the cost of) resilience in the face of unforeseeable risks?

Many companies that are developing resilience plans and installing clean energy technologies to keep the lights on when the grid goes down still end up either overspending or under-building to meet their operational needs. They might scramble in the 48-hour window before a preemptive shut-off, and find themselves overpaying for generators, or they may build a solar and energy storage project for everyday use but find it inadequate to handle critical loads over an extended period.

Others are shocked to find out after the fact, that their net-metered solar system shuts off when the power goes out instead of "islanding" itself from the grid to provide power during a blackout. Alas, microgrid technology is in the mainstream now, but it's still new enough that it isn’t priced into most behind-the-meter solar systems and can thus catch energy managers off guard.

It is a near-universal truth that being proactive instead of reactive with energy resilience costs less.

A 2018 study estimated key U.S. market segments forfeit about $27 billion per year due to power outages. Few businesses can afford to lose $100,000 per hour, but on average, that is the cost of 60 minutes of downtime, according to the ITIC Hourly Cost of Downtime and Minimum Reliability Requirements Survey. The firm says since 2008, the average cost of a single hour of downtime has risen more than 25 percent. For some industries, downtime cost is much, much higher — a data center can incur upwards of $8,000 per minute of downtime (or almost $480,000 an hour).

The question is no longer how power outages will impact supply chain-dependent businesses; it’s a matter of when, how disruptive they will be and how much they will cost. These costs take the shape of operational losses, damaged equipment, spoilage of perishable goods, lost sales and damaged customer relationships.

I encourage you to join the ranks of 80% of U.S. businesses that plan to take control of their energy. These companies plan on generating a quarter of their electricity on-site by 2025 by finding a qualified service partner and making a plan. Your entire value chain will thank you.