The industry’s way of handling the gas crisis

How the Kloepfel Group’s customers are preparing for gas shortages

The companies are thinking intensively about the energy supply (gas, electricity, heat) in their own factory and some of them have set up a task force. In addition to the supply, the companies are struggling with the dramatic price development, which is currently coming to a head. The issue often comes up on the agenda as part of risk management.

10 measures taken by companies to counter gas shortages

1. Convert secondary fuel plant from gas to oil.
2. Procure additional emergency generators.
3. Oil or diesel for existing and new emergency generators are purchased and bunkered.
4. Invest in conversion of cogeneration plants from gas to oil.
5. Conversion of gas-fired power plants from LNG to LPG.
6. Installation of an LNG tank on the plant premises to ensure supply in the event of bottlenecks.
7. Neighboring companies support each other in different ways (heat, energy, LPG, etc.).
8. Rapid expansion of solar panels
9. Planning of wind turbines on the plant premises
10. Conversion to biomass

Self-sufficient energy supply

Selected companies switched to a self-sufficient energy supply years ago. Additional aspects, such as sustainability through heat recovery and public contributions, play a role here.

One company we know launched a strategic initiative in wind power ten years ago. However, the permits for the wind turbines were only issued in the last few weeks. Solar panels are also expected to expand rapidly.

Another company had switched to more sustainable biomass and is no longer dependent on gas.

Another client has bought back the key energy plant from the utility and modernized it to ensure long-term supply.

Screening supply chains for gas risks

Meanwhile, companies are far less systematic in their supply chain to identify gas shortages at suppliers and upstream suppliers in time to react accordingly. Companies that are further along in this respect benefit when it comes to supplier commitments and avoid supply bottlenecks. Companies that will jump on the bandwagon later are likely to lose out.

Replenish inventories

Customers with worldwide plants should think about (pre-)products from suppliers with possible gas shortages. For risk considerations, increased stockpiling would be advisable, as far as the current bottlenecks still allow.

Keeping an eye on supplier risks

Geopolitical risks should be considered when selecting suppliers (2nd source) if possible. It is worthwhile to sharpen one’s view of how to deal with geopolitical risks. The Ukraine war was a wake-up call. The consequences are being felt, especially in supply chains. In hindsight, many would probably have been glad they had thought about it early on.

The pioneers among companies

Companies that have had previous experience with similar initiatives (e.g., due to disrupted supply chains caused by the pandemic or by geopolitical crises) have an organizational advantage and thus a potentially large competitive advantage.

In general, we observe that those companies are at an advantage that have implemented serious initiatives regarding various ESG (environment, social and governance) criteria focal points in recent years as part of the supply chain law and gained implementation experience in task force management during the Corona pandemic. By looking deep into supply chains, due to supply disruptions, companies were able to build a lot of knowledge during the Corona pandemic. Due diligence requirements from the Supply Chain Act are forcing companies to look much deeper into supply chains for risks. More advanced companies can benefit from this transparency and established contacts.

In addition, we have observed cross-plant collaborations in recent months with a view to gas-related risks. However, we see too few companies proactively calling suppliers and their upstream suppliers to account. Most companies have recently recognized this as a risk that continues to smolder.

Checklist against gas shortages

1. Convert secondary fuel system from gas to oil.
2. Procure emergency generators.
3. Purchase and stockpile oil or diesel for existing and new emergency generators.
4. Convert cogeneration plants from gas to oil.
5. Convert gas-fired power plants from LNG to LPG.
6. Place LNG tank on plant site to ensure supply.
7. Cooperate and support each other with neighboring companies (heat, energy, LPG, etc.).
8. Expand solar panels.
9. Consider wind turbines on plant site.
10. Screen supply chain and examine risks with (upstream) suppliers due to gas shortages.
11. Source alternatives to (upstream) suppliers with gas shortages.
12. Stock up on material affected by gas shortages to avoid production losses.
13. Have energy saving measures checked.

Kloepfel Consulting will be pleased to advise you. Take advantage of a free initial consultation.

Contact:

Kloepfel Group
Christopher Willson
Tel.: 0211 941 984 33
Pempelforter Str. 50
40211 Duesseldorf
Mail: rendite@kloepfel-consulting.com