Make Renewable Energy Projects Successful with Project Management Part 1
Ever increasing energy costs, climate change, sustainability and resource depletion…these are just a few reasons why the renewable energy industry has been growing rapidly for the last decade or so. Because of their very nature, however, renewable energy projects face many challenges and risks. However, project management can help mitigate some of these risks.
In this first part we will explain the role renewable s play in the energy industry and the importance of project management for renewable energy projects to overcome schedule and cost challenges for a successful project completion.
What is renewable energy and why is it becoming so important?
Renewable energy, also called “renewables”, is generated from non-fossil fuels. Some examples are solar, wind and geothermal energy. In their Statistical Review of World Energy 2014, BP has found that the consumption of renewable energy grew by 16.3% globally in 2013 and is now providing 5.3% of the world’s electricity. This might not sound impressive on its own, but if you compare it to 2.7% in 2008, the share has almost doubled.
There are many reasons why renewable energy has grown so fast in such a short time. There are environmental concerns, but mostly the reasons are economical. Fossil fuel reserves are quickly diminishing. While coal is expected to last 113 more years globally, oil reserves are only sufficient to meet 53.3 years of global production. This scarcity leads to rising energy costs and the wish to achieve some kind of independence from fossil fuels. Investing in renewable energy sources and implementing renewable energy projects is one of those measures.
Why is PM important for renewable energy projects?
Renewables project managers face specific challenges in addition to those of “normal” projects, namely the triple constraints of cost, schedule and scope (quality). Or rather the challenges are magnified. Project managers require significant technological know-how to be able to anticipate and mitigate the unique risks and challenges in this industry. A few examples are the uncertainty of governmental support and whether there are sales opportunities for renewable energy projects. This means that there has to be a lot of risk and change management.
Risks and Challenges of Renewable Energy Projects and how to overcome them
The initial capital costs often exceed all other costs and thus, have a significant impact on the profitability of a renewable energy project. Often the devil is in the details. Wind farms for example are often located in areas that are difficult to reach, particularly for large trucks, so roads need to be built, which requires getting permission from the authorities etc. This all leads to additional costs that can add up very quickly. A renewable energy project manager needs to be able to calculate and control the costs carefully and should have the necessary forecasting skills. Budget allocation and project cost estimation and control are vital for a project’s success.