MHI Solutions Improving Supply Chain Performance
From charging forklift batteries and electric vehicles to running conveyors and keeping the lights on, modern, clean supply chains depend on an uninterrupted supply of power from America’s electrical grid. But demand for power and other factors are testing the grid’s reliability like never before, sending users scrambling for solutions to ensure access to the electricity they need to power their enterprises and continue the transition to a carbon‑free energy future.
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It might be impossible for younger generations to imagine a time when America’s electric utilities were so eager to boost demand for power they created their own industry ambassador—a whimsical cartoon character named Reddy Kilowatt—and put him to work promoting the consumption of their product. With lightning bolts for arms and legs, a lightbulb for a nose and wall outlets for ears, ever‑smiling Reddy served for seven decades starting in 1926, appearing on billboards and in utility logos, starring in a movie and comic book—”Reddy Made Magic”—and unabashedly plugging electricity’s virtues in song.
“I am always there, with lots of power to spare, ‘cause I’m REDDY KILOWATT,” Reddy boasted in a catchy jingle featured in radio and TV commercials.
But just as supply chains are looking to depend even more heavily on electric power as they transition facilities to a net‑zero economy, America’s electrical grid today faces monumental challenges in delivering on the industry’s foundational promise of always‑on, reliable, abundant energy.
Demand for electrical power is growing for the first time in 25 years, so much so that generating capacity in the U.S. would have to double by 2035 to meet the nation’s projected needs. Several factors are driving the growth and concerns about the reliability and resilience of our energy supply:
- Electricity use by America’s tech giants is exploding as they build out new data centers to handle the huge computing power requirements of artificial intelligence (AI) programs. Some experts project a 15% annual growth rate in electricity consumption by data centers through 2030.
- Electrification as a key to meeting climate goals is further straining grid capacity as factories, warehouses and distribution centers (DCs) invest in forklift electrification and replace vehicle fleets powered by internal combustion engines (ICE) with electric vehicles (EVs) for last‑mile delivery.
- Reshoring of U.S. manufacturing is juicing demand for power, and production and investment tax credits included in the Inflation Reduction Act (IRA) have layered on additional incentives to accelerate supply chain electrification.
Adding to new demands on generation, transmission and distribution capacity, more frequent and costly disruptions to the grid due to extreme weather events are further compromising reliability. More than 180 major disruptions occurred in 2020 compared to fewer than two dozen in 2000, federal data show.
If all of that weren’t enough to wipe the grin off Reddy’s face, bottlenecks in the electrical infrastructure supply chain and a dearth of domestic suppliers are slowing efforts to modernize and expand the nation’s century‑old grid, with waits of two years for large power transformers, a key grid component.
Michael Galyen, vice president of technology and compliance for MHI member Concentric, a national distributed power services organization delivering resilient and sustainable facility power systems for forklift mobility and critical infrastructure, said all the trends could add up to a future much different from the past.
“The net result is that we certainly have the potential for less reliable, less available and more expensive power than we’ve ever had,” Galyen said.
A new report by the Council of Supply Chain Management Professionals (CSCMP), sponsored by MHI and the Warehouse Education and Research Council (WERC), warns that electrical grid planners are concerned the power‑on‑demand system the U.S. has come to take for granted could soon become a “supply‑driven” system where “to switch something on you must first switch something off.”
“Driven by growth in demand from multiple sources, this could happen even without the impact of an extensive and rapid energy transition,” the report, “The Supply Chain Risks of the Energy Transition: A Blueprint for U.S. Action,” continued.
Alphabet Soup of Solutions
The silver lining is that nobody is sitting on their hands waiting for the grid to fail. Electric utilities and end users in material handling and supply chain alike are taking a proactive approach and investing in solutions to mitigate potential risks posed by an increasingly fragile electrical system infrastructure.
Commercial and industrial end users are shielding themselves from power outages, brownouts and power quality issues by building their own generation and energy storage systems and installing kicked‑up building management systems to help improve the efficiency and reliability of their power supply.
Utilities, meanwhile, are investing in advanced metering technologies that allow them to spot problems early enough to avoid overloading the grid by working with their customers to manage demand for power effectively in order to stabilize the grid and maximize its capacity.
The solutions include an alphabet soup of acronyms—DER, AMI, DG, WEMS, ESS, EV, BMS, PV, DR, PPA, BESS and more—that together spell out a major makeover in the way the grid works and offer hope for relief from the looming power supply crisis outlined in the CSCMP’s 82‑page report published in October.
Among the most significant transformations is the rise of distributed energy resources (DERs)—solar photovoltaic cells (PV), wind turbines, battery energy storage systems (BESS), electric vehicles (EVs) and microgrids, for example—that ensure reliable power to facilities and can also enhance grid stability.
A U.S. Department of Energy study estimates the generating capacity of DERs will grow 262 gigawatts from 2023 to 2027, nearly matching the 271 gigawatts in expected additions to bulk utility‑scale generation and adding significantly to the current total U.S. generating capacity of about 1,300 gigawatts.
Boom in Microgrids
Microgrids, incorporating distributed generation (DG) with an energy storage system (ESS) and load management capabilities, are mushrooming as continuing advances in storage solutions improve their viability as an option for commercial and industrial users looking to ensure power quality and availability.
At its parts distribution facility in Greene, New York, MHI member The Raymond Corp. currently uses a solar photovoltaic (PV) microgrid with a backup battery storage system to serve its electric forklift fleet and other facility needs and plans to add an EV fleet for daily parts deliveries to its nearby forklift plant.
From its vantage point as the manufacturer—alongside sister company and MHI member Toyota Material Handling Material Handling, Inc.—of one of every three forklifts sold in North America, Raymond has seen customer interest in DERs explode, said Damon Hosmer, general manager of energy storage solutions.
“We’re seeing a huge influx in California, Oregon and Washington state, especially with the cold storage providers right now,” said Hosmer, citing reliability, sustainability and cost management as key drivers. “They are looking for ways to offset (grid power) and incorporate renewables, whatever it may be.”
Because EVs are especially well‑suited to last‑mile delivery and other applications that involve short routes, Raymond is also noticing significant growth in microgrids around major ports like Long Beach, where Hosmer recently visited a trans‑loading facility that is trying to use 100% carbon‑free electricity to power its drayage equipment.
TMHNA also recently installed a solar‑powered microgrid at its manufacturing campus in Columbus, Indiana, and MHI member Southworth International Group Inc. (SIGI) this year will complete a new solar PV installation expected to supply 100% of power for its North American manufacturing site in Arkansas.
Both are examples of microgrids that will not only enhance reliability and lower energy costs, but also help meet corporate sustainability goals by reducing each company’s greenhouse gas (GHG) emissions—in SIGI’s case halving its Scope 1 and 2 emissions from direct operations and purchased energy inputs.