Supply Chain PENs Are In. Are You?

By 2035, our world will need about 40% more electricity. Competition for electricity is becoming heated, leading to a trend of making your own. This goes well beyond solar panels over a car park, though: Supply chains are already using Private Electricity Networks (PENs), and they’ll continue to gain prominence.

One sector competing for electricity is data centers.

The International Energy Agency forecasts a 128% to 203% increase in global data center power demand by 2030, mainly due to artificial intelligence (AI). Power-hungry GenAI is leading the news cycle with talk of restarting or prolonging the lives of nuclear reactors. And to be sure, training and using Gen AI models consumes staggering amounts of electricity.

But let’s not get distracted by the GenAI shiny object syndrome.

The road ahead is anything but linear. Crumbling electricity infrastructure can’t keep pace with new Loads. What happened in Spain and Portugal in late April is a clear example. Everything that depended solely on the national grid came to a complete stop, and supply chains ground to a halt.

This is no longer just a utilities problem.

Supply chain leaders must become frontline actors in the energy transition. Those who wait for policy or market certainty may find themselves exposed to energy price shocks, grid constraints and reputational risk as the world decarbonizes.

Yes, decarbonize. The trajectory to use more renewable fuel sources is clear. And what’s the main reason? It’s cheaper compared to a new central gas power plant and faster to build.

An obvious solution might be to install more solar and wind power plants and connect them to the existing grid, but it’s not so simple. Power lines don’t have infinite capacity, and the existing grid and transmission network are limited. The required upgrades will take equal amounts of time and money.

Which brings us back to PENs.

Microgrids and private electricity networks (PENs, or "shadow grids"), leverage energy and digital technologies to bypass traditional utility infrastructure and allow supply chains to manage their energy needs securely and independently. Far from being niche technologies, these systems are increasingly accessible, providing companies with enhanced energy security, cost savings, and operational resilience.

In the longer term, Small Modular Reactors (SMRs) will become a part of the generation mix. While they aren’t expected to be commercially viable for the next 10 years, they will eventually offer another low-carbon, reliable energy source for areas facing high energy demands.

The future of electricity will be a mix of renewables, storage options and potentially nuclear, with the added complexity of user behavior changes toward more decentralized energy management.

Through PENs and microgrids, businesses and communities are beginning to create independent systems to meet their needs.

This transformation allows them to gain control over their electricity supply and costs, and to reduce their reliance on centralized grids. For supply chains, this move from centralized energy systems dominated by fossil fuels to energy on the edge offers significant benefits:

• Security: Local energy generation enhances energy security and stabilizes pricing, avoiding volatile market price fluctuations.
• Revenue: Generate additional revenue by selling excess energy back to the grid, helping utilities manage demand without costly grid expansions.
• Resilience: Boost organizational resilience by localizing energy generation, ensuring continuity during grid disruptions.

As PENs proliferate challenges will too.

Private providers will develop co-ops with like-minded companies, but this collaboration will take revenue from traditional utility and power providers. This not only includes a loss of future revenue but more importantly, the maintenance charges included in the KWH prices needed to keep the existing grid running.

We should expect traditional utilities to encroach on private providers, resulting in PENs having to pay for grid access and maintenance.

So, is there a way for traditional utilities to get ahead of this energy transition? Probably not. They are struggling to pay their own way right now. Upgrading the grid is a top priority that many are struggling to achieve. This leaves supply chains in the position of doing what they need to do right now.

CSCOs will need to tackle this headfirst, not just for their own manufacturing locations but also for the supply network. They face a delicate balancing act between long-term energy strategies and short-term pressures.

Localized generation provides operational continuity and new revenue opportunities, aligning expectations for resilience. However, significant regional variations demand an open and flexible strategy that can integrate multiple generation sources, ensuring the supply chain remains adaptable and robust.


Wade L. McDaniel
VP Distinguished Advisor
Gartner Supply Chain
wade.mcdaniel@gartner.com