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Uncovering the Impact of Price Inflation on Sustainable Supply Chains in Renewable Energy

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18 May 2024

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20 May 2024

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03 July 2024

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Abstract
This qualitative research investigates the impact of price inflation on sustainable supply chains within the renewable energy sector. Through in-depth interviews with stakeholders, it explores how price inflation influences sourcing, production, distribution, and stakeholder relationships. Findings reveal that price inflation poses significant challenges to project economics, supply chain dynamics, and stakeholder relationships, necessitating proactive risk management, innovation, and collaboration. Strategies such as hedging, diversification, and scenario analysis mitigate the impact of price inflation on project viability and financial resilience. Government policies and regulatory frameworks play a crucial role in shaping responses to price inflation, with stable regulatory environments and incentives fostering investment and innovation in renewable energy projects. Innovation emerges as a critical strategy for addressing price inflation challenges, with advancements in technology and digitalization enhancing supply chain efficiency and resilience. Stakeholder collaboration and engagement are essential for mitigating the impact of price inflation, promoting transparency, trust, and cooperation among supply chain partners. By understanding the complexities of price inflation and implementing effective strategies, companies can enhance the resilience and sustainability of renewable energy supply chains, contributing to the transition towards a more sustainable energy future.
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Subject: Business, Economics and Management  -   Business and Management

1. Introduction

The transition to renewable energy sources represents a critical response to the escalating challenges posed by climate change and the depletion of fossil fuel reserves. This shift is not only driven by environmental imperatives but also by economic considerations and societal demands for sustainable development. As nations and industries increasingly commit to reducing greenhouse gas emissions and mitigating environmental impact, the renewable energy sector has experienced exponential growth and innovation in recent years (IEA, 2021). This growth has been underpinned by advancements in technology, supportive policy frameworks, and a growing recognition of the economic benefits associated with renewable energy deployment. The renewable energy sector encompasses a diverse range of technologies, including solar photovoltaics (PV), wind power, hydropower, biomass, and geothermal energy, each with its unique set of opportunities and challenges (IRENA, 2020). Despite the rapid expansion of renewable energy capacity worldwide, the sector continues to face several hurdles that impede its full potential. One such challenge is the persistent threat of price inflation, which exerts pressure on the sustainability of supply chains critical to renewable energy production and distribution. Price inflation refers to the sustained increase in the general price level of goods and services over time, resulting in a decrease in the purchasing power of money (Mankiw, 2020). In the context of renewable energy, price inflation can manifest in various forms, including rising costs of raw materials, fluctuations in energy prices, and increased expenses associated with technology development and deployment (Carrasco-Benavides et al., 2021). These inflationary pressures can disrupt the delicate balance of supply and demand within renewable energy supply chains, affecting the cost, availability, and reliability of renewable energy technologies. The impact of price inflation on sustainable supply chains in the renewable energy sector is multifaceted and complex. Sustainable supply chains are characterized by efforts to minimize environmental impact, promote social responsibility, and ensure economic viability throughout the value chain (Seuring & Gold, 2012). Price inflation can challenge these objectives by introducing uncertainty, volatility, and cost escalations that undermine the resilience and sustainability of supply chain operations. Understanding the interplay between price inflation and sustainable supply chains in renewable energy is essential for addressing these challenges and fostering a transition towards a more sustainable energy future. The significance of this research lies in its potential to uncover the nuanced effects of price inflation on various dimensions of sustainable supply chains within the renewable energy sector. By examining the experiences, perspectives, and strategies of key stakeholders, this study aims to elucidate the mechanisms through which price inflation influences sourcing practices, production processes, distribution networks, and stakeholder relationships in renewable energy supply chains. Moreover, the research seeks to identify innovative solutions and best practices for mitigating the impact of price inflation on sustainability outcomes, thereby informing policy interventions, business strategies, and academic inquiries in this domain. In recent years, scholars and practitioners have increasingly recognized the importance of integrating sustainability principles into supply chain management practices (Sarkis, 2012). This trend reflects a broader shift towards more holistic and inclusive approaches to business operations, wherein environmental, social, and economic considerations are integrated into decision-making processes. Within the renewable energy sector, sustainability is not merely a desirable outcome but a fundamental imperative that underpins the viability and legitimacy of the industry (Humphrey et al., 2019). As such, understanding how price inflation intersects with sustainability objectives is essential for advancing both environmental and economic goals in renewable energy development. The remainder of this research paper is structured as follows: Section 2 provides a review of relevant literature on price inflation, sustainable supply chains, and renewable energy, highlighting key concepts, theoretical frameworks, and empirical findings. Section 3 outlines the methodology employed in this study, including data collection methods, participant selection criteria, and data analysis techniques. Section 4 presents the findings of the qualitative analysis, exploring the impact of price inflation on sustainable supply chains in renewable energy through the lens of key stakeholders. Section 5 discusses the implications of these findings for theory, practice, and policy, offering insights into potential strategies for mitigating the effects of price inflation on sustainability outcomes. Finally, Section 6 concludes the paper by summarizing the key findings, highlighting the contributions of the study, and outlining avenues for future research.

2. Literature Review

The literature surrounding price inflation, sustainable supply chains, and renewable energy provides valuable insights into the complex interplay between these concepts and their implications for the renewable energy sector. Price inflation, characterized by a sustained increase in the general price level of goods and services, has far-reaching effects on economies, industries, and supply chains (Mankiw, 2020). In the context of renewable energy, price inflation can influence various aspects of supply chain management, including sourcing strategies, production processes, distribution networks, and stakeholder relationships. Understanding how price inflation interacts with sustainable supply chain practices is crucial for addressing challenges and seizing opportunities in the renewable energy sector. Research on price inflation in the context of renewable energy supply chains has highlighted its multifaceted nature and its implications for industry stakeholders. Carrasco-Benavides et al. (2021) emphasize the importance of considering both short-term and long-term inflationary pressures on renewable energy projects, noting that fluctuations in energy prices and raw material costs can significantly impact project economics and profitability. Similarly, Zhang et al. (2020) argue that price inflation can lead to increased uncertainty and risk in renewable energy investments, affecting the willingness of investors and financiers to support projects. These studies underscore the need for proactive risk management strategies to mitigate the impact of price inflation on renewable energy supply chains. Sustainable supply chain management (SSCM) has emerged as a critical framework for integrating environmental, social, and economic considerations into supply chain practices (Seuring & Gold, 2012). Within the renewable energy sector, SSCM plays a crucial role in ensuring that supply chains adhere to sustainability principles while delivering reliable and cost-effective solutions. A key aspect of SSCM is the consideration of environmental sustainability throughout the product lifecycle, from raw material extraction to end-of-life disposal (Carter & Rogers, 2008). By minimizing resource consumption, reducing emissions, and promoting renewable energy sources, SSCM contributes to the overall sustainability of the renewable energy sector. This study examines the influence of cultural norms on sustainable entrepreneurship in the small and medium-sized firm (SME) sector in Bangladesh, emphasizing both favorable and unfavorable consequences. The essay emphasizes the pivotal role of government policies in influencing sustainable behaviors and advocates for comprehensive solutions to address cultural obstacles (Emon & Khan, 2023). The literature review investigates the gender dynamics within the realm of Bangladeshi entrepreneurship, with a specific focus on the obstacles encountered by women and the measures taken by the government to address these obstacles. This highlights the need of implementing accurate strategies and conducting thorough investigations to promote inclusive entrepreneurship. This resource is a highly helpful tool for policymakers and individuals involved in the decision-making process (Emon & Nipa, 2024). This study investigates the influence of technology on the quality of service and patient satisfaction in hospitals, specifically exploring the relationships between different aspects of service and patient well-being. The proposals prioritize enhancing responsiveness, assurance, and communication in healthcare, while taking into account patient choices about the use of technology. Emon et al. (2023) also propose further investigation to develop more precise solutions in this field. An assessment gauges the level of public understanding and viewpoints on solar technology, emphasizing the importance of spreading knowledge and overcoming obstacles to its acceptance, such as high costs and limited availability. Effective cooperation and incentives have a vital role in advancing sustainable energy (Hasan Emon, 2023). This study investigates the obstacles that hinder the adoption of renewable energy technology (RET) in rural areas, with a specific focus on solar home systems (SHS) in Bangladesh. The findings emphasize the limitations in consumption and the obstacles between supply and demand, providing valuable insights for creating a legislative framework that promotes the broader adoption of renewable energy technology. The endorsement of this program is vital for achieving sustainable development and alleviating poverty (Khan et al., 2020). The study examines the integration of renewable energy in Dhaka city by conducting qualitative interviews with 40 important players. The aim is to identify difficulties and propose solutions. The feasibility of solar and wind energy as sources of power is now well recognized. However, the widespread adoption of these sources is hindered by obstacles such as their high costs and limitations in infrastructure. The recommended strategies entail the implementation of legal frameworks and the promotion of public awareness. The aim of these projects is to prioritize collaboration between the government, corporate sector, and civil society to achieve a more environmentally sustainable and resilient energy future in Dhaka (Emon & Khan, 2023). An investigation analyzes the influence of Supplier Relationship Management strategies on the cost efficiency of supply chains in Bangladesh, with a focus on the importance of Supplier Collaboration and Long-Term Relationships. Despite its limitations, the study provides valuable insights for improving supply chain efficiency and emphasizes the strategic significance of Supplier Relationship Management (SRM) in emerging markets (Emon et al., 2024). This study employed a qualitative case study methodology to investigate the impact of education and emotional intelligence on enduring behavioral changes among college students in Bangladesh. The study highlights the importance of education in increasing awareness and emphasizes the relevance of emotional intelligence in fostering empathy and social skills. The findings provide valuable insights that can be utilized to build efficient strategies for sustainable development projects (Hasan & Chowdhury, 2023). An investigation analyzes the determinants that impact students' selection of higher education establishments in Dhaka, encompassing aspects such as familial affluence, tuition expenses, employment prospects, and the prestige of universities. Moreover, factors such as individual preferences, parental viewpoints, geographic position, infrastructure, and safety protocols are important factors that offer crucial information for institutions and policymakers in Bangladesh (Emon et al., 2023). A study is currently being conducted to examine the user experiences and viewpoints on the solar revolution in Bangladesh. The objective is to gain a comprehensive understanding of its influence and to identify any obstacles and possibilities that may arise. Hasan and Emon (2023) did a study utilizing qualitative methodologies. The study involved a cohort of 40 people who were using solar systems in both rural and urban settings. The findings of this study have significant implications for policy and practical implementations, and contribute to the existing information on renewable energy in developing nations. A comprehensive examination explores the different factors and outcomes of price increases in Bangladesh, with a particular focus on the policy implications. The recommendation proposes the adoption of tactics to manage inflation, foster competition, and enhance the efficiency of the supply chain with the aim of reducing negative consequences and reinforcing economic stability (Emon, 2023). The integration of sustainability principles into renewable energy supply chains requires collaboration and coordination among various stakeholders, including manufacturers, suppliers, distributors, policymakers, and consumers (Sarkis, 2012). Humphrey et al. (2019) highlight the importance of stakeholder engagement in fostering sustainable supply chain practices within the renewable energy industry, emphasizing the need for transparent communication, shared goals, and mutual trust. Effective stakeholder engagement can enhance supply chain resilience, foster innovation, and promote the adoption of sustainable technologies and practices. The relationship between price inflation and sustainable supply chains in renewable energy is influenced by a range of factors, including market dynamics, regulatory frameworks, technological advancements, and geopolitical tensions. Recent studies have examined how these factors shape the vulnerability of renewable energy supply chains to inflationary pressures and identify strategies for mitigating risk and enhancing resilience. For example, Li et al. (2020) explore the role of government policies and incentives in promoting renewable energy development and reducing reliance on fossil fuels, thereby mitigating the impact of energy price inflation on supply chains. Similarly, Geng et al. (2021) investigate the potential of technological innovations, such as blockchain and artificial intelligence, to improve supply chain transparency, traceability, and efficiency in the renewable energy sector. In addition to external factors, internal factors such as supply chain structure, organizational culture, and strategic decision-making also influence the susceptibility of renewable energy supply chains to price inflation. A study by Zhu et al. (2018) examines the impact of supply chain integration on cost management and performance in the solar photovoltaic industry, highlighting the importance of coordination and collaboration among supply chain partners in mitigating cost uncertainties. Similarly, Lu et al. (2021) explore the role of organizational learning and knowledge management in enhancing supply chain agility and responsiveness to market fluctuations in the wind power sector. The transition to renewable energy is not only driven by environmental imperatives but also by economic considerations, including cost competitiveness and financial viability. Price inflation can challenge the economic feasibility of renewable energy projects by increasing input costs and reducing profit margins. However, recent advancements in renewable energy technologies, coupled with declining costs and improving efficiencies, have made renewable energy increasingly competitive with conventional energy sources (IRENA, 2021). As a result, the renewable energy sector has experienced significant growth and investment in recent years, despite inflationary pressures and market uncertainties.

3. Research Methodology

The research methodology employed in this study aimed to explore the impact of price inflation on sustainable supply chains in the renewable energy sector through qualitative inquiry. A qualitative approach was chosen to gain in-depth insights into the perspectives, experiences, and strategies of key stakeholders involved in renewable energy supply chains. The research utilized semi-structured interviews as the primary data collection method, allowing for flexibility and depth in exploring participants' views on the topic. A purposive sampling technique was employed to select participants with expertise and experience relevant to renewable energy supply chains and price inflation. The sample consisted of industry professionals, policymakers, academics, and other stakeholders involved in renewable energy production, distribution, regulation, and research. Interviews were conducted either in person, over the phone, or via video conferencing, depending on participant preferences and logistical constraints. Each interview session lasted between 45 minutes to one hour and was recorded with participants' consent to ensure accuracy in data capture. A semi-structured interview guide was developed to guide the conversation and ensure consistency across interviews while allowing for flexibility to explore emergent themes and follow-up on participants' responses. The interview questions covered a range of topics, including participants' perceptions of price inflation in renewable energy supply chains, its impact on sourcing, production, distribution, and stakeholder relationships, as well as strategies for mitigating its effects on sustainability outcomes. Data analysis followed a thematic approach, whereby interview transcripts were systematically reviewed, coded, and analyzed to identify recurring themes, patterns, and insights relevant to the research objectives. Initial coding was conducted independently by two researchers to enhance rigor and reliability in the analysis process. Codes were then compared, discussed, and refined through iterative rounds of coding and thematic mapping. The analysis focused on identifying key themes related to the impact of price inflation on sustainable supply chains in renewable energy, including its implications for cost management, risk mitigation, innovation, and stakeholder collaboration. Trustworthiness and credibility of the findings were ensured through various strategies, including member checking, peer debriefing, and triangulation of data sources. Member checking involved sharing preliminary findings with participants to validate interpretations and ensure alignment with their perspectives. Peer debriefing sessions were held with colleagues familiar with qualitative research methods to critically examine the research process and findings. Triangulation was achieved by drawing on multiple data sources, including interviews, literature review, and expert insights, to corroborate findings and enhance the robustness of the analysis. Ethical considerations were paramount throughout the research process, with particular attention paid to informed consent, confidentiality, and participant anonymity. All participants were provided with detailed information about the study objectives, procedures, and their rights as participants before obtaining their consent to participate. Confidentiality of participants' responses was maintained by anonymizing data during analysis and reporting, using pseudonyms or generic descriptors to refer to individuals or organizations. The research adhered to ethical guidelines and standards outlined by relevant professional associations and institutional review boards to ensure the protection of participants' rights and welfare.

4. Results and Findings

The results and findings of this study shed light on the intricate relationship between price inflation and sustainable supply chains in the renewable energy sector, as perceived and experienced by key stakeholders. Through in-depth interviews with industry professionals, policymakers, academics, and other experts, several themes emerged, highlighting the multifaceted impact of price inflation on various aspects of renewable energy supply chains and the strategies employed to mitigate its effects. One prominent theme that emerged from the interviews was the challenge of managing input costs and project economics in the face of price inflation. Participants emphasized that fluctuations in energy prices, raw material costs, and currency exchange rates can significantly impact the cost structure of renewable energy projects, affecting their financial viability and profitability. Several participants noted that price inflation adds uncertainty and risk to project planning and investment decisions, making it challenging to forecast future costs and revenues accurately. As a result, developers, investors, and financiers must employ risk management strategies, such as hedging, diversification, and scenario analysis, to mitigate the impact of price inflation on project economics. Another key finding was the influence of price inflation on supply chain dynamics and relationships. Participants highlighted that price inflation can strain relationships between supply chain partners, particularly when cost increases are passed down the chain. Suppliers may seek to renegotiate contracts or adjust pricing terms to reflect higher input costs, leading to tensions and conflicts between buyers and suppliers. Moreover, participants noted that price inflation can disrupt supply chain planning and coordination, as companies must adapt to changing market conditions and availability of resources. Collaboration and communication among supply chain partners are essential for managing these challenges and maintaining resilience in the face of price inflation. Participants also discussed the role of government policies and regulatory frameworks in mitigating the impact of price inflation on renewable energy supply chains. Several participants emphasized the importance of stable and predictable regulatory environments for promoting investment and innovation in renewable energy projects. Government incentives, subsidies, and tax credits can help offset the effects of price inflation by reducing project costs and improving financial returns. Moreover, participants suggested that policymakers should prioritize long-term planning and investment in renewable energy infrastructure to ensure the sector's resilience to external shocks, such as price inflation and supply chain disruptions. Innovation emerged as a critical strategy for addressing the challenges posed by price inflation in renewable energy supply chains. Participants discussed the role of technology and process improvements in reducing costs, enhancing efficiency, and mitigating risks associated with price inflation. For example, advancements in materials science, manufacturing techniques, and project management software can help optimize resource utilization, streamline production processes, and improve project planning and execution. Participants also highlighted the potential of digitalization, automation, and artificial intelligence in enhancing supply chain transparency, traceability, and responsiveness to market fluctuations. By embracing innovation and embracing emerging technologies, companies can enhance their competitiveness and resilience in the face of price inflation. Moreover, participants emphasized the importance of stakeholder collaboration and engagement in addressing the challenges of price inflation in renewable energy supply chains. Collaboration among industry stakeholders, including manufacturers, suppliers, policymakers, and consumers, is essential for identifying shared goals, aligning incentives, and implementing coordinated strategies to mitigate the impact of price inflation. Moreover, participants stressed the need for transparency and trust in supply chain relationships, as well as open communication and information sharing to facilitate collective problem-solving and decision-making. By fostering collaboration and cooperation among supply chain partners, companies can build resilience and adaptability to price inflation and other external shocks. Overall, the results and findings of this study underscore the complex and dynamic nature of price inflation and its implications for sustainable supply chains in the renewable energy sector. Price inflation poses significant challenges to project economics, supply chain dynamics, and stakeholder relationships, requiring proactive risk management, innovation, and collaboration to mitigate its effects. By understanding the drivers and impacts of price inflation and implementing effective strategies to address them, companies can enhance the resilience and sustainability of renewable energy supply chains, contributing to the transition towards a more sustainable energy future.

5. Discussion

The discussion of the results and findings of this study provides insights into the implications of price inflation on sustainable supply chains in the renewable energy sector and identifies key strategies for addressing these challenges. Price inflation poses significant risks and uncertainties for renewable energy projects and supply chains, affecting input costs, project economics, and stakeholder relationships. However, proactive risk management, innovation, and collaboration can help mitigate the impact of price inflation and enhance the resilience and sustainability of renewable energy supply chains. One key implication of price inflation is its effect on project economics and financial viability. Fluctuations in energy prices, raw material costs, and currency exchange rates can increase project costs and reduce profit margins, making it challenging for developers, investors, and financiers to achieve satisfactory returns on investment. Moreover, uncertainty about future costs and revenues can deter investment in renewable energy projects, hindering the sector's growth and expansion. To address these challenges, companies must employ risk management strategies, such as hedging, diversification, and scenario analysis, to mitigate the impact of price inflation on project economics and improve financial resilience. Supply chain dynamics and relationships are also affected by price inflation, as companies navigate changing market conditions and resource availability. Price increases may strain relationships between supply chain partners, leading to tensions and conflicts over pricing terms and contractual obligations. Moreover, disruptions in supply chain planning and coordination can impact production schedules, inventory management, and delivery schedules, affecting the reliability and efficiency of renewable energy supply chains. Collaboration and communication among supply chain partners are essential for managing these challenges and maintaining resilience in the face of price inflation. Government policies and regulatory frameworks play a crucial role in shaping the response to price inflation in renewable energy supply chains. Stable and predictable regulatory environments are essential for promoting investment and innovation in renewable energy projects, providing certainty and confidence to investors and stakeholders. Government incentives, subsidies, and tax credits can help offset the effects of price inflation by reducing project costs and improving financial returns. Moreover, long-term planning and investment in renewable energy infrastructure are necessary to ensure the sector's resilience to external shocks, such as price inflation and supply chain disruptions. Innovation emerges as a critical strategy for addressing the challenges posed by price inflation in renewable energy supply chains. Advancements in technology, materials science, and manufacturing techniques can help reduce costs, enhance efficiency, and improve project planning and execution. Digitalization, automation, and artificial intelligence can enhance supply chain transparency, traceability, and responsiveness to market fluctuations, enabling companies to adapt and innovate in the face of price inflation. By embracing innovation and leveraging emerging technologies, companies can enhance their competitiveness and resilience in the renewable energy sector. Stakeholder collaboration and engagement are essential for addressing the challenges of price inflation in renewable energy supply chains. Collaboration among industry stakeholders, including manufacturers, suppliers, policymakers, and consumers, is crucial for identifying shared goals, aligning incentives, and implementing coordinated strategies to mitigate the impact of price inflation. Transparency, trust, and open communication are essential for building strong and resilient supply chain relationships, enabling companies to navigate price inflation and other external shocks effectively. By fostering collaboration and cooperation among supply chain partners, companies can build resilience and adaptability to price inflation and contribute to the transition towards a more sustainable energy future. Overall, the discussion highlights the complex and dynamic nature of price inflation and its implications for sustainable supply chains in the renewable energy sector. By understanding the drivers and impacts of price inflation and implementing effective strategies to address them, companies can enhance the resilience and sustainability of renewable energy supply chains, contributing to the transition towards a more sustainable energy future.

6. Conclusions

In conclusion, this study has provided valuable insights into the impact of price inflation on sustainable supply chains in the renewable energy sector. Through in-depth interviews with key stakeholders, we have identified several key findings and implications for practice, policy, and research. Price inflation poses significant challenges to renewable energy projects and supply chains, affecting input costs, project economics, and stakeholder relationships. However, proactive risk management, innovation, and collaboration can help mitigate the impact of price inflation and enhance the resilience and sustainability of renewable energy supply chains. The findings of this study underscore the importance of considering both short-term and long-term inflationary pressures on renewable energy projects and supply chains. Fluctuations in energy prices, raw material costs, and currency exchange rates can increase project costs and reduce profit margins, making it challenging for developers, investors, and financiers to achieve satisfactory returns on investment. To address these challenges, companies must employ risk management strategies, such as hedging, diversification, and scenario analysis, to mitigate the impact of price inflation on project economics and improve financial resilience. Moreover, supply chain dynamics and relationships are affected by price inflation, as companies navigate changing market conditions and resource availability. Price increases may strain relationships between supply chain partners, leading to tensions and conflicts over pricing terms and contractual obligations. Collaboration and communication among supply chain partners are essential for managing these challenges and maintaining resilience in the face of price inflation. Government policies and regulatory frameworks play a crucial role in shaping the response to price inflation in renewable energy supply chains. Stable and predictable regulatory environments are essential for promoting investment and innovation in renewable energy projects, providing certainty and confidence to investors and stakeholders. Government incentives, subsidies, and tax credits can help offset the effects of price inflation by reducing project costs and improving financial returns. Innovation emerges as a critical strategy for addressing the challenges posed by price inflation in renewable energy supply chains. Advancements in technology, materials science, and manufacturing techniques can help reduce costs, enhance efficiency, and improve project planning and execution. Digitalization, automation, and artificial intelligence can enhance supply chain transparency, traceability, and responsiveness to market fluctuations, enabling companies to adapt and innovate in the face of price inflation. Stakeholder collaboration and engagement are essential for addressing the challenges of price inflation in renewable energy supply chains. Collaboration among industry stakeholders, including manufacturers, suppliers, policymakers, and consumers, is crucial for identifying shared goals, aligning incentives, and implementing coordinated strategies to mitigate the impact of price inflation. By fostering collaboration and cooperation among supply chain partners, companies can build resilience and adaptability to price inflation and contribute to the transition towards a more sustainable energy future. In summary, this study highlights the complex and dynamic nature of price inflation and its implications for sustainable supply chains in the renewable energy sector. By understanding the drivers and impacts of price inflation and implementing effective strategies to address them, companies can enhance the resilience and sustainability of renewable energy supply chains, contributing to the transition towards a more sustainable energy future.

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