What Procurement Leaders Should Know About Energy Security
The European Commission's 2024 "fitness check" on EU energy security regulations offers critical insights for procurement leaders navigating an increasingly volatile energy landscape.
The evaluation, which examines the 2017 to 2024 period, provides a comprehensive assessment of how legislative frameworks performed during unprecedented supply chain disruptions and what improvements are needed to safeguard future energy procurement strategies.
The assessment focuses on two cornerstone regulations: the 2017 Gas Security of Supply Regulation and the 2019 Electricity Risk Preparedness Regulation.
Both were tested extensively during the 2021-23 energy crisis, triggered by the Russia-Ukraine conflict in 2022, making this review particularly relevant for procurement professionals responsible for securing stable energy supplies.
Strategic sourcing in transition
For procurement teams, understanding the shifting energy mix is essential for long-term planning. Renewable energy sources have grown from 18.4% in 2017 to 24.5% by 2023, while coal declined from 14.7% to 9.6% over the same period. This transition presents both opportunities and challenges for energy procurement strategies, as organisations must balance sustainability commitments with supply reliability.
The natural gas market has undergone particularly dramatic transformation. With domestic EU production declining, import dependency has intensified, though supplier diversity has improved significantly. Prior to 2022, Russia dominated gas imports at 45% of total supply. By 2024, Norway had become the primary supplier at 33%, followed by Russia at 19% and the US at 17%.
Ditte Juul-Jorgensen, the Director-General of the European Commission's Directorate-General for Energy, explains on LinkedIn the urgency of this shift: "Our efforts started in January 2022, when gas supply and storage across the EU had been weaponised in what turned out to be the run-up to Russia's invasion of Ukraine. It was clear that the high level of dependence on Russia for our gas supply was a risk to our security and our economy."
Procurement risk mitigation
The dramatic increase in liquefied natural gas procurement demonstrates how quickly sourcing strategies have evolved. LNG imports rose from just 10% in 2017 to 37% in 2024, with the US supplying 46%, Russia 20% and Qatar 12%. This diversification represents a fundamental shift in procurement risk management, as organisations and governments work to eliminate Russian gas dependency by 2027.
For procurement professionals, this diversification strategy offers valuable lessons in supplier risk management. The "fitness check" reveals that while enhanced transparency has improved preparedness and resilience, significant gaps remain in risk assessment capabilities. The report identifies critical areas requiring stronger procurement planning, including cybersecurity threats, hybrid risks, access to critical energy transition minerals and climate change impacts.
Efficiency and administrative burden
From a procurement operations perspective, the "fitness check" found that the main framework costs were administrative and infrastructure related. While indicators suggest these costs are low compared to the potential costs of supply crises, the report acknowledges that the burden on national administration can be substantial in terms of manpower. The evaluation identifies considerable opportunity for streamlining the framework and simplifying procurement processes.
The coherence assessment found that while regulations are mostly consistent with existing legislation, greater coordination is needed regarding security of supply. The increased electrification of energy systems and emerging geopolitical risks require additional measures that procurement teams must factor into their strategic planning.
Framework adaptation required
The "fitness check" confirms that existing regulations have delivered EU added value by encouraging cooperation, risk mitigation and security measures across member states. However, procurement leaders should note that deeper mitigation strategies are needed to address evolving challenges.
The report's conclusion is clear: while the investigated regulations remain relevant, the framework requires adaptation to meet changing energy markets and emerging threats. For procurement professionals, this signals a period of continued regulatory evolution that will demand flexible sourcing strategies, robust risk management and close monitoring of legislative developments to ensure supply security and cost competitiveness in an uncertain geopolitical environment.
