As conflict in the Middle East intensifies, experts say countries that generate more power from wind, solar and other renewables are better protected from global energy shocks. Attacks on critical infrastructure and the effective shutdown of the Strait of Hormuz — the waterway that carries about 20% of the world’s oil and gas — risk disrupting fuel supplies, pushing prices up and worsening cost-of-living pressures.
The world still relies on fossil fuels for roughly 80% of primary energy. That dependence leaves economies vulnerable to geopolitical events that tighten supply and inflate prices. Renewables can’t erase all exposure — green technology supply chains and the rare earths used in manufacturing are themselves subject to trade tensions — but the energy produced by wind, sun and local hydro is, by definition, domestic fuel.
“Once you bring the technology into the countries, the fuel you’re using is the sun, is the wind, is the heat that is local,” says Rana Adib, executive secretary of REN21. That local nature makes renewable-based power systems more resilient to shocks that affect global fossil-fuel markets.
Uruguay: a case study
After the 2008 financial crisis, Uruguay prioritized energy independence and rapidly expanded wind farms alongside hydro and solar. Today more than 90% of the country’s electricity comes from renewables, and in particularly favorable years that figure has reached about 98%. The move demonstrated that a near-100% renewable electricity grid is feasible without massive storage build-outs.
Uruguay’s transition helped stabilize domestic energy costs during previous international crises. Adib notes the country’s shift limited exposure to the sharp energy price rises seen after the war in Ukraine. The renewables build-out also created roughly 50,000 jobs and saved an estimated $500 million a year in imported fuel costs. Still, transport, industry and heating remain largely fossil-fuel based, and fully phasing out those uses will take decades.
Denmark: long-term planning pays off
Denmark began investing in renewables after the oil shocks of the 1970s. Today more than 80% of Danish electricity comes from green sources, with wind accounting for nearly 60% of generation. The country has halved greenhouse gas emissions since 1990 and aims for a fossil-free electricity system by 2030. Extensive district heating networks have phased out coal for many homes and are moving toward renewable biomethane.
Economic benefits and limits
Analysts point to clear economic advantages. An IMF study cited by experts shows that, on average, each 1 percentage point increase in renewables’ share of power generation reduces wholesale electricity prices by about 0.6%. That effect grows when gas prices spike, increasing renewables’ value as a hedge.
But consumers only gain full protection when energy services such as transport and heating are also electrified. Electric vehicles and heat pumps, for example, are necessary to translate cheap renewable electricity into lower costs at the pump and in home heating. Until transport and industry shift away from oil and gas, households remain exposed to fuel-price volatility.
Barriers to faster roll-out
Although renewables are often cheaper than fossil fuels on a pure generation cost basis, accelerating the transition requires large investments and system changes. Oil and gas still benefit from substantial subsidies, while grid upgrades, storage, electrification of heating and transport, and industrial decarbonization demand capital, planning and political will.
There are also supply-chain risks: turbines, panels and batteries rely on global manufacturing and critical minerals, which can be disrupted. However, once installed, the “fuel” for renewables is free and local, offering long-term insulation from international market swings.
Policy and political implications
Rising fossil-fuel prices and the visible vulnerability of supply chains exert pressure on governments to diversify energy mixes. Experts say energy security and climate policy can align: boosting renewables reduces emissions while also making economies less susceptible to price shocks. The current geopolitical crisis has pushed energy strategy back up the political agenda, creating an opening for policies that prioritize both affordability and resilience.
In short, greater reliance on homegrown renewable electricity can blunt the impact of oil and gas price spikes, but realizing that resilience requires electrifying transport and heating, upgrading systems, and committing significant investment and policy support.
Edited by: Jennifer Collins