Energy shock could strengthen the case for renewables

A war-triggered chokehold on the Strait of Hormuz has unleashed what the International Energy Agency describes as the most severe oil supply disruption the world has ever seen, after the US-Israeli attack on Iran sent shockwaves through global energy markets.

And the turmoil is still unfolding.

Analysts say the fallout from the energy shock could be felt for years – even decades, depending on how quickly the conflict ends – piling fresh pressure on economies and households already struggling to stay afloat.

It’s only four years since Russia’s full-scale invasion of Ukraine set off the previous energy crisis.

“What we are seeing now is a postcard from the future,” said Conall Bolger CEO of Trifecta Ireland, a Dublin-based energy think tank.

“It’s a dreadful situation that negatively affects so many people across the globe,” he added, “but there will be more instances like this”.

So, will this latest warning about the dangers of dependence on imported fossil fuels finally tip the balance in favour of renewables?

Maybe – is the unsatisfying but most honest answer.

Fuel prices surge amid global shortages

Sceptics note that past crises have often produced only limited change – moments when pressure for reform gathered pace, then ebbed as soon as the geopolitical storm passed.

A full-scale transformation of the energy system never materialised.

And although renewable generation continues to rise year after year, fossil fuels still run much of the global economy, including the growing infrastructure around artificial intelligence, which is on course to consume at least 3% of total global electricity demand by 2030.

Even so, supporters of clean energy believe this could mark a decisive turning point.

“The Hormuz crisis will speed up the energy transition,” said Kingsmill Bond, a strategist for the energy thinktank Ember.

He argues that the key difference between the twin shocks of this decade and those of the 1970s is that green technology is now ready to deploy – with solar, wind, batteries, EVs and other electro tech already in use.

The price spikes and growing risks tied to fossil fuels “literally hands over victory to their competitor,” he told RTÉ News.

“Maybe this is the difference between now and 2022, is then we thought we could go from buying our gas from Russia, to buying our gas from America and Qatar,” he said.

This time, he said, the rethink runs deeper.

Hormuz has certainly sharpened the debate among policymakers in Europe.

And where the conversation once focused mainly on climate, security now sits squarely at the centre.

“The difference between climate and energy security is like your doctor telling you to get off the couch, go for a run and get fit, versus someone breaking in through the window and holding a gun to your head,” said Mr Bond.

“We have just got to get on with it – we have no other option.”

On Wednesday, the EU announced Accelerate EU – a suite of measures to support governments to manage the current crisis and plan for the future.

EU Energy Commissioner Dan Jørgensen said that “this must be a wake-up call and a turning point,” for Europe to shift away from fossil fuels.

The measures call for reducing taxes on electricity and incentivising the shift to homegrown, clean energies across industry, transport, and building sectors.

“This will give us energy independence and security, and mean we are better able to weather geopolitical storms,” European Commission President Ursula von der Leyen said.

Dan Jørgensen said ‘this must be a wake-up call and a turning point’

But, analysts told RTÉ News, it may not be that simple.

Take the example of electric vehicles, said Judith Jacob, head of geopolitical intelligence at Forward Global, a London-based risk consultancy.

“You would think that the minute there have been spikes in the oil price, say when Russia invaded Ukraine, everybody would suddenly switch to using EVs,” she said.

“And that just simply isn’t the case.”

Why?

Because the initial outlay to buy an electric vehicle is higher than a petrol car, even though the running cost of an EV is cheaper over the long run.

“The upfront cost of an EV is what puts people off,” she said.

And governments face the same basic calculation.

Building an electric grid takes time and money.

It also demands long-term strategic planning and a heavy dose of political will.

That may be hard to sustain in febrile political environments, especially when governments are already under pressure to spend on housing shortages, urgent infrastructure needs, rising inflation and rising defence costs.

UK Prime Minister Keir Starmer, for example, is facing a barrage of criticism from the opposition leader Kemi Badenoch over the Labour government’s ban on new North Sea oil and gas licensing.

He’s also getting it in the neck from US President Donald Trump who said the US and UK relationship would only improve if Mr Starmer opened the North Sea for drilling and tightened immigration policies.

Meanwhile, because the power grid is designed for fossil fuels, a lot of the electricity generated by wind and solar goes to waste, according to Alan Wylie of Energy Cloud, a charity campaigning to eliminate energy poverty.

“The grid is a little bit like the roads network,” he said.

“There are motorways, regional roads, boreens, and if you have a wind farm, for example, they often are very rural – in northwest Donegal or Mayo for example – you may never be able to move that [electricity] to where you want to use it,” he said.

“Last year, over €500 million of renewable wind energy was dumped,” he said, urging the Government to use that waste to help people in energy poverty.

But the ongoing disruption of the Strait of Hormuz has raised the prospect of countries running out of energy altogether, especially as hot summers or freezing winters approach.

This is a major concern in poorer regions of the world, experts said.

Wealthier countries, by comparison, will seek to secure their supplies and even stockpile oil and gas.

As competition grows, producers will serve the highest bidder.

“The minute you put gas into a boat, the boat can go anywhere,” said Ms Jacob.

“This is why it’s causing huge amounts of shortages in lots of poorer Asian countries, because you can’t compete with Europeans who can just pay more and have the boat come to them,” she said.

This is one reason why some developing countries have moved faster on renewables.

Analysts point to the example of Pakistan which was dependent on Qatar for 99% of imports of liquefied natural gas (LNG).

A local resident cleans a solar panel installed on his house’s rooftop in Pakistan’s port city of Karachi

That source was abruptly cut off following Iranian drone strikes on Qatar’s gas facilities last month.

Pakistan was suddenly plunged into darkness, as frequent blackouts plagued the national grid.

The crisis, no doubt, incentivised Pakistan’s energetic diplomacy to bring a swift end to this conflict.

But the situation could have been worst, analysts said, had Pakistan not gone through a major “bottom-up” energy transition already.

After the last LNG price spike, caused by Russia’s 2022 invasion of Ukraine, businesses and individuals, with the help of government incentives, started buying cheap solar panels from China.

Farmers put them in their fields, while city residents fixed them to their rooftops.

Research by Ember, the energy think tank, showed that solar power generation in the country soared to nearly 30% of national electricity use from a baseline of zero a decade ago.

It’s now Pakistan’s single biggest source of electricity ahead of gas, coal, hydro, and nuclear, according to Jan Rosenow, professor of Energy and Climate Policy at Oxford University.

On the other side of the world, Germany has seen a similar phenomenon with the sharp uptake in “balcony solar”.

These are small size panels that plug into household sockets and can generate enough electricity to power home appliances, thereby slashing utility bills.

The interest in this kind of personal power generation has exploded.

Last month solar panel sales in Ireland – which imports more than 80% of its energy – rose sharply.

A part of a so-called balcony solar panel is pictured at a balcony of a private house in Berlin

But solar has supply chain issues too.

The vast majority of photovoltaic panels come from China and some experts fear a reliance on fossil fuel from unstable regions may end up simply being replaced by dependence on an authoritarian state, with a poor human rights record, for green tech hardware and raw materials.

In December, an RTÉ investigation found that solar panels used in Ireland were sourced from companies linked to forced labour and environmental devastation in the Xinjiang region of China.

In the United States, the resistance to the energy transition – exemplified best by US President Donald Trump who has called wind turbines “ugly” and climate change “a hoax” – can be explained in part by fear of relying on China for green technology.

“China has succeeded in dominating the world’s supply chains in green energy products and components,” stated a 2024 report from the right-leaning thinktank the Heritage Foundation.

“Continuing to require the use of these green energy products will cede economic power to China, giving China control of American energy security,” it went on.

“Only by using its own oil and natural gas resources and passing prudent trade, tax, and regulatory policy can America remain strong and energy-independent.”

In this context, Mr Trump’s mantra of “drill, baby, drill,” appeals to those concerned about energy security as much as the direct beneficiaries in the oil and gas industry.

A similar conversation is taking place in Brussels too.

A report earlier this year by the European Court of Auditors found that the EU was “dangerously dependent on a handful of countries outside the EU”, for supply of materials critical to the energy transition.

Those countries are China, Türkiye and Chile which supply technical equipment such as batteries, wind turbines and solar panels, all of which require critical raw materials such as lithium, nickel, cobalt, copper, and rare earth elements, the report said.

Without them “there will be no energy transition, no competitiveness, and no strategic autonomy,” Keit Pentus-Rosimannus, the ECA Member responsible for the audit said.

But Kingsmill Bond argues that fossil fuel dependency is much less secure.

“A crisis anywhere in the world sends prices through the roof and causes protests on the streets of Dublin,” he said.

“But if you buy a solar panel and you put it on your roof and the Chinese cut off supply,” he said, “you’ve got 30 years to find another solar panel supplier.”

He added that while China is currently leading in lots of areas of electro manufacturing, “we can also do this stuff”.

“Germany makes all the cables that we use, France makes the transformers, Japan makes a lot of the heavy machinery,” he said.

Most of the world’s solar panels are made in China

“China is dominant in certain areas, but actually, everyone else can participate,” he added.

It would be wrong to assume that a clean energy future would be more peaceful than the era of fossil fuels, according to Judith Jacob of Forward Global.

“The making of batteries requires huge amounts of lithium, cobalt, nickel,” she said, “and those will become, I think, the commodities of the future that we then end up squabbling over”.

In the meantime, governments around the world face a “trilemma”, experts said, over how to make energy clean, affordable and secure – three things that often appear in competition.

“In reality, if your energy policy isn’t delivering on all three, it’s failing at some point,” said Mr Bolger of Trifecta Ireland.

“They are the conditions of success.”

The problem, he added, was that our energy framework was designed for a bygone era.

It was a system “built around burning dead dinosaurs”, said Mr Bolger.

And it will take considerable effort – and time – to change it.

The US/Israeli attack on Iran and the subsequent blockade of the Strait of Hormuz has triggered what the International Energy Agency says is the biggest oil supply disruption the world has ever faced.

And there is no sign yet that the crisis has run its course.

Analysts say the energy shock will echo for years – possibly decades, depending on when this war ends – putting even more strain on economies and households already short of cash.

It’s only four years since Russia’s full-scale invasion of Ukraine triggered the last energy crisis.

And Europe had never fully recovered from the ones before that, stretching back to the 1970s.

“Right now is a postcard from the future,” said Conall Bolger CEO of Trifecta Ireland, a Dublin-based energy think tank.

“It’s a dreadful situation that negatively affects so many people across the globe,” he added, “but there will be more instances like this”.

So, is this latest reminder of the perils of relying on imported fossil fuels going seal the deal for renewables once and for all?

Maybe – is the admittedly unsatisfactory but most appropriate answer.

Sceptics point to similar crises leading to little more than piecemeal change in the past – times where momentum for action built up, only to subside once the geopolitical storm had passed.

A root-and-branch overhaul of our energy system never happened.

And while renewable energy output is increasing every year, fossil fuels still power much of the global economy, including the expanding infrastructure around artificial intelligence, which is on track to start sucking up at least three percent of total global electricity demand by 2030.

Nevertheless, proponents of clean energy see this as a major pivot point.

“The Hormuz crisis will speed up the energy transition,” said Kingsmill Bond, a strategist for the energy thinktank Ember.

He argues that the difference between the double shock of this decade and that of the 1970s is that green technology is now available – with solar, wind, batteries, EVs and other electro tech already on stream.

The rise in price and risk associated with fossil fuels “literally hands over victory to their competitor,” he told RTÉ News.

“Maybe this is the difference between now and 2022, is then we thought we could go from buying our gas from Russia, to buying our gas from America and Qatar,” he said.

This time around, he said, there’s a more fundamental rethink underway.

Hormuz has certainly reinvigorated the conversation among policymakers in Europe.

And while the debate previously centred around climate, security is firmly at the heart of today’s discussions.

“The difference between climate and energy security is like your doctor telling you to get off the couch go for a run and get fit, versus someone breaking in through the window and holding a gun to your head,” said Mr Bond.

“We have just got to get on with it – we have no other option”.

On Wednesday, the EU announced “Accelerate EU” – a suite of measures to support governments to manage the current crisis and plan for the future.

EU Energy Commissioner Dan Jorgensen said that “this must be a wake-up call and a turning point,” for Europe to shift away from fossil fuels.

The measures call for reducing taxes on electricity and incentivising the shift to homegrown, clean energies across industry, transport, and building sectors.

“This will give us energy independence and security, and mean we are better able to weather geopolitical storms,” European Commission President Ursula von der Leyen said.

But, analysts told RTÉ News, it may not be that simple.

Take the example of electric vehicles said Judith Jacobs, head of geopolitical intelligence at Forward Global, a London-based risk consultancy.

“You would think that the minute there have been spikes in the oil price, say when Russia invaded Ukraine, everybody would suddenly switch to using EVs,” she said.

“And that just simply isn’t the case”.

Why?

Because the initial outlay to buy an electric vehicle is higher than a petrol car, even though the running cost of an EV is cheaper over the long run.

“The upfront cost of an EV is what puts people off,” she said.

And it’s the same calculation for governments.

Building an electric grid takes time and money.

It also takes long-term strategic planning and a heavy dose of political will.

All of this may prove difficult in febrile political environments while governments are already under pressure to spend money to tackle housing shortages, pressing infrastructure needs, rising inflation and rising defence costs.

In the meantime, because the power grid is designed for fossil fuels, a lot of the electricity generated by wind and solar goes to waste, according to Alan Wylie of Energy Cloud, a charity campaigning to eliminate energy poverty.

“The grid is a little bit like the roads network,” he told RTÉ News.

“There are motorways, regional roads, boreens, and if you have a wind farm, for example, they often are very rural – in Northwest Donegal or Mayo for example – you may never be able to move that [electricity] to where you want to use it,” he said.

“Last year, over €500 million of renewable wind energy was dumped,” he said, urging the government to use that waste to help people in energy poverty.

But the ongoing disruption of the Strait of Hormuz has raised the prospect of countries running out of energy altogether, especially as hot summers or freezing winters approach.

This is a major concern in poorer regions of the world, experts told RTÉ News.

Wealthier countries, by comparison, will seek to secure their supplies and even stockpile oil and gas.

As competition grows, producers will serve the highest bidder.

“The minute you put gas into a boat, the boat can go anywhere,” said Ms Jacobs.

“This is why it’s causing huge amounts of shortages in lots of poorer Asian countries, because you can’t compete with Europeans who can just pay more and have the boat come to them,” she said.

This is one reason why some developing countries have moved faster on renewables.

Analysts point to the example of Pakistan which was dependent on Qatar for 99 percent of imports of liquefied natural gas (LNG).

That source was abruptly cut off following Iranian drone strikes on Qatar’s gas facilities last month.

Pakistan was suddenly plunged into darkness, as frequent blackouts plagued the national grid.

The crisis, no doubt, incentivised Pakistan’s energetic diplomacy to bring a swift end to this conflict.

But the situation could have been worst, analysts said, had Pakistan not gone through a major “bottom-up” energy transition already.

After the last LNG price spike, caused by Russia’s 2022 invasion of Ukraine, businesses and individuals, with the help of government incentives, started buying cheap solar panels from China.

Farmers installed them in their fields, urban dwellers on their rooftops.

Research by Ember, the energy think tank, showed that solar power generation in the country soared to nearly 30 percent of national electricity use from a baseline of zero a