The longstanding market consensus has for decades criticized renewable energy for its intermittent power generation, while fossil fuels have been viewed as the guarantor of energy security.

The combination of conflict involving Iran and prolonged disruption to navigation through the Strait of Hormuz has completely upended this traditional argument.

During a European power industry summit in Finland this week, energy experts and the chief executives of two major Nordic energy firms, Fortum and Statkraft, discussed this issue in an interview.

Iran's geopolitical leverage over the Strait of Hormuz has unexpectedly reconfigured the logic of the global energy security discussion, with fossil fuels now becoming the primary source of risk to energy systems, while the role of renewables has been inverted.

For decades, the prevailing view was entrenched: new energy sources like wind and solar were criticized for being weather-dependent and having unstable output, while fossil fuels like coal, oil, and natural gas were seen as the stable foundation of energy supply.

However, the outbreak of conflict in the Middle East and the long-term obstruction of the Strait of Hormuz, a vital passage for about 20% of the world's seaborne crude oil and liquefied natural gas, has shattered this conventional logic, fully exposing the vulnerability and fragility of fossil fuel supply chains. This view was expressed by several energy experts and the CEOs of Nordic energy leaders Fortum and Statkraft at the European Power Summit held in Helsinki, Finland, this week.

Kingsmill Bond, an energy strategist at the UK think tank Ember, stated in an interview in Helsinki: "There's a crucial change that is rarely mentioned: it is now fossil fuel supply that is intermittent and uncertain, which is precisely the criticism historically leveled against renewable energy. With battery storage, solar power can achieve a high degree of stability as long as the sun rises each day. The energy landscape has entered a new phase, but regions like Europe remain deeply tied to the old fossil fuel system and must accelerate the transition."

Comparing the current situation to the 1973 and 1979 oil crises, Bond noted that this energy shock is historically unique because policymakers now have mature and reliable alternative energy solutions at hand.

"During the oil crises of the 1970s, the only option for countries was to turn to nuclear power, but nuclear plants take a decade to build and are expensive. Today, technologies like solar, wind, storage, and electrification are mature, low-cost, and can be deployed rapidly at scale. This is the energy transformation happening globally right now."

The Concept of 'Incremental' Energy

The conflict led by the US and Israel against Iran has severely impacted global energy markets, spreading inflation fears. Asia, which is highly dependent on fossil fuel imports, has been plunged into an energy crisis.

Europe and Africa have also suffered from supply disruptions, with soaring fuel prices sharply increasing food security risks. With no immediate signs of the Strait of Hormuz reopening, countries are beginning to re-evaluate the global economy's excessive reliance on seaborne fossil fuel routes.

When asked about the "intermittency" risk of supply disruptions also inherent in imported fossil fuels, Fortum CEO Markus Rauramo pointed out: "It's just a different source of failure. The fundamental solution to reduce dependence on high-carbon imported oil and gas is to develop local clean electricity."

He added: "This path is the inevitable trend, but we are grounded in reality and not blindly optimistic. New energy sources certainly still have output volatility issues. For households and industries heavily reliant on natural gas, the energy switch will inevitably be a long process."

Previously, the fossil fuel industry was promoting a new narrative advocating for 'incremental' energy development to meet the new energy demands of emerging industries like artificial intelligence. Incremental energy refers to the parallel development of fossil fuels and new energy sources like wind and solar; whereas traditional energy transition concepts often refer to the gradual replacement of existing fossil fuels with new energy.

Storage and Hydropower Empower New Energy

Birgitte Ringstad Vartdal, CEO of Europe's largest renewable energy operator Statkraft, stated that the conflicts in Ukraine and involving Iran have completely rewritten the positioning of clean energy within energy security systems.

"Advancements in energy storage technology are crucial, with battery costs falling significantly and storage duration continuously improving."

The core function of storage is to smooth out renewable energy fluctuations: storing excess power when generation is high and discharging it during low-generation periods. "In the past, transitional power periods between peak and off-peak demand required backup from traditional power sources. Now, storage combined with solar, and wind-solar hybrid systems, can essentially provide stable power supply around the clock."

Vartdal noted that Norway, with its excellent hydropower resources, faces far less pressure from renewable output volatility than other European countries. However, national energy architectures still need to retain some gas-fired capacity to handle extreme scenarios like prolonged dry periods or sudden drops in renewable output.

Europe's Shift to US LNG Purchases

While the conflict involving Iran has overturned energy security arguments, the alternative energy choices spurred by successive geopolitical conflicts also harbor hidden risks. Warnings were sounded as early as after the 2022 Russia-Ukraine conflict when Europe hastily increased imports of US liquefied natural gas (LNG).

Jan Rosenow, Professor of Energy and Climate Policy at the University of Oxford, stated: "Affected by the Strait situation, Europe's future LNG imports will become highly dependent on the US. This means Europe's energy lifeline is tied to a country with highly volatile foreign policy, presenting significant risk. Locally produced renewable electricity does not have these geopolitical constraints."