INSIGHTS 3 July 2026
For at least two decades, the strategic dimension of energy security was materially underestimated across advanced economies, particularly in Europe. Energy policy often prioritised short-term affordability, decarbonisation and free trade, while the resilience and strategic autonomy of energy systems received comparatively less attention.
Yet geopolitical developments evolving over the last 20 years have demonstrated that energy security cannot rely solely on the persistence of international free trade, especially for a continent importing more than 50% of its energy, as Europe does.
The resilience of an energy system, both with respect to primary supply and secondary infrastructure, notably electricity systems, depends on several factors: import dependency, diversification of supply sources, adequacy of infrastructure and storage, robustness of contractual arrangements, and overall supply flexibility and demand elasticity.
The economic consequences of insufficient resilience can be severe. During the 2022 energy crisis triggered by the Russian invasion of Ukraine, European wholesale gas prices temporarily increased more than tenfold versus historical averages, while electricity prices in several markets exceeded €500/MWh for sustained periods.
The International Monetary Fund and the European Central Bank both identified energy dependency as a principal driver of inflation and industrial competitiveness concerns across Europe. Germany alone imported more than 55% of its gas from Russia before the invasion, illustrating the systemic vulnerability created by excessive concentration of supply over many years.
More recently, tensions and military intervention in the Middle East, followed by disruptions to the Strait of Hormuz, have reinforced the strategic importance of energy security. Given the large volumes of oil and LNG transiting through the Gulf region and the impact of constrained supplies on global prices, the conflict has once again exposed the vulnerability of international energy markets to geopolitical shocks, renewing policy focus on strategic reserves, supply diversification and domestic energy production.
Strategic reserves play a critical role in safeguarding energy systems. International Energy Agency member states are generally required to maintain emergency oil stocks equivalent to at least 90 days of net imports.
Within the European Union, gas storage regulation now requires storage facilities to be filled to around 90% capacity ahead of winter, recognising storage as both a physical and strategic buffer against supply disruptions and price volatility.
A similar discussion is emerging around electricity systems. As electrification accelerates across transport, heating and industry, electricity is becoming the dominant secondary energy carrier underpinning economic activity, with data centres emerging as a new energy-intensive asset class. At the same time, power systems are becoming increasingly decentralised and more weather dependent.
Strategic reserve capacity – whether through dispatchable generation, pumped hydro, batteries, demand-response mechanisms or interconnectors – is therefore gaining increasing policy attention, creating further opportunities for infrastructure investment.
Against this backdrop, renewable energy increasingly contributes not only to decarbonisation objectives, but also to strengthening energy sovereignty and long-term security of supply.
Domestic renewable generation reduces exposure to imported hydrocarbons, lowers geopolitical dependency, and enhances price stability over time due to its capex-driven economics. Several European countries already generate more than 50% of their electricity from renewables, including Austria, Sweden, Denmark, Portugal, Spain, Finland and Germany, while the UK, Ireland and Italy are approaching similar levels.
Equally important is the rapid evolution of Europe’s regulatory and policy framework. Faster permitting procedures, credible long-term investment in grids and storage, stronger cross-border interconnections, diversification of LNG infrastructure, and implementation of strategic capacity mechanisms all reflect growing recognition that decarbonisation and energy security are increasingly working in tandem.
Events over the recent past have demonstrated that energy resilience carries tangible economic and strategic value. Countries capable of combining diversified energy access, robust strategic reserves, flexible electricity systems and substantial domestic renewable generation are likely to enjoy a structural competitive advantage in industrial stability, economic resilience and geopolitical autonomy over the coming decades.
