How does renewable energy boost economic resilience?

How does renewable energy boost economic resilience? 

As the world moves towards greener models and lessens the tight hold the fossil fuels have over the energy market, a strong correlation is emerging between renewable energy and economic resilience.  

Sustainable energy can reduce the world’s dependency on the volatile fossil fuel market, strengthening resilience against energy shocks, climate risks, and global market volatility. 

Other economic benefits include the creation of a sustainable microcosm - creating stable green jobs as fossil fuel employment begins to phase out. With reduced climate change effects, it could also hold the power to enhance infrastructure against climate change risks. There are also long-term financial and social benefits of transitioning to sustainable energy systems. 

The link between renewable energy and economic resilience 

Green energy holds the potential to improve the economic resilience of the world compared to when using fossil fuels.  

How does clean energy reduces exposure to fossil fuel price volatility 

In theory, fossil fuels are a more stable source of energy than renewable energy. They should therefore result in more stable pricing. However, fossil fuels can still suffer from price volatility. This is because external influences can create price hikes in the fossil fuel market. External influences causing price hikes or bottlenecks could include changes to legislation or geopolitical tensions.  

Building resilience against geopolitical risks 

War or politics can affect the price of fossil fuels, as a producing country may decide to apply price restrictions on fuel in the face of conflicting politics. For example, the war in Ukraine causes disruption to energy pricing coming from Russia, with certain countries that Russia supplied energy to when their politics were conflicting. Many countries experienced price spikes in their energy supplies, which contributed to the cost-of-living crisis.  

Job creation and long-term economic growth 

As fossil fuels are deprioritised, a loss of employment in these industries may follow. Green energy represents a boost to economic growth and the job roles that accompany this boom.  

Expansion of green jobs across solar, wind, and hydropower sectors 

As well as achieving sustainability goals, the growth of the renewable energy industry can also increase jobs within the energy sector, which can help companies to achieve their social element of Environmental, Social and Governance (ESG) goals. This could be in the form of employees employed to run and maintain a renewable wind array onsite, hydropower design engineers, or it could be operations staff - such as marketing, sales or finance - within a solar plant. 

Reskilling opportunities in the energy transition 

As the world moves towards a more renewable future and fossil fuels are deprioritised, some jobs may disappear from the fossil fuel-led industry. However, the increase in renewable energy projects may help to backfill the roles lost within the fossil fuel industry. These reskilled employees will have a new career and a career with longevity as the renewable industry continues. This is particularly poignant in rural or remote areas where jobs are more scarce and renewable projects are often located.    

Strengthening energy security and independence 

Currently, many non-energy-producing countries are at the mercy of some of the larger fossil fuel-producing countries - renewable energy could change this.   

Local renewable production reduces reliance on imports & global supply disruptions

When energy spikes occurred due to the war in Ukraine, it was due to geopolitical instability. The countries that often feel the effects of geopolitical instability are often those that do not generate their own fuel or energy, so they need to import it. This may be because they do not have fossil fuel sources in their geographical makeup. Renewable energy can often be generated in areas of extreme heat or wind without the characteristics needed to generate fossil fuels, so installing and generating renewable energy may reduce a country’s reliance on imported fuel, easing global supply disruptions when a geopolitical event occurs.  

Benefits of decentralised and diversified energy systems 

Diversified energy systems allow a business to hedge its risk in investing in a renewable system. For example, suppose a renewables provider invests in solar energy, but solar output is not always productive due to weather unpredictability. In that case, they may wish to invest in another type of renewable energy, for example, wind, which may yield production during stormy weather, which wouldn’t suit solar power due to a lack of sun, but would suit wind energy due to increased wind. Decentralised systems don’t rely on the healthy functioning of the grid to supply energy, easing reliance on a grid that isn’t optimised for renewables or to cope with fluctuations in supply and demand.  

Climate change adaptation and infrastructure resilience 

One of the higher costs associated with renewable energy is the climate-change-associated damage to infrastructure. Building climate-resilient energy infrastructure, e.g. more durable wind turbines that can withstand high-grade storms, results in fewer power outages due to maintenance costs.  

This can also work in reverse. As the world invests in more green technologies, it lessens the effect of climate change on the world, lessening the impact of extreme weather caused by climate change. This reduced extreme weather means that potentially less damage would occur to renewable technologies, coming full circle and resulting in long-term economic savings from reduced climate damage.  

The role of smart grids and storage is also crucial in ensuring energy stability. Energy storage provides a solution to the volatility of energy production, for example, high energy production periods vs. low energy production periods. By installing batteries on modern networks that integrate renewable energy, energy generated during high production periods can be banked and then released when energy generation dips on renewable systems, making networks more resilient to changes in weather, climate and therefore output.  

Investment opportunities in renewable energy 

Sustainable systems are an attractive option for many businesses wanting to invest in the energy market - to bolster this interest, financial incentives and government policies should be prioritised that support clean energy. One of the key reasons investors see renewable energy as an attractive investment is its growth as an asset class. This is in part due to renewable energy being a cheaper long-term option. The decreasing levelised cost of energy (LCOE) measures sustainable energy solutions, taking into account the overall cost of a plant over its lifetime. There are large associated upfront costs with  

renewable energy, however, over time, the costs come down. This is partly due to the avoidance of costly combustion methods required by fossil fuel plants. This means that over time, a plant's LCOE is likely to decrease.  

There are also financial instruments that encourage investors to prioritise sustainable infrastructure. This is through a method called hedging, which protects businesses against fluctuations in pricing. This involves buying their energy for a determined period at a fixed price to ensure the price doesn’t increase, also known as ’future planning,’, or the employment of future swaps and options.  

Renewables drive economic resilience—cutting reliance on volatile fuels, creating lasting jobs, and building stronger, sustainable futures.