This article first appeared in Energy Intelligence
At the onset of the war in the Middle East, global energy markets reacted instantly. Oil prices surged and gas markets tightened, bringing the risk of renewed cost pressure for consumers and industry into focus. In many power markets, gas-fired generation still sets the marginal price of electricity, so when gas prices spike, electricity prices tend to follow. For the UK, a nation overly dependent on natural gas, this is a familiar dynamic following the shockwaves from Russia’s invasion of Ukraine. Meanwhile, the price of gas in the UK — which imports a large portion of its supply — surged by almost 25% following strikes on critical energy infrastructure in the Middle East. These events expose structural weaknesses in modern energy systems. The risk of disruption has long been visible — in geopolitics, supply concentration and infrastructure constraints — and it has been consistently underestimated.
For decades, countries have optimised for efficiency under normal conditions, focusing on low-cost generation, streamlined supply chains and just-in-time delivery. In doing so, systems have been left with limited shock absorbers.
When disruption hits, there is little buffer — only pass-through cost.
The impact is not just being felt in household bills. For energy-intensive industries, this volatility increases uncertainty, which can delay or deter investment. For governments, it translates into fiscal strain and heightened political exposure. For economies, it erodes competitiveness at the margin.
Pricing the Shock
High energy prices are damaging, but unpredictable energy prices can be worse.
The challenge of this unpredictability is even more acute as global electricity demand from data centres accelerates. Data center power demand could increase to 945 terawatt hours by 2030, more than Japan’s total electricity consumption.
Electrification, industrial growth and expanding digital infrastructure will further accelerate power demand. In this context, reliable and affordable power is nonnegotiable; it’s a prerequisite for growth and security.
Geopolitical challenges are increasingly being seen as a structural feature of the energy landscape, not episodic, and the 2020s are a clear lesson for energy security: The risks were always present, and the system hasn’t been designed to absorb them.
Security Trumps Decarbonisation
At CERAWeek this year, that reality was front and center. Across discussions with industry leaders, policymakers and investors, one theme came through clearly — the era of single-solution thinking is over:
- Decarbonisation, while still an essential part of the conversation, is taking a back seat to energy reliability and affordability.
- A diversified portfolio approach is progressively becoming the new default.
- Power demand is a landscape-shaping force that favors flexibility.
Taken together, these shifts suggest the conversation is moving away from focusing on how to decarbonise energy systems toward how to make them durable, recognising that when reliability and affordability come under threat, sustainability is often deprioritised. Without a more holistic approach to balancing all three, we risk repeating that pattern and exacerbating the climate crisis.
Markets Redefined
This shift has profound implications for economic competitiveness. Markets with stable, reliable and affordable power systems will have a decisive advantage.
Those without could face higher costs, slower growth and reduced investment. Energy policy is, in effect, becoming inextricably linked with industrial policy.
Recent geopolitical crises have punctuated the need to avoid replacing one form of dependence with another; instead transitioning toward building energy systems that are more resilient by design. Today, that means diversification.
A resilient energy system demands multiple sources of power generation, flexible assets that can rapidly respond to spiking demand and supply-stabilising storage technologies. No single source can deliver consistent performance across all conditions, so a diversified mix ensures that when one becomes unavailable or costly, others can step in to maintain supply and limit price volatility.
In the wake of the latest energy shock following the war in the Middle East, inadequate long-term planning has left politicians concerned about pricing and rushing to mobilise short-term solutions — some of which could come at the expense of efforts to progress the energy transition, which risks undermining a truly resilient system long term. For example, some European countries called for quick reform to minimise the EU Emission Trading System’s impact on power prices, while others called for a full suspension.
One outlier in Europe is Spain, which saw renewable energy capacity rise to 57% of the country’s electricity mix in 2025. Spain has added over 40 gigawatts of solar and wind capacity since 2019.
As a result, gas sets electricity prices for a significantly smaller share of the day — around 15% — reducing exposure to global gas price volatility relative to other European markets.
On the other hand, the UK’s experience illustrates the cost of limited diversification. Despite rapid growth in renewables, wholesale power prices remain heavily exposed to gas, a dynamic that has contributed to some of the highest electricity bills in Europe.
Operators are increasingly responding by building more balanced portfolios that combine generation, storage and flexible assets to manage volatility. Drax’s own portfolio, spanning biomass, pumped storage, battery systems and open cycle gas turbines, reflects this shift, providing dispatchable power and system services that help stabilise the grid when supply tightens.
Resilience by Design
Designing for resilience requires a shift in mindset. Disruption should not be treated as exceptional, but as inevitable. The goal is not to predict the next shock, but to ensure the system can withstand it.
In a more volatile world, resilience is becoming the defining measure of energy security. The countries that succeed in the next phase of the energy transition will not be those with the most generation capacity but those with systems designed to endure disruption.
Ross McKenzie is the chief corporate affairs and sustainability officer for UK electricity generator Drax Group. The views expressed in this article are those of the author.
