The global renewable energy sector entered 2026 with strong growth momentum, but escalating geopolitical tensions, particularly in the Middle East, are set to influence both the pace of deployment and the risks surrounding new projects.
Rising oil prices, renewed concerns over energy security, and intensifying supply-chain vulnerabilities are pushing governments and investors to accelerate renewable development, even as insurers and developers grapple with the physical and cyber risks associated with a rapidly expanding clean-energy infrastructure.
Michael Perron (pictured), renewable energy market lead at commercial property insurer FM, said geopolitical shocks historically have acted as catalysts for renewable investment. The current instability in the Middle East, which has helped push oil prices above $100 a barrel in some markets on March 12, is likely to reinforce that trend.
“Whenever a major part of the global energy supply chain is disrupted, it forces countries to look for alternatives,” Perron said in an interview with Insurance Business.
For Perron, Europe offers the clearest recent example. Following the collapse of Russian gas flows after the Russian invasion of Ukraine in 2022, European governments accelerated renewable energy investment to reduce reliance on imported fossil fuels.
According to the International Energy Agency, Europe has added record levels of wind and solar capacity as countries rushed to diversify power sources and improve energy independence.
Perron believes renewed geopolitical tensions, including disruptions near key oil and shipping chokepoints such as the Strait of Hormuz, will further reinforce the transition.
“Europe already learned the lesson that overreliance on one energy source can create serious vulnerabilities,” he said. “Conflict tends to accelerate the push toward renewables and other domestic generation options.”
However, renewables are only part of a broader “all-of-the-above” strategy for energy security. Several European governments are reconsidering nuclear power to stabilize electricity supply, including debate in Germany over extending or reviving nuclear capacity.
At the same time, Perron said surging electricity demand from artificial intelligence infrastructure, data centers and electric vehicles is increasing pressure on power systems worldwide.
“The challenge is that electricity demand is rising everywhere,” Perron noted. “Countries are looking for every viable source of generation they can build quickly.”
In recent years, the United States expanded renewable capacity rapidly under incentives introduced through the Inflation Reduction Act of 2022. Those incentives spurred billions of dollars in new clean-energy investment.
Even as Trump’s policy changes gradually reduce some of those benefits, Perron said renewable growth in the US remains strong. “The One Big, Beautiful Bill curtails some of the benefits of building renewable energy, but it does so over a period of time,” he explained. “(Investment) will taper off but continue to grow because we need a significant amount of power.”
China, however, remains the fastest-growing renewable market. The country already accounts for more than half of global renewable capacity additions, according to the International Renewable Energy Agency, and continues to expand both solar and wind installations to meet its massive electricity needs.
Beyond the US and China, renewable deployment is accelerating across Europe, Australia and parts of Asia as countries attempt to reduce exposure to volatile fossil fuel markets.
"Because with the advancement of AI and data centers, and electric vehicles and electrification across the world, it's challenging to find enough sources of power generation available," said Perron. "Renewables are a cost competitive option."
