Russia-Ukraine war: How will rising oil prices impact the energy transition?

The global crude oil prices have surged by 7%, reaching the highest levels in the past eight years, following sanctions imposed on Russia due to the ongoing conflict in Ukraine. This sudden spike has reignited discussions about the impact on investment in renewable energy, especially in the context of a prolonged period of low oil prices. To explore the implications and potential shifts in the energy landscape, Guled Ahmed, Founder and CEO of Power Offgrid, joined CNBC Africa for an in-depth conversation. Ahmed highlighted the complex dynamics at play, emphasizing the need for a strategic approach to address the evolving energy transition amidst geopolitical tensions. The energy sector has been witnessing significant changes globally, with many developed nations gradually transitioning towards renewable sources. However, the recent surge in oil and gas prices has introduced a challenge, leading some countries to revert to fossil fuels like coal to meet their energy demands. While renewable energy presents opportunities in certain sectors, Ahmed noted that industrialized nations with high energy needs may struggle to rely solely on renewables. The current geopolitical landscape, particularly the Russia-Ukraine conflict and associated sanctions, has underscored the urgency for more aggressive investments in renewables to bridge the energy gap. Ahmed delved into historical investment trends, pointing out a shift in funding from renewable to fossil fuel projects over the past decade. The cost implications associated with renewables remain a significant factor, especially for countries with high energy demands like industrial powerhouses. Despite challenges, Ahmed stressed the importance of accelerating investments in renewable energy to align with long-term sustainability goals and address the growing energy deficit. When discussing viable renewable energy alternatives, Ahmed highlighted hydroelectric power and waste-to-energy conversion as economically feasible options for many countries. Additionally, advancements in nuclear technology have made it a more attractive choice in some regions. These varied sources of renewable energy can play a crucial role in diversifying energy portfolios and reducing reliance on traditional fossil fuels. As Africa emerges as a key player in the global energy landscape, the focus on building a robust renewable ecosystem becomes paramount. Ahmed underscored the need for increased investments in research, technology, and manufacturing within the continent to drive renewable energy adoption. Governments play a crucial role in facilitating this transition by providing financial support, promoting innovation, and fostering public-private partnerships to accelerate the shift towards cleaner energy sources. Amid uncertain oil market dynamics, Ahmed emphasized the importance of collaboration between the public and private sectors to drive reinvestments in renewable energy. By leveraging a mix of financing options such as grants, debt, and equity, countries can expedite the transition to renewable and mixed energy sources, thereby meeting the escalating energy demands of various industries. The current energy landscape calls for strategic investments and policy initiatives to navigate the challenges posed by fluctuating oil prices and geopolitical uncertainties, paving the way for a more sustainable and resilient energy future.