The disruption to the Strait of Hormuz has exposed Australia's fuel vulnerability and sharpened the strategic case for investment in renewables, storage and electrification.
The escalation of the US-Israel conflict with Iran in late February 2026 triggered a severe disruption to oil flows through the Strait of Hormuz, a corridor that handles a significant share of globally traded crude. The IEA has described it as one of the most significant supply shocks in modern oil market history. Ceasefires announced in April have raised the prospect of flows resuming, but shipping remains below normal levels and the risk of renewed disruption has not gone away. The episode has made clear just how fragile globally integrated fuel supply chains really are.
Australia's exposure is significant. The country imports the majority of its refined liquid fuel requirements, a vulnerability that successive government reviews have flagged but not resolved. That dependency leaves the economy exposed not just to price spikes, but to physical shortages when geopolitical events interrupt supply.
The price effects have been immediate and sharp. Brent crude briefly exceeded US$120 per barrel before easing on ceasefire expectations. That shock has fed through into domestic fuel costs and industrial inputs, with petrochemical supply chains under pressure in ways that will be familiar to anyone who lived through previous oil disruptions.
For Australia's power and utilities sector, though, the more consequential shift is strategic. This crisis is reframing the energy transition. It is no longer just a decarbonisation story. It is increasingly a national resilience story.
That reframing was already building before the crisis hit. AEMO's Draft 2026 Integrated System Plan, released in December 2025, maps out the scale of investment required to support electrification and maintain system reliability. Under its central scenario, the National Electricity Market will need approximately 120 GW of utility-scale wind and solar and somewhere between 30 and 40 GW of grid-scale storage by 2050, alongside a major expansion of transmission infrastructure. Battery storage in particular has moved from a supplementary technology to a core component of how the system is expected to function.
Electricity demand is also expected to grow substantially over that period, driven by electrification across transport and industry and by emerging loads like data centres.
What the oil shock has done is accelerate the urgency. As the Institute for Energy Economics and Financial Analysis has noted, this is the first major oil disruption to occur at a point where renewables and electrification represent a genuine, scalable alternative to imported fuels. That was not true in 2008. It was not true in the 1970s. It is true now, and that changes the strategic calculus materially.
"We've done enough of these transactions to know when sentiment changes, and it's changed. The buyers who were cautious twelve months ago are now the most active. Energy security has moved from a policy talking point to something people are actually prepared to pay a premium for. Renewable generation, storage and grid infrastructure are all being treated like essential infrastructure now, and that's reflected in how deals are getting done," says Tom Butler, Director at Nash Advisory.
Deal implications
We're seeing the strategic premium for renewable energy assets move in real time. Operating assets and late-stage development pipelines are no longer being evaluated purely on yield. Buyers are pricing in resilience, and that's a different conversation. High-quality renewable platforms have consistently attracted elevated double-digit EBITDA multiples, and if anything, competition is intensifying as more industrial players enter a market that was previously dominated by utilities and infrastructure funds.
Battery storage is where we're seeing the most urgent shift in sentiment. Twelve months ago it was still being treated as supplementary. Now it's central to how acquirers think about system reliability, and the scale of required deployment means the capital opportunity is substantial across both grid-scale systems and behind-the-meter storage.
Electrification is the other thread running through almost every deal conversation we're having. Transport, industrial processes, resource sector operations are all businesses still heavily exposed to diesel and imported fuels, and boards are increasingly aware of what that means when supply gets disrupted. Companies that are further down the electrification path are attracting serious interest, and so are the platforms that enable it: energy services businesses, virtual power plant operators, grid integration technology.
The buyer landscape has also shifted. Industrial players are now coming to us with vertical integration mandates that we simply weren't seeing two years ago. They're not looking for yield alone. They're looking to control their energy supply. That dynamic, combined with continued strong appetite from infrastructure funds, means competition for the best assets is only going one way.
To discuss how these dynamics affect your business, contact Tom Butler.
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