Conversely, battery storage costs have fallen by 95%, solar panel costs by 89%, and wind energy costs by 71% since 2010. These indicators reveal that diversifying energy sources is no longer just an environmental choice, but has become an economic necessity to enhance energy security and limit fluctuations in production costs.
The gravity of the situation increases when an energy shock coincides with a rise in financing costs. The report indicates that the volatility of capital flows has doubled since the outbreak of the war, reflecting a state of heightened "uncertainty" in the markets. When energy becomes more expensive and financing less stable, the private sector's ability to expand declines, and financing projects becomes more difficult. Here, the impact of the shock shifts from a temporary increase in prices to a threat to investment and productivity. Central banks also find themselves facing a difficult equation, because raising interest rates does not address energy supply shortages, but it does increase the cost of investment and slows growth.
Can the crisis be turned into an economic opportunity? The UNCTAD report figures indicate that in 2024, renewable energy sources were less expensive than the cheapest new alternative for energy based on oil derivatives. This result reinforces the economic feasibility of diversifying energy sources, especially in fuel-importing countries, as investment in renewable energy can reduce exposure to global price fluctuations and enhance supply security.
For Jordan, these developments necessitate a shift from managing the rising energy bill to reducing the economy's sensitivity to it. This begins with accelerating renewable energy and storage projects, and linking industrial incentives to achieving actual savings in energy consumption. It also requires directing support to the most affected groups "could support be linked through the Sanad application, for example?", and directing funding toward sectors capable of generating added value, exports, and job opportunities. Of course, strengthening reliance on local production does not mean abandoning imports, but rather reducing reliance on inputs most exposed to shocks when the local alternative is economically viable.
The true measure of policy success is not only reducing the cost of the current crisis, but increasing the economy's ability to withstand future shocks without sacrificing growth, productivity, and job opportunities. A stronger economy is not one that avoids shocks, but one that can absorb them without losing its ability to grow.
