The Mirage of Fossil Fuel Wealth - Our Energy Future is Green, Renewable, Decentralised

A geo-politically volatile energy world can make oil finds like last week's Horse Hill discovery seem pertinent to British energy security.

But the continuous reliance on fossil fuels to avert energy security risks blind-sighting us to the bigger picture. The real obstacles facing energy security and self-sufficiency are structural.

Our energy infrastructure must shift away from a centralized system towards a more decentralized model that empowers those consuming energy to also play a part in producing it.

There has been a global deterioration in energy relations of late. The Ukraine conflict, the widespread use of energy as a political tool, OPEC's control of oil production and western attempts to achieve energy independence have created the conditions for two divergent energy world blocs to emerge: the Atlantic bloc, led by the West, and the alternative bloc very much led by Russia.

Such developments tend to exacerbate fears over energy security. It is little wonder then that last week's discovery of "significant" deposits of oil outside Gatwick airport was hailed as a major potential boon for Britain's energy security in an increasingly unpredictable energy climate.

Since then however, estimates of the scale of the find have been played down considerably by UK Oil and Gas Investments, the company that discovered the find.

The fundamental problem is our energy model, not a lack of oil

But while claims of an 'oil bonanza' worth a 100 billion barrels was rightfully met with skepticism, it was also met with the widespread hope of propelling the country towards greater energy self-sufficiency.

Unfortunately this continuous reliance on fossil fuels to enhance energy security risks blind-sighting us to the bigger picture. The real obstacles facing British energy security and self-sufficiency are systemic and structural.

What's more important than how much oil and gas Britain has hidden underground, is its entire model of energy ownership, production and consumption.

Britain, like many Europeans nations, can go some way towards overcoming its energy concerns simply by rebalancing its energy infrastructure away from a centralized system and towards a more decentralized model that empowers those consuming energy to also play a part in producing it.

As it stands, energy is produced in a few large power stations and distributed nationally, with much of it wasted at power stations and in the transportation process. But decentralizing energy production so ordinary citizens play a bigger role in production can help address this problem and galvanize the much broader production of renewable energies.

The power of decentralizing energy production

Decentralization would mean embracing the phenomena of distributed energy, an effective and proven form of energy production. The emergence of smart grids, particularly in the USA, as well as microgrids; small-scale localized versions of the centralized electricity system have already been made.

It has also enabled hospitals, schools and companies to have their own smart grids and to source cheaper long term renewable energies. And technological advancements in electricity storage harnessed from solar and wind alongside the right regulatory framework can empower the creation of an 'off-grid economy' - a multitude of local users with greater control over their energy resourcing, costs and security.

In the third world, decentralizing energy production and an off-grid economy would mean communities accessing electricity without investing in a conventional grid infrastructure in the same way mobile phones have supplanted the need for third world communities to invest in traditional telecoms infrastructure.

From a regulatory perspective, decentralizing energy means allowing people and businesses large and small compete to sell energy directly to customers and cutting the bureaucracy and costs currently dissuading many from harnessing off-grid renewables energies for their homes.

Such a model means less dependence on foreign energy, mitigates against dangers inherent in an interconnected centralized grid system (like recent nationwide power cuts in Turkey) and positively incentivize use of cleaner energies.

And after near inexorable increases in UK energy prices over the past few years, it would help disperse control of the energy sector away from a few large energy companies and towards ordinary citizens.

A fast changing world is challenging the fossil fuel industry

But there are other reasons for why fossil fuel industry is not the answer to current energy woes. Recent historic commitments by the US, China, and the EU to reduce greenhouse gas emissions signals more than just a desire to address climate concerns.

It signals to energy investors a hitherto unseen confidence in cleaner renewable energies and a major political shift away from fossil fuels.

Sure fracking is being used in the US to in part help achieve energy self-sufficiency and could well act as a bridge fuel to cleaner energy, but for EU and US climate goals to be met in coming years, we will need more than just a bridge fuel, we will need a genuine push towards a stronger renewable energy sector.

This political reality coupled with low oil prices has made for a challenging environment for traditional fossil fuel companies - not to mention the obvious challenges of extracting oil and gas, most of it taking place offshore.

And the challenges of exploiting 'extreme' fossil energy in ever more hazardous environments from the Artic to deep offshore, are far greater than those of harnessing the power of our abundant renewable resources.

Fossil fuel challenge from renewables

Fossil fuels are also facing more stringent competition from renewables. The global market share of renewables has shot up to 22% as of last year, dwarfing the world's nuclear industry by twofold, whose current market share stands at 11%.

And the growth is expected to get bigger. In the US, renewables will be 'fully competitive' in at least 40 states within a decade (if not sooner given the rate of progress the solar energy industry has been experiencing), meaning it will no longer be reliant on subsidies.

Solar is already reported as a lowest cost generation option in the most optimal locations like Chile and perhaps California.

The Middle East is also primed for large-scale power generation. Saudi Arabia has plans to generate a third of its electricity from solar by 2040 and Qatar has made solar energy agreements with major renewable energy companies as part of its commitments to the Solar GCC alliance.

Innovative storage and micro-grid solutions designed to address renewables' intermittency and peak demand are also expected to become commercial in the near future, thereby eliminating hybrid dependence on fossils.

This would all help decentralize renewable energy consumption, taking it off-grid and therefore granting consumers hitherto unknown control of their energy sourcing and consumption.

Recent mergers like the Shell-BG merger are indicative of the fossil fuel industry's weakness more than its ability to adapt and thrive. It is a pattern likely to continue into the future.

While oil and gas might be important in the near and even medium terms given our huge reliance upon them, they are simply not a sustainable long-term response to Britain's growing energy needs.

And in an increasingly volatile energy climate where bipolar energy blocs can leverage fossil fuels as a political tool, one way of enhancing our energy security is harnessing the bottom-up power of the off-grid economy by establishing the regulatory framework to decentralise energy production.