"As I head to Davos this week for the World Economic Forum, it feels like an opportune moment to pause and reflect on the seismic shifts now underway in global energy."
Quick (AI) Summary: The Rise of the Electrostate
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Geopolitical Pivot: Global power is shifting from "petrostates" (oil/gas control) to "electrostates" driven by technology, AI, and electricity.
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Economic Dominance: Renewables are now cheaper and faster to deploy than fossil fuels, with global investment in electrification ($2T) doubling that of oil and gas.
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Strategic Autonomy: Countries are adopting solar and wind not for ideology, but for security; local "electrons" eliminate the need for vulnerable shipping lanes and volatile fuel prices.
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Market Paradox: While the U.S. treats solar as an "ideological inconvenience," China is dominating exports, and high fossil fuel prices are ironically forcing the rest of the world to electrify faster.
For more than a century, global power has been shaped by control of energy. From Churchill’s decision to shift the British navy from coal to oil, through roughly seventy five years of policy focused on policing shipping lanes and pipelines, oil and gas became tools of statecraft rather than just fuels. That mindset still dominates US foreign policy today. But the energy system is being rewired in front of our eyes, from molecules to electrons, from petrostates to electrostates and from geopolitical leverage to economic reality.
Russia’s invasion of Ukraine in February 2022 triggered the biggest upheaval in Europe’s energy system this century. Almost overnight, policymakers were forced to rethink how to keep the lights on without Russian gas, while protecting households and industry from soaring prices. The response was swift and, in hindsight, remarkably effective. Through a combination of energy saving measures, rapid electrification, fuel switching and unprecedented cooperation between European countries, gas consumption fell sharply. As a result, natural gas demand in Europe in 2025 was at its lowest level in around thirty years. The crucial difference is that back in the 1990s gas was the future. Today it is the buffer. That achievement fundamentally challenged old ideas about energy security. It showed that dependence on imported molecules was not inevitable and that electrons could move faster than geopolitics.
What we are now seeing play out in Venezuela and Iran has the potential to trigger another shock to the system, one that is likely to push countries across the world to electrify even faster. The Trump administration appears to believe that control over oil and gas flows still equates to control over global energy markets. That worldview is rapidly becoming a relic of a lost era. It reflects the logic of the petrostate at precisely the moment when the energy system is reorganising itself around electricity, technology and artificial intelligence.
Electrification changes everything because energy can be produced locally, using nuclear and, in particular, renewables. In finance we have a simple saying: follow the money. And the money is now flowing overwhelmingly into electrification. In 2025, roughly $1.8 to $2.0 trillion was invested globally in renewables and related grid infrastructure. That is almost twice the capital invested in oil and gas. In the same year, the world installed around 1,100 gigawatts of new renewable capacity, which will generate more than 2,000 terawatt hours of electricity annually which enough to supply all of the European Union’s electricity needs.
"This is why the transition has entered a new phase. It is no longer being led by governments. It is being pulled forward by customers who want cheap, reliable electricity as fast as possible."
The implication is clear. Countries across the world are becoming structurally less reliant on oil and gas, not because of ideology, but because of economics. Pakistan has gone from almost no renewables to more than half of its power mix in less than a decade. South Africa has moved from effectively zero to around ten percent in seven years. Solar has overtaken gas in the power mix in countries as diverse as Hungary and Vietnam. These are not climate experiments. They are rational responses to cost, security and speed. This is the rise of the electrostate.
The economics are now brutally clear. Utility scale solar costs as little as $30 per megawatt hour in the sunniest regions and typically below $80 even in northern areas. New combined cycle gas plants come in higher, before fuel price volatility, carbon risk, and geopolitics are even considered. And that comparison entirely misses what may be the most disruptive force of all which is rooftop solar. Once installed, it turns consumers into producers and volatility into irrelevance. No shipping lanes required. No monthly fuel bill. Just electrons on the roof for decades.
This is why the transition has entered a new phase. It is no longer being led by governments. It is being pulled forward by customers who want cheap, reliable electricity as fast as possible. China understands this better than anyone. In 2025 alone, it exported more than $200 billion of clean energy technologies. That number will only grow as countries across the Global South look for ways to reduce their exposure to volatile fossil fuel markets and to provide low cost energy to their growing populations. Every solar panel installed is one less long term customer for LNG. A panel bought once replaces fuel bought forever.
Artificial intelligence adds another accelerant. Electricity demand from compute is rising fast, but here too old assumptions are being challenged. China is deploying every available form of generation, from coal to nuclear to record installations of solar, to power its data centre build out. The United States, by contrast, continues to treat solar as an ideological inconvenience rather than a strategic asset. With LNG exports set to rise sharply and domestic gas prices already under pressure ahead of the midterms, the question is not whether this stance will change, but when. A quiet U turn on solar before the year is out would not surprise me in the least.
Finally, in a world that increasingly defies linear thinking, there is a final irony. A US fossil fuel first energy policy may end up doing more than any climate agreement to accelerate electrification, and in particular clean electrification, across the globe.
Guest contribution by:
Gerard Reid
Co-Founder & Partner
