Digital tech set to transform global energy system

Digital technologies will transform energy systems around the world in the coming decades, making them more connected, intelligent, reliable and sustainable, according to a new report by the International Energy Agency (IEA).

The report, Digitalization & Energy, says that from the rise of connected devices at home, to automated industrial production processes and smart mobility, digital technologies are increasingly changing how, where and when energy is consumed.

These changes will have a profound and lasting impact on both energy demand and supply.

For instance, more than 1 billion households and 11 billion smart appliances could participate in interconnected electricity systems by 2040, thanks to smart meters and connected devices. This would allow homes to alter when and how much they draw electricity from the grid. Demand-side response — in buildings, industry and transport — could provide 185 GW of flexibility, and avoid $270bn (£205bn) of investment in new electricity infrastructure.

With smart thermostats linked to smart lighting and other digital tools, buildings could reduce their energy use by 10% by using real-time data to improve operational efficiency. Meanwhile, massive amounts of data, ubiquitous connectivity, and rapid progress in Artificial Intelligence and machine learning are enabling new applications and business models across the energy system, from autonomous cars and shared mobility to 3D printing and connected appliances, the report says.

On the supply side, a transformation is taking place in how energy is produced — from smart oil fields to interconnected grids and renewable power.

Digital technologies could help integrate higher shares of variable renewables into the grid by better matching energy demand to solar and wind supplies, the IEA explained. Energy providers also stand to gain from greater productivity and efficiency, as well as improved safety for workers.

Investment in digital technologies by energy companies has risen sharply over the last few years. The report notes that global investment in digital electricity infrastructure and software has grown by over 20% annually since 2014, reaching $47bn (£36bn) in 2016. That’s almost 40% higher than the worldwide investment in gas-fired power generation ($34bn or £26bn).

Digital technologies are blurring the lines between supply and demand, according to IEA executive director Dr Fatih Birol.

“The electricity sector and smart grids are at the centre of this transformation, but ultimately all sectors across both energy supply and demand — households, transport and industry — will be affected,” he said.

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