Electricity is the fastest-growing source of final energy demand, and over the next 25 years its growth is set to outpace energy consumption as a whole. Economies depend on the reliable and affordable delivery of electricity. At the same time, the need to address climate change necessitates dramatic transformation of the world’s power systems.
As decarbonisation efforts progress, innovative approaches to the design and operation of electricity systems are needed. Without such innovation, growing electrification could lead to increased insecurity, unnecessary transmission and distribution losses, and missed opportunities for cost savings for energy consumers and producers alike.
Digital technologies can enable more dynamic, efficient, reliable and sustainable electricity systems. Electricity systems in the future may be able to deliver power in response to predicted demand at the right time, in the right place, at the lowest cost and with the lowest emissions. The importance of distributed energy resources such as energy efficiency, smart demand response, smart electric vehicle charging, building-level energy storage, distributed solar photovoltaics is growing. These resources provide the flexibility needed to integrate more generation from variable renewables, and thus are increasingly critical to countries that are increasing the share of renewable power in their energy mix.
Digital, demand-driven solutions offer significant benefits to cost reduction, emissions abatement and enhanced energy efficiency. For example, smart demand response could provide 185 GW of system flexibility globally, roughly equivalent to the currently installed electricity supply capacity of Australia and Italy combined. This could save USD 270 billion of investment in new electricity infrastructure.
Achieving this transformation requires policy action, enabling regulatory frameworks, new business models and investments brought up to scale, as well as innovation and deployment of technology.
The IEA has launched the four-year cross-agency Digital Demand-Driven Electricity Networks Initiative (3DEN), which is working to identify the policy, regulation, technology and investments needed to accelerate progress on power system modernisation and effective utilisation of distributed energy resources.