Energy integration

Tracking Clean Energy Progress

More efforts needed

While individual clean energy technologies are the building blocks of clean energy transitions, it is also necessary to employ energy integration systems to maximise their impact by increasing system flexibility. Although advances in the area of energy storage were impressive in 2018, market designs and regulations need to evolve to reward the huge benefits these increasingly crucial integration technologies have to offer. Innovation efforts should therefore focus on trialling integration technologies at large scale under a variety of market conditions.

Luis Munuera
Lead author

Back to TCEP overview 🕐 Last updated Thursday, May 23, 2019

Tracking progress

Energy integration technologies – smart grids, energy storage, demand response, and hydrogen – play a crucial role in increasing the flexibility of energy systems. They can help integrate greater shares of variable renewables and help accommodate the large-scale electrification of transport, heating or industrial processes needed in the SDS.

As energy demand becomes progressively more digitalised and more consumers generate and store their own energy, integration technologies can facilitate their participation in energy system operations.

Energy integration technologies

Energy storage made significant progress in 2018, aided by mandates and other positive policies. A lack of progress in creating supportive market designs and regulatory frameworks is causing other integration technologies to lag behind.

More efforts are needed in smart grids, hydrogen, and demand response to get on track with the SDS.

Energy storage

Energy storage deployment reached a record level in 2018, nearly doubling from 2017. Behind-the-meter storage expansion was particularly strong, almost three times that of 2017. The leading country was Korea, followed by China, the United States and Germany. New markets have emerged quickly wherever governments and utilities have created supportive mechanisms, including in Southeast Asia and South Africa, indicating that storage continues to need policy support.

Combined utility-scale and behind-the-meter deployment by country

Policy support, largely through mandates and targets, has enabled rapid growth in a selected but growing number of markets.

	Korea	China	US	Germany	Other
2013	0.019	0.038	0.062	0.022153168	0.05920525
2014	0.086	0.087	0.047	0.059146332	0.12864415
2015	0.022	0.034	0.218	0.093401955	0.337620159
2016	0.291	0.09	0.187	0.194686417	0.471152774
2017	0.36	0.147	0.236	0.139795178	0.84564305
2018	0.839	0.608	0.388	0.25431694	1.023987247
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In 2018, hydrogen maintained its unprecedented recent momentum, with over 20 MW of electrolyser capacity coming online, and larger projects announced (up to 100 MW, mostly in Europe). All six new CCS project announcements in Europe related to hydrogen. Notable policies in France and Korea, plus high-level co‑ordination by Japan, bear witness to increased government interest. China, raised its levels of ambition and vehicle production to globally significant levels. In 2019, a major new IEA analysis provides recommendations for governments and companies to build on current momentum. More effort is needed in three key, trackable areas: (1) increase the share of low-carbon hydrogen in existing industrial uses; (2) expand hydrogen into new applications; and (3) deliver cost reductions.

Hydrogen supply and demand

Today’s hydrogen industry is large, but most hydrogen is produced from gas in dedicated facilities. The current share from renewables is small and the share used in fuel cell vehicles is even smaller.

Notes: Mtoe = million tonnes of oil equivalent. MtH2 = million tonnes of hydrogen.

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Demand response

Demand-response capacity increased only 4% in 2018, maintaining the average growth rate of the past five years despite vast demand-response potential (equivalent to total annual US electricity demand). Although progress has been made in smart-meter deployment, this enthusiasm has not spread to developing the market designs and business models necessary to take advantage of the potential flexibility available. To raise demand-response growth closer to the SDS level, new markets for flexibility and ancillary services are needed, and existing markets need to be opened to new business models such as aggregation and virtual power plants.

Demand response potential in the SDS

Vast potential for demand response remains largely untapped.

	Industry and Agriculture	Transport	Buildings	Share of demand
2016	847	50.79	3070.9	16
2040	1504	1550.69	6220.73	26
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Smart grids

Although smart grid investments rose 10% in 2018, these technologies still represent a small share of all investment in network infrastructure. Furthermore, despite the initial enthusiastic response to smart grids, many signs now point to a slowdown: funding for microgrids and virtual power plants did not expand in 2018, and investments in blockchain technology plummeted. Further efforts are needed to implement regulatory frameworks that recognise and reward investment in new digital technologies and in other ‘non-wire’ alternatives to traditional electricity grid extensions.

Investment in smart grids by technology area

Investment in smart grids is growing, but remains a small share of all network investment.

	Rest of networks	Power equipment	Smart meters	Smart grid infrastructure	EV chargers	Share from digital grid infrastructure
2014	139.29	114	11	12	0.91	8.466159768
2015	148.27	121	11	11.90	1.39	8.285231976
2016	149.35	126	16	12.54	1.88	9.937560765
2017	130.52	135	18	12.67	2.16	11.11699481
2018	127.01	131	19	12.62	3.40	12.10211248
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