Electricity is the fastest-growing source of final energy demand, set to outpace energy consumption as a whole over the next 25 years. Economies depend on reliable and affordable electricity. In addition to the urgent need to address climate change, this anticipated growth will require a dramatic transformation of the world’s power systems.
Alongside global efforts to decarbonise energy systems, the world needs innovative approaches to the design and operation of electricity systems. Without such innovation, growing electrification could lead to increased energy insecurity, unnecessary transmission and distribution losses, and missed cost-saving opportunities for energy consumers and producers alike.
Digital technologies can enable more dynamic, efficient, reliable and sustainable electricity systems. The electricity systems of the future will deliver power in response to predicted demand at the right time, in the right place, at the lowest cost and with the lowest emissions. Distributed energy resources, such as energy efficiency, smart demand response, smart electric vehicle charging, building-level energy storage and distributed solar photovoltaics, become more critical every year. These resources provide the flexibility needed to integrate generation from variable renewables. Thus, they are increasingly essential to countries that are growing 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 that would otherwise be necessary for new electricity infrastructure to meet rapid demand growth.
Achieving this transformation requires policy action, enabling regulatory frameworks, new business models and investments at scale, as well as innovation and deployment of technology.
The IEA has launched a four-year cross-agency initiative, Digital Demand-Driven Electricity Networks (3DEN). 3DEN is working to accelerate progress on power system modernisation and effective utilisation of distributed energy resources through policy, regulation, technology and investment guidance.