Tracking report
Smart Grids
Infrastructure deep dive
Smart grids
Electricity grid investments are expected to reach about USD 290 billion in 2021, recovering from 2020 and even surpassing the 2019 level of about USD 270 billion. The considerable expansion plans expected for 2021 are likely to reverse last year's trend.
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A smart grid is an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end users. Smart grids coordinate the needs and capabilities of all generators, grid operators, end users and electricity market stakeholders to operate all parts of the system as efficiently as possible, minimising costs and environmental impacts while maximising system reliability, resilience and stability.
Smart grids comprise a broad mix of technologies to modernise electricity networks, extending from the end user to distribution and transmission.
Not only can better technologies for monitoring, control and automation stimulate the development of new business models, they can unlock system-wide benefits including reduced outages, shorter response times, deferral of investments to the grids themselves and distributed energy resource integration.
At the end-user level, smart grids can enable demand flexibility and consumer participation in the energy system, including through demand response, electric vehicle (EV) charging and self-produced distributed generation and storage.
Demand flexibility can increase the overall capacity of the system to integrate variable renewables while accelerating the electrification of heating, cooling and industry at a lower cost. Deploying a physical layer of smart-grid infrastructure – underpinned by smart meters – can help unlock these benefits.
Smart grids comprise a broad mix of technologies to modernise electricity networks, extending from the end user to distribution and transmission.
Not only can better technologies for monitoring, control and automation stimulate the development of new business models, they can unlock system-wide benefits including reduced outages, shorter response times, deferral of investments to the grids themselves and distributed energy resource integration.
At the end-user level, smart grids can enable demand flexibility and consumer participation in the energy system, including through demand response, electric vehicle (EV) charging and self-produced distributed generation and storage.
Demand flexibility can increase the overall capacity of the system to integrate variable renewables while accelerating the electrification of heating, cooling and industry at a lower cost. Deploying a physical layer of smart-grid infrastructure – underpinned by smart meters – can help unlock these benefits.
Last updated Oct 4, 2022
Key findings
Investment spending on electricity grids, 2015-2021
OpenInvestment in smart grids needs to more than double through 2030
Investment in electricity grids showed a strong increase of 6% in 2021, with advanced economies accelerating investment to support and enable the electrification of buildings, industry and transport and to accommodate variable renewables on the power system.
Despite some recovery from the economic disruption caused by the Covid-19 pandemic, investment in smart grids need to more than double through to 2030 to get on track with the Net Zero Emissions by 2050 Scenario, especially in emerging market and developing economies.
Investment in electricity grids needs to average around USD 600 billion annually through to 2030 to get on the Net Zero Scenario trajectory. This is almost double the current investment levels, at around USD 300 billion per year.
Despite some recovery from the economic disruption caused by the Covid-19 pandemic, investment in smart grids need to more than double through to 2030 to get on track with the Net Zero Emissions by 2050 Scenario, especially in emerging market and developing economies.
Investment in electricity grids needs to average around USD 600 billion annually through to 2030 to get on the Net Zero Scenario trajectory. This is almost double the current investment levels, at around USD 300 billion per year.
Analysis
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Our work on Smart grids
The ISGAN TCP is a strategic platform to support high-level government attention and action for the accelerated development and deployment of smarter, cleaner electricity grids around the world. Operating as both an initiative of the Clean Energy Ministerial, and as a TCP, the ISGAN TCP provides an important channel for communication of experience, trends, lessons learned, and visions in support of clean energy objectives as well as new flexible and resilient solutions for smart grids.
Related sectoral Technology Collaboration Programmes (TCP)
The IEA is expanding cross-Agency efforts to assess the policy, regulatory, technology and investment context needed to accelerate progress on power system modernisation and effective utilisation of demand side resources, leveraging the opportunities offered by digitalisation. The project draws from global experience and lessons learned to address emerging economies challenges and provide actionable recommendations.
Events
5 Sep 2018
Energy Perspectives on Blockchain (OECD Blockchain Policy Forum)
20 Jun 2018
Systems Integration Side Event
7 Feb 2018
Presentation: Digitalization & Energy
12 Jul 2017
