Digitalization and Energy 2017

The International Energy Agency has recently published a report to the digitization of the global energy system and its implications for energy stakeholders. 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 save 270 billion USD of investment in new infrastructure.

In a first chapter, the report sketches a very comprehensive picture of the impacts of digitization on energy demand in the transport, building and industrial sectors. Then, the report looks at the potential impact of digitization on the oil and gas and coal sectors before tackling the digital transformation of the electrical system. It collects a number of data on energy consumption by the digital industries, then identifies a series of cross-cutting risks (cybersecurity, privacy, impacts on jobs and skills) in the increasingly digitalized world of energy and makes some general recommendations for policy makers.

Digital technologies are set to transform the global energy system in coming decades, making it more connected, reliable and sustainable. This will have a profound and lasting impact on both energy demand and supply. 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 responses in building, industry and transport could provide 185 GW of flexibility, and avoid USD 270 billion of investment in new electricity infrastructure.

The biggest potential for digital energy transformation lies in blurring the distinction between production and consumption through four levers: flexibility, the integration of renewable energy sources, the implementation of smart charging for electric vehicles as well as the emergence of small-scale decentralized electric resources such as domestic photovoltaics. The opportunities are, as always, accompanied by risks. Cyberattacks in particular are a valid concern, as are privacy risks and disrupting markets.

To help understand and deal with this fast-evolving landscape, the report concludes with some policy recommendations, as sound policy and market design will be critical in steering a digitally enhanced energy system along a more efficient, secure, accessible and sustainable path. The recommendations include building digital knowledge among their staff, experiment through pilot projects and learn from case studies and to build flexibility into policies.

Read the report here