Over the coming decades, digital technologies are set to make energy systems around the world more connected, intelligent, efficient, reliable and sustainable. Stunning advances in data, analytics and connectivity are enabling a range of new digital applications such as smart appliances, shared mobility, and 3D printing. Digitalized
energy systems in the future may be able to identify who needs energy and deliver it at the right time, in the right place and at the lowest cost. But getting everything right will not be easy.
Digitalization is already improving the safety, productivity, accessibility and sustainability of energy systems. But digitalization is also raising new security and privacy risks. It is also changing markets, businesses and employment. New business models are emerging, while some century-old models may be on their way out.
Policy makers, business executives and other stakeholders increasingly face new and complex decisions, often with incomplete or imperfect information. Adding to this challenge is the extremely dynamic nature of energy systems, which are often built on large, long-lived physical infrastructure and assets.
This report seeks to provide more clarity for decision makers on what digitalization means for energy – shining a light on both its enormous potential and most pressing challenges. It is the first effort from the International Energy Agency (IEA) to comprehensively depict how digitalization is reshaping the energy sector. It is also intended to serve as a springboard for future work.
Digitalization: A new era in energy?
The energy sector has been an early adopter of digital technologies. In the 1970s, power utilities were digital pioneers, using emerging technologies to facilitate grid management and operation. Oil and gas companies have long used digital technologies to model exploration and production assets.
Recent technological advances and trends are truly astounding. Data are growing at an exponential rate – internet traffic has tripled in only the past five years. There are now more mobile phone subscriptions than people in the world.
Advancing technology, falling costs, and ubiquitous connectivity are opening the door to new models of producing and consuming energy. Digitalization holds the potential to build new architectures of interconnected energy systems, including breaking down traditional boundaries between demand and supply.
The impact of these tremendous digital advances and their rapid deployment across the energy landscape raise the fundamental question of whether we are on the cusp of a new digital era in energy and, if so, what are the emerging trends. This report attempts to answer these questions.
All energy demand sectors are feeling the effects Digital technologies are already widely used in energy end-use sectors, with the widespread deployment of potentially transformative technologies on the horizon, such
as autonomous cars, intelligent home systems and machine learning. While these technologies could improve efficiency, some could also induce rebound effects that increase overall energy use.
In the transport sector, cars, trucks, planes, ships, trains and their supporting infrastructure are all becoming smarter and more connected, improving safety and efficiency. Digitalization could have its biggest impact on road transport, where connectivity and automation (alongside further electrification) could dramatically reshape mobility. Meanwhile, the overall net impacts on energy use are highly uncertain. Over the long term, under a best-case scenario of improved efficiency through automation and ride-sharing, energy use could halve compared with current
levels. Conversely, if efficiency improvements do not materialise and rebound effects from automation result in substantially more travel, energy use could more than double.
In buildings, our analysis shows that digitalization could cut energy use by about 10% by using real-time data to improve operational efficiency. Smart thermostats can anticipate the behaviour of occupants (based on past experience) and use real-time weather forecasts to better predict heating and cooling needs. Smart lighting can
provide more than just light when and where it is needed; light-emitting diodes (LEDs) can also include sensors linked to other systems, for example, helping to tailor heating and cooling services.
In industry, many companies have a long history of using digital technologies to improve safety and increase production. Further cost-effective energy savings can be achieved through advanced process controls, and by coupling smart sensors and data analytics to predict equipment failure. 3D printing, machine learning and connectivity could have even greater impacts. For example, 3D printing can be used to make aircraft lighter, reducing both the materials to build the plane and the fuel to fly it.