The growing use of information and communications technology – digitalization – is increasingly permeating modern life, from the way people work and travel to the way they live and entertain. Digitalization is increasingly having an impact on energy systems, bringing both the potential for substantial efficiency and system improvements and raising new policy issues.
The opportunities and challenges raised by the intersection of digitalization and energy were the focus of a two-day workshop held by the International Energy Agency in Paris this month that brought together more than 120 global experts. This workshop was part of an extensive effort by the IEA to examine the relationship between digitalization and energy that will result in a comprehensive report published in October.
The IEA has deep experience analysing the impact of technology, business and policy changes on energy systems. Through its work on smart grids, system integration of renewables, electric vehicles and smart charging, and the use of technology in the oil and gas sector, the IEA has been analysing the impact of digitalization for many years. One of its most-downloaded reports, “More Data, Less Energy,” examined the implications of connected devices on energy demand.
“Every unit of the IEA – from efficiency to investment, from electricity to transportation, from renewables to modelling, from sustainability to statistics – is examining the implications of digitalization on the energy sector,” says Dr Fatih Birol, the IEA’s executive director. “The interest in this topic is strong, but the world’s current understanding of the scale and scope of its potential remains limited, particularly when it comes to analytically-rigorous assessments.”
The IEA’s workshop, which was held under Chatham House Rule, examined critical questions that will help inform future analysis and policy recommendations. Speakers and participants represented IEA member and partner governments worldwide, well-established energy companies and new start-ups, major ICT companies, financial actors, environmental organizations, and researchers.
Workshop participants addressed questions such as: How big an impact will digitalization have on energy systems? Which companies and business models are best positioned to take advantage of opportunities presented by digitalization? How can governments and regulators make sure that businesses and consumers benefits from digitalization? And what are the most significant challenges and obstacles?
The various speakers explained how digitalization has already led to higher efficiency in operations throughout the energy supply chain, thanks to better analytics, the use of virtual facilities, the introduction of automation and artificial intelligence, and the use of quantum computing technologies.
Thanks to sensors, remote analysis and drones, for instance, operators can use predictive maintenance to extend the life of power generation, transmission and distribution assets. Big data in seismic mapping has significantly increased recoverable resources in oil and gas. The workshop also explored how digital technologies are starting to enable new linkages and interactions between energy supply and demand. Remote control of energy assets such as distributed generation and storage resources within smart grids can enable better electricity load management.
The workshop examined the significant challenges from digital disruption to existing energy business models, and how various market actors are positioning themselves to take advantage of opportunities. Participants explored key policy challenges, including data privacy, ownership, and standardization to strengthening digital resilience, as well as providing a sound regulatory environment for dealing with quickly-evolving technology and workforce challenges.
The IEA’s forthcoming study aims to provide new insight and perspective, accurate data and information, and highlight key case studies. The report will include an assessment of the potential value that digitalization could generate and to help advise policy-makers on how to enable and protect those gains.
“We’re all entering this brave new world together – whether as business competitors or potential partners, government regulators, or other key actors and stakeholders,” Dr Birol noted in his opening remarks to the workshop, “Our hope is that the IEA can provide analytically-rigorous insight and perspective in order to help all actors of the energy sector navigate the digitalization and energy landscape in the most sensible, cost-effective manner possible.”
Courtesy International Energy Agency