The Electricity Revolution Today Lacks a Key Component
In various parts of the world, energy systems are undergoing profound and rapid transformations that will make them look entirely different a decade from now. One of the main driving forces behind this shift is the increasing electrification of the global economy. More people are relying on electric vehicles, heat pumps, and smart devices (digitally interconnected), and we are also witnessing massive growth in the construction of electricity-hungry data centers, many of which are used to power artificial intelligence. Due to these trends, the International Energy Agency has forecasted that electricity demand will grow to six times the total demand for energy by 2035.
The supply side of the energy sector is also experiencing rapid development. Renewable energy sources, particularly solar power, are expected to play increasingly important roles in energy systems worldwide. These trends and technologies could achieve greater autonomy for the energy sector and succeed in reducing emissions, provided that appropriate policies and infrastructure are implemented. However, they also add a layer of complexity to grid management, as operators must account for fluctuating electricity flows while ensuring that consumers can rely on supplies and bear costs.
Networks also need to supply additional places and things with energy. By 2030, homes and businesses will have over 30 billion digitally connected devices, doubling the current number. To keep pace with this increase, the flexibility of energy systems – their ability to respond promptly to fluctuations in electricity supply and demand – must grow much faster than currently anticipated.
Digital transformation may be key to bridging this gap, even though it brings with it new challenges. Digital tools could enhance energy systems, improve their efficiency, and support their affordability while also strengthening energy security. Artificial intelligence, in particular, holds tremendous potential to improve and simplify electricity systems. As recent case studies show, existing models and tools can better predict the output of weather-sensitive generation sources, help match supply and demand throughout the day, and assist in detecting and correcting infrastructure faults as they arise.
However, to fully capitalize on these opportunities, certain challenges must be addressed. Even when the lion’s share of new technologies on both sides of supply and demand is digitally enabled – implying their capability to connect with other digital systems – they tend to operate in isolation from each other. Often, they feature customized designs, lack standardized interfaces, and do not possess the necessary functions to interact dynamically with the grid. Such fragmentation creates unnecessary inefficiencies, raises costs, stifles innovation, and complicates the realization of the benefits of digital transformation overall.
For this reason, it is not enough for energy systems to be equipped with digital capabilities. They also need to be interoperable so that new technologies can be seamlessly integrated and incorporated. When every node on the network can communicate effectively, system managers can achieve desired outcomes more quickly.
If implemented well, increased interoperability among digital technologies on both sides of energy supply and demand could bring significant gains. Smart electric vehicle chargers could be designed to shift charging to times when renewable power generation is high. Thermostats and modern devices could instantaneously respond to price signals, thereby helping reduce electricity consumption during peak times. Rooftop solar energy systems could supply power to the grid when needed. With the right frameworks in place, these resources can work together, driving progress towards the energy goals set by countries and communities.
Unless we put in more efforts to ensure interoperability, we risk a future of wasted potential, missed opportunities, stalled investments, and rising threats to energy security. In fact, cyberattacks on energy facilities have already more than tripled over the past four years, and now artificial intelligence is increasing the complexity and precision of such attacks. Nevertheless, we know that interoperable systems built on common standards can be more resilient in the face of such threats.
This is why we urge governments and industry to collaborate and work toward producing robust and secure digital energy systems. Now more than ever, we need a shared vision and long-term planning. Recent proposals regarding the construction of a digital energy network aim to create a unified digital backbone for the energy ecosystem by introducing global identity, machine readability, and verification. Since these features will enable transparent, reliable, and interoperable energy transactions, it is crucial that they are taken seriously.
Based on these ideas, India is already taking a calculated step forward with the launch of the “Indian Energy Package.” This package aims to create a public digital infrastructure that enables identification and value exchange across a large number of actors and assets through standardized specifications and criteria.
Energy systems will continue to transform one way or another. We must act now to ensure that the systems that will emerge from this transformation reflect considered design choices. This means strengthening global cooperation and creating shared forms of infrastructure that will benefit everyone.
