6 November 2017: In its first comprehensive report on the interplay between digitalization and energy, the International Energy Agency (IEA) highlighted the potential for digital technologies to improve energy efficiency in the coming decades.

Titled ‘Digitalization and Energy,’ the report analyzes the manner by which the introduction and expansion of interconnected digital devices in buildings, transportation, and the electricity grid is changing the way energy is consumed, with significant potential for future efficiency gains in all industries. The publication explains that nearly half the global population now has access to the internet, while the number of connected devices is expected to grow from 8.4 billion in 2017 to 20 billion by 2020.

The study predicts that digitally interconnected systems will blur the distinction between generation and consumption, and increase flexibility in four ways: using smart demand response to increase system flexibility; combining smart response with new storage technologies to increase renewable energy integration; using smart charging technologies for electric vehicles to exploit periods of low electricity demand; and using digital technologies to develop distributed energy resources.

Electricity use in residential and commercial buildings is expected to double by 2040, but smart thermostats and smart lighting could reduce that number by 10%.

The IEA estimates that electricity use in residential and commercial buildings will double to 20 petawatt hours (PWh) by 2040, but smart thermostats and smart lighting could reduce that number by 10%, resulting in a cumulative 65 PWh savings. The report highlights three pathways to realize these savings: improving energy service responsiveness and prediction of user behavior; adjusting demand response; and allowing better detection of maintenance needs.

The report also highlights the effects of digitalization on transportation. Sensors on new aircraft, ships and trucks, connected by improved satellite communications, are expected to help operators to optimize routes, reducing fuel consumption. Citing a related IEA report titled, “The Future of Trucks,” the digitization report states that digital solutions could reduce road freight energy use by 20-25%. The IEA also notes the uncertain consequences of automated driving technology, which could either halve or more than double energy use in transportation depending on whether vehicle efficiency improvements materialize and how autonomous vehicles change consumer behavior.

The study also notes that expanded use of digital technologies is increasing energy demand from information and communications technologies themselves. The workload of data centers is expected to triple by 2020, however the report predicts that efficiency gains to data center infrastructure will limit the increase in related energy demand to 3%. It also notes, however, that future electricity consumption by data networks is uncertain. Information technology companies are responding to these uncertainties by making major investments in the development of renewable energy projects. Amazon and Google have each developed over 1 GW of renewable energy capacity in recent years.

To harness the positive impacts of digitalization, and minimize associated cybersecurity risks, the report suggests that policy makers, among other recommendations: build flexibility into policies to accommodate new technology developments; monitor the impacts of digitalization on energy demand; and incorporate digital resilience in product development and manufacturing. [IEA Press Release] [IEA Digitalization and Energy Interactive] [IEA Report]