As energy storage solutions become more integrated into power networks, demand-side response in buildings, industry and transport could provide 185GW of flexibility worldwide, the IEA stated.
Today, only about 1% of global demand, or about 40GW of capacity is able to directly respond to shortages or excess supply, according to analysis by Navigant Research, cited in the IEA’s report.
But in the IEA’s Digitalisation & Energy report, researchers concluded that by 2040 more than 1 billion households and 11 billion smart appliances could participate in interconnected electricity systems.
These smart meters and connected devices such as air conditioners and boilers would enable homes to alter when and how much they draw electricity from the grid, increasing flexibility in national grids and preventing curtailment, the agency said.
In the European Union (EU), increased storage and digitally-enabled response could reduce curtailment rates of wind and solar projects from 7% in 2016 to 1% by 2040 — a reduction of more than three quarters.
"The introduction of measures to prevent curtailment will be critical to increased deployment of wind and solar PV," the IEA stated.
The agency’s executive director Fatih Birol added: "Digitalisation is blurring the lines between supply and demand.
"The electricity sector and smart grids are at the centre of this transformation, but ultimately all sectors across both energy supply and demand — households, transport and industry — will be affected."
Improving data and analytics could also aid planning, leading to better co-ordinated investment in networks and projects, the IEA suggested.
For example, sophisticated designs for new wind power projects are now possible based on digital data, enabling the optimal choice of turbine technology and distribution of turbines to maximise the potential of resources while minimising integration challenges, the agency stated.
But as digitalisation transforms the energy market, it also creates challenges, warned the IEA.
As devices and projects become increasingly connected, energy systems would become more vulnerable to cyber attacks, the IEA said.
The threat of cyber attacks would require international efforts between governments and companies to develop more resilient energy systems, the agency added.
The IEA also suggested that drones could increasingly be deployed to carry out inspections of wind turbine blades, or to survey environmental conditions and wildlife in areas that would normally be difficult or expensive to access — such as at potential offshore sites.
However, this could "reduce the need for some employees", the IEA wrote.
And in certain circumstances, digitalisation could actually increase carbon emissions from energy use, the agency warned. For example, self-driving vehicles might encourage increased travel, the IEA suggested.
The IEA also suggested ten policy actions governments could take to prepare for the increasing trend of digitalisation in the energy system:
- Build digital expertise within their staff;
- Ensure appropriate access to timely, robust and verifiable data;
- Build flexibility into policies to accommodate new technologies and developments;
- Experiment, including through "learning by doing" pilot projects;
- Participate in broader inter-agency discussions on digitalisation;
- Focus on the broader, overall system benefits;
- Monitor the energy impacts of digitalisation on nerall energy demand;
- Incorporate digital resilience by design into research, development and product manufacturing;
- Provide a level playing field to allow a variety of companies to compete and serve consumers better;
- Learn from others, including both positive case studies as well as more cautionary tales.