Smart grid technologies crucial for global energy transition: IEA

Advanced smart grid technologies are pivotal for enhancing energy transition and system reliability, with projections indicating a need to double investments to $600 billion annually by 2030.

In its latest report, the International Energy Agency emphasized that the success of the shift hinges on transforming various facets of the power system, including electricity generation plants, transmission and distribution systems, and consumer practices.

This comes as the energy think tank projected that overall investments in smart grids should double annually through 2030 from the current $300 billion.

The world aims to transition from fossil-based energy systems to renewable sources like wind, solar, and hydropower. This global shift, known as energy transition, is driven by major commitments such as the Paris Agreement, which targets net-zero carbon emissions by 2050.

“The clean energy transition increases electricity demand and requires more wind and solar power, stressing power grids. Smart grid technologies can manage this transition, reduce the need for costly new infrastructure, and improve grid resilience and reliability,” said IEA in the report.

It added: “In the pursuit of a cleaner energy sector, smart grid technologies are pivotal in modernizing a consistently overloaded grid. Digital technologies will also allow to integrate continually increasing shares of renewables from multiple sources, and further engage end users so that they can improve energy efficiency and reduce emissions.”

In January, a research report by experts at Saudi Arabia’s King Fahd University of Petroleum and Minerals stated that smart grids could revolutionize the Kingdom’s current energy management systems.

According to these researchers, such grids could enhance the integration of renewables into the electricity grid by enabling better energy transactions and ensuring a reliable supply.

Meanwhile, Saudi Arabia is making steady progress in developing smart grids as the Kingdom aims to achieve its net-zero goals by 2060.

In February, Peter Terium, CEO of NEOM’s water and electricity subsidiary ENOWA, told Arab News that the company has developed a blueprint for the world’s first renewable, high-voltage smart grid.

Terium explained that the smart grid will enable ENOWA to supply the NEOM region with 100 percent renewable electricity while reducing the corridor footprint by 50 percent.

He noted that the principle of smart grids is simple, as they are traditionally used on a small scale in buildings.

Digital innovation

The IEA emphasizes that measuring digital innovation in the power sector is crucial for tracking, improving, and implementing policies to shape the digitalization process effectively.

The report highlighted that quantifying innovation is challenging due to the lack of standardized metrics, with patent filings being the best way to measure progress in this sector.

“In this rapidly evolving landscape, patent data serve as a proxy measure of investment in innovation, offering valuable insights into the intellectual prowess and competitive strategies of people and organizations striving to redefine how we generate, transmit and utilize electrical power in the digital age,” said the IEA.

The global body revealed that between 2000 and 2023, 16,000 International Patent Families were filed related to smart grids, accounting for 0.2 percent of total IPFs across all technologies.

The report added that 2011 “saw a peak in smart grid innovation with 2,000 unique inventions produced, representing 11 percent of power sector innovations. Following a period of decline, the relative share of smart grid innovations increased to 13 percent in 2022, aligning with the trajectory of the IEA Net Zero by 2050 Scenario.”

The agency noted that the highest shares of IPFs in the smart grid sector are focused on systems supporting the interoperability of electric or hybrid vehicles. Additionally, significant patent filings are also happening in demand response systems and energy storage unit technologies.

Geographical distribution

East Asia dominated smart grid innovation from 2017 to 2021, accounting for over half of the IPFs. Since 2007, it has consistently led globally, with North America and Western Europe sharing the remaining IPFs, according to the IEA.

“In the last two decades, there has been a transition from Europe and the Americas being the primary sources of smart grid innovation to Asia taking on a more prominent role in this field,” said the report.

It added: “North America experienced a peak share of smart grid innovation in the period between 2002 and 2006, but consistently produced less than a third of global smart grid patents for the remaining years.”

The report disclosed that a quarter of smart grid IPFs registered in the past decade originated from inventors in Japan, with nearly an equal share coming from innovators in the US.

The IEA added that the remaining half of registrations came from investors based in China, Germany, and South Korea.

In a separate report released in May, the IEA highlighted that urban planning, digitalization and grid investment can help cities manage the impacts of climate change and growing energy demand.

In that report, IEA emphasized, “Reducing emissions in cities is essential for the world to meet its energy and climate goals — and digital solutions that manage consumption patterns and optimize infrastructure can play a significant role.”

The energy agency further highlighted that the pace of deploying digital technologies in the energy sector will heavily depend on the ability to build a skilled workforce.