As we reach the halfway mark towards the 2030 deadline for achieving the Sustainable Development Goals (SDGs), the significance of ‘energy’ as the cornerstone to facing the challenges and opportunities that we face today cannot be overstated. From poverty eradication to gender equality, climate change adaptation to food security, quality healthcare and education access to sustainable urban development, job creation to transportation systems improvement, energy is a catalytic actor in achieving all 17 SDGs. Yet, beneath the ‘energy promise’ lies the challenges of inclusivity, management, efficiency, effectiveness, and sustainability. With the intersection of growing energy demands and mounting climate change and environmental concerns, there is a clear and urgent call for making energy cleaner, equitable and inclusive. In this transformative journey, digitalization emerges as a key enabler.
Digitalization holds the potential to accelerate the decarbonization efforts of high-emitting industries, including the energy sector, which contributed a significant 43% of global emissions in 2020. By 2050, it is estimated that this integration could lead to a remarkable 20% reduction in emissions within the power sector. Moreover, if we fast-track the adoption of digitalization, the energy sector could realize immediate benefits, achieving emission abatement rates ranging from 4% to 10%.
The term 'digital' is evolving into a disruptive force throughout the entire energy value chain, spanning from production and transportation to distribution, supply, and consumption. From the cutting-edge realm of high technology like Artificial Intelligence (AI) and Big Data to the more modest domain of frugality like 3D printed sensors, the digital revolution offers a range of potent tools. These tools hold the capacity to transform the energy landscape, fostering greater sustainability and resilience. However, unlocking this potential requires a crucial synergy: the seamless integration of energy governance and digital solutions. Achieving this integration requires careful consideration of the energy value chain to identify ways in which digital technologies can influence and enhance it.
Catalyzing energy access and transition
Increasing the share of renewable energy in our energy mix is critical, as it represents the key to expanding energy access for the estimated 675 million people still without electricity, all while maintaining low emissions. The decentralization of energy systems, especially in remote and rural regions, is crucial in achieving universal energy access, and digital technologies are instrumental in this endeavor. Take renewable energy minigrids, for instance, which are small-scale generators, powered by solar, wind or hydro, operated independently from the national transmission grid. They can effectively deliver dependable electricity to rural communities and businesses. Optimizing the use of digital technologies can improve the entire process of their deployment, including but not limited to planning, designing, financing, operating, maintaining, and managing. On the other hand, energy can also empower digital advancements. A prominent example is the Cambodian operator Cellcard, which leveraged solar energy to reduce the cost of extending mobile coverage into rural areas, highlighting a symbiotic relationship between energy and digital technologies.
Further, digitalization proves invaluable in the planning and design phases of energy projects. Geospatial tools harness satellite and spatial data to pinpoint ideal locations for electrification projects. This allows for precise determination of areas currently served by the national grid and those in need of decentralized energy systems. For example, Kenya is utilizing a geospatial tool called Energy Access Explorer to support integrated energy planning in Kitui and Narok counties to optimize grid extension and distributed renewable energy strategies.
Digital technologies can help in energy financing by enhancing transparency in project development and assessment processes, subsequently reducing investment risks for external entities. Blockchain technology, with its inherent transparency and security features, is a game-changer in supporting and financing equitable energy access. It enables peer-to-peer energy trading and decentralized energy markets, empowering consumers and energy producers alike. Start-ups like WePower and Green Energy Lab exemplify this concept by enabling direct energy sales from producers to consumers. Similarly, platforms like Sun Exchange and SolarCoin offer opportunities for investment in solar projects, demonstrating the possibilities to revolutionize how we fund and sustain energy access projects.
Indeed, it is not limited to high-end technologies alone; we are also witnessing other innovative business models emerging to enhance energy access. One such innovation is the Pay-As-You-Go (PAYG) system, a plug-and-play off-grid solar solution that eliminates the upfront cost barrier associated with Solar Home Systems (SHS). With this approach, end-users can pay for energy gradually through a simple top-up payment structure, like how mobile phone plans operate. Besides, new financing mechanisms like crowdfunding through online platforms such as Bettervest, Ecoligo, Crowdfund for Solar, or Crowd4Climate have emerged, providing a financial model to support the initial costs of sustainable energy projects.
Enhancing energy efficiency
At a time when global cooling demands increase amidst record temperatures, heatwaves and wildfires, energy efficiency becomes important now more than ever. Recognizing that a significant 60% of energy management remains inefficient, the potential for enhancing energy efficiency through digitalization is enormous.
Digital technologies can play a key role in the operation, maintenance, and management of energy systems, ushering in a new era of efficiency and effectiveness. One crucial advancement is the deployment of Remote Monitoring Systems (RMS), providing real-time remote monitoring of critical parameters, such as battery status and the performance of generation systems. In addition, the Internet of Things (IoT) sensors play a useful role by continuously monitoring weather conditions and optimizing renewable energy production. This is particularly valuable in addressing the inherent intermittency challenges associated with solar and wind energy production. Innovative technologies, such as drones, have also found their niche in the energy sector, which are employed to inspect onshore and offshore assets like solar panels and wind turbines, efficiently detecting and mitigating damage, thus ensuring optimal energy production. Artificial Intelligence (AI) and machine learning processes are now being leveraged to forecast equipment failures and automate maintenance tasks.
Energy system flexibility, enabled by digital technologies, is a key solution to address supply and demand challenges in achieving net-zero goals. It offers substantial benefits, including cost savings, reduced network expenses, increased utilization of existing generation capacity, and enhanced security and reliability of the energy system. AI is valuable in predicting energy demand and forecasting energy supply sources, especially in regions with weak grids and limited capacity for energy storage, enabling better integration of renewable energy sources with the grid and ensuring grid stability. The distribution grid, which has become increasingly complex due to dynamic and multidirectional power flows, presents unique challenges to grid operators. The introduction of various assets, including those that generate surplus power (e.g., solar installations) and those that experience sudden spikes in energy consumption (e.g., fast electric vehicle charging), further exacerbates these challenges. Smart grid technologies can address these by allowing grid operators to closely monitor energy flow and optimize electricity management, leading to reduced energy wastage and improved power reliability for consumers, enhancing energy resilience.
Further, digital technologies offer both businesses and consumers valuable tools for enhancing energy efficiency through monitoring and control of energy consumption. Smart thermostats, energy management systems, and intelligent household appliances are some examples of such tools, which can schedule operations during low energy demand periods or when renewable energy is abundant. By embracing digital transformation, there is a potential reduction in electricity consumption and intensity, thus contributing to overall energy efficiency.
While these solutions provide a new way to connect digital, financial, and social assets, there are some limitations to consider. For example, crowdfunding might not completely solve long-term financial issues, such as closing the gap between a project's actual costs and the customer's financial capacity. Similarly, blockchain technology often faces obstacles due to a lack of confidence from regulatory bodies and funding agencies, making it a largely untested mechanism. Incorporating digital technologies into the energy sector can also bring about the possibility of cyberattacks, which may undermine the reliability and security of the energy system. Moreover, the proliferation of more devices and data servers to handle the information generated by these technologies could potentially result in substantial net increases in energy usage. Therefore, there is a need for careful assessment of the limitations to ensure a responsible adoption of digital innovations in the energy sector.
The convergence of energy and digital technologies is a powerful phenomenon, reshaping our global landscape. The mutual influence, as demonstrated by digital's impact on the energy value chain and energy's enabling role for digital expansion, serves as a catalyst for sustainable development. The key to realizing the SDGs hinges on our ability to harness this symbiosis, unlocking their collective potential for a more sustainable and equitable future. In this synergy, we can find the blueprint for a resilient world, where the promise of the SDGs can transform into a tangible reality.
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