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© OECD/IEA 2018
Digitalization & Energy
Webinar – 7 February 2018
IEA
© OECD/IEA 2018
Speakers
Dave Turk Director (Acting) of Sustainability, Technology and Outlooks
Co-Lead, IEA Digitalization Working Group
George Kamiya Energy Environment Division
Thibaut Abergel Energy Technology Policy Division
Jacob Teter Energy Technology Policy Division
Kira West Energy Demand Outlook Division
Christophe McGlade Energy Supply Outlook Division
Carlos Fernández Alvarez Gas, Coal & Power Markets Division
Brent Wanner Energy Demand Outlook Division
Luis Munuera Energy Technology Policy Division
Jan Bartoš Energy Policy and Security Division
© OECD/IEA 2018
Digital technologies are everywhere….
© OECD/IEA 2018
Drivers of digitalization: data, analytics, and connectivity
Since 2008, data collection, storage, and transmission costs have declined by over 90%
Sources: Based on BNEF (2017), Utilities, Smart Thermostats and the Connected Home Opportunity; Holdowsky et al. (2015), Inside the Internet of Things; IEA (2017), Renewables; Tracking Clean Energy Progress; World Energy
Investment; Navigant Research (2017), Market data: Demand Response. Global Capacity, Sites, Spending and Revenue Forecasts.
0
20
40
60
80
100
2008 2010 2012 2014 2016
2008 = 100
EV batteries
Utility-scale PV
Data storage
Internet bandwidth
Sensors
© OECD/IEA 2018
Internet data traffic is growing exponentially, tripling over the past five years
Sources: Cisco (2017). The Zettabyte Era: Trends and Analysis June 2017; Cisco (2015). The History and Future of Internet Traffic.
Entering the zettabyte era
© OECD/IEA 2018
World electricity and backbone internet infrastructure
© OECD/IEA 2018
Electricity use by data centres and networks
Sustained efficiency gains could keep ICT electricity demand largely in check over the next five years,
despite exponential growth in demand for data centre and network services
0
100
200
300
400
500
2014 2020
TWh
Data centres
Hyperscale data centres
Cloud data centres (non-hyperscale)
Traditional data centres
0
100
200
300
400
500
Moderate efficiency
improvement
High efficiency
improvement
2015 2021
TWh
Data networks
Mobile Fixed
© OECD/IEA 2018
Poll Q1
Which sector do you think will be most impacted / transformed by
digitalization over the next 5-10 years?
a) Buildings
b) Transport
c) Industry
d) Oil & gas
e) Coal
f) Power
© OECD/IEA 2018
Buildings: reducing global energy demand
Widespread deployment of smart building controls could reduce energy use by 10% to 2040
0
10
20
30
40
50
60
70
By sector By end use
PWh
Non-residential
Residential
Others
Appliances
Lighting
Water heating
Space cooling
Space heating
Cumulative energy savings in buildings from digitalization
© OECD/IEA 2018
Buildings: enabling demand-side response
The growth in network-enabled devices presents opportunities for smart demand response
but also increases needs for standby power control
0
1 000
2 000
3 000
4 000
5 000
6 000
2010 2015 2020 2025 2030 2035 2040
TWh
Network-enabled Not connected
Household electricity consumption of appliances and
other small plug loads
© OECD/IEA 2018
Buildings: broadening horizons
New business models for enhanced energy services could help overcome technical and economic
barriers to digitalization in buildings.
Measuring, reporting
and monitoring
Interoperability
Other opportunities Other barriers
Enhanced energy
services
Li-fi
Education
Training
Communication
© OECD/IEA 2018
Digitalization and transport: trucks and logistics
Digital solutions for trucks and logistics could reduce energy use for road freight by 20-25%
-80%
-60%
-40%
-20%
0%
Energy
demand
GHG
emissions
Netchange
Systemic measures
Vehicle efficiency
Fuel switching
Approximate
contribution
of digital technologies
Source: IEA (2017). The Future of Trucks: Implications for energy and the environment.
© OECD/IEA 2018
Impacts on road transport energy demand
Road transport energy demand could halve or double from automation and connectivity
depending on how technology, behavior, and policy evolve
-80% -40% 0% 40% 80% 120%
I) Optimistic scenario:
"Have our cake and eat it too"
-80% -40% 0% 40% 80% 120%
II) Pessimistic scenario:
"Dystopian nightmare"
Heavy-duty
vehicles
Light-duty
vehicles
Energy intensity
Travel demand
Energy demand
Total road
transport energy
• Automation, connectivity, sharing,
and electrification (ACES) to
dramatically reshape mobility
• Impacts on energy demand
difficult to predict
Source: Wadud, MacKenzie and Leiby (2016), “Help or hindrance? The travel, energy and carbon impacts of highly automated vehicles”.
© OECD/IEA 2018
0
100
200
300
400
0
100
200
300
400
1987 1991 1995 1999 2003 2007 2011 2015
USD(2010)million
CumulativesavingsUSD(2010)millions
Energy savings (left axis) Cumulative investment cost (right axis)
Energy savings from improvement to industrial process controls
Improvements to industrial process controls produce substantial energy and associated cost savings
Energy efficiency measures relating to improved process control in small to medium US manufacturers
Source: IAC database
© OECD/IEA 2018
Illustrative case study: aircraft component light-weighting
The use of 3D printed components in commercial aircraft could lead to significant material
demand and fuel savings
0
5 000
10 000
15 000
20 000
25 000
Conventional
components
AM components
Tons
Metal demand
in 2050
Aluminium alloys Nickel alloys Titanium alloys Fuel savings
0
250
500
750
1 000
1 250
1 500
1 750
Slow
adoption
Mid-range
adoption
Rapid
adoption
Million GJ
Cumulative aircraft fuel savings
to 2050
Source: Huang et al. (2016)
© OECD/IEA 2018
Digital plant twins
Virtual feasibility and durability testing of real process plants can accelerate the innovation cycle by
saving time and resources
Source: Siemens UK
Source: GE
© OECD/IEA 2018
The oil and gas sector has a complicated relationship with digital technologies
but multiple opportunities are available
Examples of digital oil and gas supply technologies
Digitalization and oil and gas supply
Source: Courtesy of Shell Global Solutions International B.V.
© OECD/IEA 2018
Digitalization could increase recoverable resources, decrease production costs, improve health and
safety, and reduce the environmental impact of production
Impact of digitalization on global technically recoverable oil and gas resources
Digitalization and oil and gas supply
0
100
200
300
400
500
Oil Gas Oil Gas
Conventional Unconventional
billion toe
Absolute increase in resources
% Increase in resources
3% 3%
3%
15%
© OECD/IEA 2018
Coal: Multiple opportunities to improve efficiency throughout the supply chain
© OECD/IEA 2018
2%
1%
20002015
Increasing performance step by step
Drones, data processing and remote operation may optimize the use of big and expensive machinery
© OECD/IEA 2018
Mechanization of underground mine and use of super-giant machinery in surface mines removed most
of the mining jobs. Driverless trucks and shovels and remote longwalls will reduce further
Safety will be the main benefit of digitalization
© OECD/IEA 2018
Electricity generation and networks
Digitalization
in the power sector
“Data and analytics”
Provides forpredictivemaintenance,
planningand operationalchanges
“Connectivity”
Enablesbroadstructuralchange
ReducedO&M costs Improvedefficiencies
Reductionof
unplannedoutages
Extendedasset
lifetimes
Reducedinvestment
needs
Reducedfuel
consumptionand
costs
ReducedCO2
emissions
Reducedinvestment
needs
Improvedsystem
stability
Improvedsystem
planning
Digital data and analytics in existing systems can deliver benefits to the owners of power sector assets,
the wider electricity system, consumers and the environment
*Green = benefit to asset owner, red = system benefits and consumers, blue = global environmental benefits
© OECD/IEA 2018
Electricity generation and networks
Digitalization could save around USD 80 billion per year,
or about 5% of total annual power generation costs
0
10
20
30
40
5% lower
O&M costs
Efficiency:
5% more
electricity output
per unit of fuel
Efficiency:
5% lower total
network losses
5-yr life
extension
for power plants
5-yr life
extension
for networks
USD billion (2016) OPEX CAPEX
© OECD/IEA 2018
If every car today was an EV, how much would…
• Electricity demand increase?
A. 110%
B. 55%
C. 12%
• Generation capacity increase, if everyone charged when it was best for them?
A. 12%
B. 40%
C. 20%
© OECD/IEA 2018
Pre-digital energy systems are defined by unidirectional flows and distinct roles,
The digital transformation of the energy system
© OECD/IEA 2018
Pre-digital energy systems are defined by unidirectional flows and distinct roles,
digital technologies enable a multi-directional and highly integrated energy system
The digital transformation of the energy system
© OECD/IEA 2018
Providing system flexibility from the demand side
0
10
20
30
40
50
0 24 48
GW
Uncontrolled demand process, no system optimisation
0
10
GW
Uncontrolled demand profile
© OECD/IEA 2018
0
10
20
30
40
50
0 24 48
GW
Providing system flexibility from the demand side
0
10
GW
Optimised demand profile
© OECD/IEA 2018
0
10
20
30
40
50
0 24 48
GW
Optimised demand process
Providing system flexibility from the demand side
0
10
GW
Optimised demand profile
System peak reduction
Reduced net load ramping
Use coincident with PV output
© OECD/IEA 2018
Demand response programs – in buildings, industry and transport - could provide 185 GW of flexibility,
and avoid USD 270 billion of investment in new electricity infrastructure
Smart demand response
1 billion households and
11 billion smart appliances
could actively participate in
interconnected electricity
systems
Residential sector
© OECD/IEA 2018
EVs smart charging would provide further flexibility to the grid
saving between USD 100-280 billion investment in new electricity infrastructure
Smart charging of electric vehicles
EVs standard vs smart charging
Capacity requirement
150 million
EVs
140 GW
75 GW
500 million
EVs
300 GW
190 GW
Standard charging
Smart charging
© OECD/IEA 2018
Digitalization can help integrate variable renewables by enabling grids to better match
energy demand to times when the sun is shining and the wind is blowing.
Integration of variable renewables
Curtailment of solar PV and wind
7%
2040
Digital
flexibility
© OECD/IEA 2018
Digitalization can facilitate the deployment of residential solar PV and storage,
making it easier to store and sell surplus electricity to the grid or locally
Distributed energy resources
Blockchain could help to facilitate
peer-to-peer electricity trade
within local energy communities
© OECD/IEA 2018
Poll Q2
What will be the biggest barrier to achieving the benefits of digitalization?
a) Data ownership / data privacy
b) Cybersecurity
c) Economic disruption and transformation (e.g. job losses)
d) Market design challenges (e.g. ensuring accurate price signals)
e) Lack of public acceptance / trust with new technologies
© OECD/IEA 2018
Building digital resilience
• To date, cyber disruptions to energy have been small
• But cyber-attacks are become easier and cheaper – malware, ransomware,
phishing / whaling, botnets
• Digitalization also increases the “cyber attack surface” of energy systems
• Full prevention is impossible, but impact can be limited:
- Raised awareness, cyber hygiene, standard setting and staff training
- Coordinated and proactive preparation by companies and governments
- Design digital resilience in technologies and systems
• International efforts can help raise awareness and share best practices
© OECD/IEA 2018
Industroyer / Crash Override
Cybersecurity:
The ability to protect or defend
the use of cyberspace from cyber-
attacks and cyber incidents,
preserving the availability and
integrity of networks and
infrastructure and the
confidentiality of the information
these contain.
Commonly also refers to the
safeguards and actions available
to do this.
Ukraine, December 2016 (reported May 2017)
• A second brief but significant attack on the Ukrainian electricity
system.
• Thought to have been a test run for malware “Industroyer” (also
known as “Crash Override”): a versatile malware enabling attackers
to view, block, control or destroy grid control equipment, including
circuit breakers.
• Malware design suggested expert knowledge of several
standardised industrial communication protocols widely used to
control infrastructure – not only electricity grids – throughout
Europe, Asia and the Middle East.
• This was an example of a cyber intrusion into the control systems
of critical infrastructure.
© OECD/IEA 2018
Preparedness
Key message: The handling of some attacks falls within the capability of
companies themselves, while larger-scale attacks by sophisticated actors
may require more active government responses.
Beyond capabilities
of most companies
Capability level of large,
well-prepared companies
Most companies can handle
Amateur hacker
Ambitious hacker
Professional cyber
attackers
State actors
Top 10
cyber forces
Limiting impact (resilience) is
particularly important for critical
infrastructure: the physical and
institutional assets that are essential
for an economy to function, such as
large-scale energy systems.
• Mexico: identified 3 000 “strategic
installations”, half of them owned by
the national oil company PEMEX and
another 13% by the Federal Electricity
Commission.
• Germany: any infrastructure on which
more than 500 000 people (1/160th of
population) depend is considered
critical. This includes all gas power
plants and electricity transmission grids.
© OECD/IEA 2018
Managing privacy concerns
Source: Newborough and Augood (1999), “Demand-side management opportunities for the UK domestic sector” (reproduced courtesy of the Institution of Engineering and Technology).
© OECD/IEA 2018
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to accommodate
new technologies and developments.
4. Experiment, including through “learning by
doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of digitalization
on overall energy demand.
8. Incorporate digital resilience by design into
research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary tales.
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to accommodate
new technologies and developments.
4. Experiment, including through “learning by
doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of digitalization
on overall energy demand.
8. Incorporate digital resilience by design into
research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary tales.
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to
accommodate new technologies and
developments.
4. Experiment, including through “learning
by doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of digitalization
on overall energy demand.
8. Incorporate digital resilience by design into
research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary tales.
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to accommodate
new technologies and developments.
4. Experiment, including through “learning by
doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of
digitalization on overall energy demand.
8. Incorporate digital resilience by design into
research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary tales.
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to accommodate
new technologies and developments.
4. Experiment, including through “learning by
doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of digitalization
on overall energy demand.
8. Incorporate digital resilience by design
into research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary tales.
1. Build digital expertise within their staff.
2. Ensure appropriate access to timely, robust,
and verifiable data.
3. Build flexibility into policies to accommodate
new technologies and developments.
4. Experiment, including through “learning by
doing” pilot projects.
5. Participate in broader inter-agency
discussions on digitalization.
6. Focus on the broader, overall system benefits.
7. Monitor the energy impacts of digitalization
on overall energy demand.
8. Incorporate digital resilience by design into
research, development and product
manufacturing.
9. Provide a level playing field to allow a variety
of companies to compete and serve
consumers better.
10. Learn from others, including both positive
case studies as well as more cautionary
tales.
No-regrets policy recommendations
© OECD/IEA 2018
Digitalization: A New Era in Energy
• The energy system is on the cusp of a new digital era
• This first-of-its-kind “Digitalization and Energy” report will help shine a light on
digitalization's enormous potential and most pressing challenges
• But impacts are difficult to predict; uncertainty in technology, policy and
behaviour
• Much more work needs to be done…
• Next steps for IEA, especially to focus on high impact, high uncertainty areas:
- Automation, connectivity, and electrification of transport
- Digitalization, electricity, and smart energy systems
© OECD/IEA 2018
iea.org/digital
digital@iea.org
IEA

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Webinar: Digitalization & Energy

  • 1. © OECD/IEA 2018 Digitalization & Energy Webinar – 7 February 2018 IEA
  • 2. © OECD/IEA 2018 Speakers Dave Turk Director (Acting) of Sustainability, Technology and Outlooks Co-Lead, IEA Digitalization Working Group George Kamiya Energy Environment Division Thibaut Abergel Energy Technology Policy Division Jacob Teter Energy Technology Policy Division Kira West Energy Demand Outlook Division Christophe McGlade Energy Supply Outlook Division Carlos Fernández Alvarez Gas, Coal & Power Markets Division Brent Wanner Energy Demand Outlook Division Luis Munuera Energy Technology Policy Division Jan Bartoš Energy Policy and Security Division
  • 3. © OECD/IEA 2018 Digital technologies are everywhere….
  • 4. © OECD/IEA 2018 Drivers of digitalization: data, analytics, and connectivity Since 2008, data collection, storage, and transmission costs have declined by over 90% Sources: Based on BNEF (2017), Utilities, Smart Thermostats and the Connected Home Opportunity; Holdowsky et al. (2015), Inside the Internet of Things; IEA (2017), Renewables; Tracking Clean Energy Progress; World Energy Investment; Navigant Research (2017), Market data: Demand Response. Global Capacity, Sites, Spending and Revenue Forecasts. 0 20 40 60 80 100 2008 2010 2012 2014 2016 2008 = 100 EV batteries Utility-scale PV Data storage Internet bandwidth Sensors
  • 5. © OECD/IEA 2018 Internet data traffic is growing exponentially, tripling over the past five years Sources: Cisco (2017). The Zettabyte Era: Trends and Analysis June 2017; Cisco (2015). The History and Future of Internet Traffic. Entering the zettabyte era
  • 6. © OECD/IEA 2018 World electricity and backbone internet infrastructure
  • 7. © OECD/IEA 2018 Electricity use by data centres and networks Sustained efficiency gains could keep ICT electricity demand largely in check over the next five years, despite exponential growth in demand for data centre and network services 0 100 200 300 400 500 2014 2020 TWh Data centres Hyperscale data centres Cloud data centres (non-hyperscale) Traditional data centres 0 100 200 300 400 500 Moderate efficiency improvement High efficiency improvement 2015 2021 TWh Data networks Mobile Fixed
  • 8. © OECD/IEA 2018 Poll Q1 Which sector do you think will be most impacted / transformed by digitalization over the next 5-10 years? a) Buildings b) Transport c) Industry d) Oil & gas e) Coal f) Power
  • 9. © OECD/IEA 2018 Buildings: reducing global energy demand Widespread deployment of smart building controls could reduce energy use by 10% to 2040 0 10 20 30 40 50 60 70 By sector By end use PWh Non-residential Residential Others Appliances Lighting Water heating Space cooling Space heating Cumulative energy savings in buildings from digitalization
  • 10. © OECD/IEA 2018 Buildings: enabling demand-side response The growth in network-enabled devices presents opportunities for smart demand response but also increases needs for standby power control 0 1 000 2 000 3 000 4 000 5 000 6 000 2010 2015 2020 2025 2030 2035 2040 TWh Network-enabled Not connected Household electricity consumption of appliances and other small plug loads
  • 11. © OECD/IEA 2018 Buildings: broadening horizons New business models for enhanced energy services could help overcome technical and economic barriers to digitalization in buildings. Measuring, reporting and monitoring Interoperability Other opportunities Other barriers Enhanced energy services Li-fi Education Training Communication
  • 12. © OECD/IEA 2018 Digitalization and transport: trucks and logistics Digital solutions for trucks and logistics could reduce energy use for road freight by 20-25% -80% -60% -40% -20% 0% Energy demand GHG emissions Netchange Systemic measures Vehicle efficiency Fuel switching Approximate contribution of digital technologies Source: IEA (2017). The Future of Trucks: Implications for energy and the environment.
  • 13. © OECD/IEA 2018 Impacts on road transport energy demand Road transport energy demand could halve or double from automation and connectivity depending on how technology, behavior, and policy evolve -80% -40% 0% 40% 80% 120% I) Optimistic scenario: "Have our cake and eat it too" -80% -40% 0% 40% 80% 120% II) Pessimistic scenario: "Dystopian nightmare" Heavy-duty vehicles Light-duty vehicles Energy intensity Travel demand Energy demand Total road transport energy • Automation, connectivity, sharing, and electrification (ACES) to dramatically reshape mobility • Impacts on energy demand difficult to predict Source: Wadud, MacKenzie and Leiby (2016), “Help or hindrance? The travel, energy and carbon impacts of highly automated vehicles”.
  • 14. © OECD/IEA 2018 0 100 200 300 400 0 100 200 300 400 1987 1991 1995 1999 2003 2007 2011 2015 USD(2010)million CumulativesavingsUSD(2010)millions Energy savings (left axis) Cumulative investment cost (right axis) Energy savings from improvement to industrial process controls Improvements to industrial process controls produce substantial energy and associated cost savings Energy efficiency measures relating to improved process control in small to medium US manufacturers Source: IAC database
  • 15. © OECD/IEA 2018 Illustrative case study: aircraft component light-weighting The use of 3D printed components in commercial aircraft could lead to significant material demand and fuel savings 0 5 000 10 000 15 000 20 000 25 000 Conventional components AM components Tons Metal demand in 2050 Aluminium alloys Nickel alloys Titanium alloys Fuel savings 0 250 500 750 1 000 1 250 1 500 1 750 Slow adoption Mid-range adoption Rapid adoption Million GJ Cumulative aircraft fuel savings to 2050 Source: Huang et al. (2016)
  • 16. © OECD/IEA 2018 Digital plant twins Virtual feasibility and durability testing of real process plants can accelerate the innovation cycle by saving time and resources Source: Siemens UK Source: GE
  • 17. © OECD/IEA 2018 The oil and gas sector has a complicated relationship with digital technologies but multiple opportunities are available Examples of digital oil and gas supply technologies Digitalization and oil and gas supply Source: Courtesy of Shell Global Solutions International B.V.
  • 18. © OECD/IEA 2018 Digitalization could increase recoverable resources, decrease production costs, improve health and safety, and reduce the environmental impact of production Impact of digitalization on global technically recoverable oil and gas resources Digitalization and oil and gas supply 0 100 200 300 400 500 Oil Gas Oil Gas Conventional Unconventional billion toe Absolute increase in resources % Increase in resources 3% 3% 3% 15%
  • 19. © OECD/IEA 2018 Coal: Multiple opportunities to improve efficiency throughout the supply chain
  • 20. © OECD/IEA 2018 2% 1% 20002015 Increasing performance step by step Drones, data processing and remote operation may optimize the use of big and expensive machinery
  • 21. © OECD/IEA 2018 Mechanization of underground mine and use of super-giant machinery in surface mines removed most of the mining jobs. Driverless trucks and shovels and remote longwalls will reduce further Safety will be the main benefit of digitalization
  • 22. © OECD/IEA 2018 Electricity generation and networks Digitalization in the power sector “Data and analytics” Provides forpredictivemaintenance, planningand operationalchanges “Connectivity” Enablesbroadstructuralchange ReducedO&M costs Improvedefficiencies Reductionof unplannedoutages Extendedasset lifetimes Reducedinvestment needs Reducedfuel consumptionand costs ReducedCO2 emissions Reducedinvestment needs Improvedsystem stability Improvedsystem planning Digital data and analytics in existing systems can deliver benefits to the owners of power sector assets, the wider electricity system, consumers and the environment *Green = benefit to asset owner, red = system benefits and consumers, blue = global environmental benefits
  • 23. © OECD/IEA 2018 Electricity generation and networks Digitalization could save around USD 80 billion per year, or about 5% of total annual power generation costs 0 10 20 30 40 5% lower O&M costs Efficiency: 5% more electricity output per unit of fuel Efficiency: 5% lower total network losses 5-yr life extension for power plants 5-yr life extension for networks USD billion (2016) OPEX CAPEX
  • 24. © OECD/IEA 2018 If every car today was an EV, how much would… • Electricity demand increase? A. 110% B. 55% C. 12% • Generation capacity increase, if everyone charged when it was best for them? A. 12% B. 40% C. 20%
  • 25. © OECD/IEA 2018 Pre-digital energy systems are defined by unidirectional flows and distinct roles, The digital transformation of the energy system
  • 26. © OECD/IEA 2018 Pre-digital energy systems are defined by unidirectional flows and distinct roles, digital technologies enable a multi-directional and highly integrated energy system The digital transformation of the energy system
  • 27. © OECD/IEA 2018 Providing system flexibility from the demand side 0 10 20 30 40 50 0 24 48 GW Uncontrolled demand process, no system optimisation 0 10 GW Uncontrolled demand profile
  • 28. © OECD/IEA 2018 0 10 20 30 40 50 0 24 48 GW Providing system flexibility from the demand side 0 10 GW Optimised demand profile
  • 29. © OECD/IEA 2018 0 10 20 30 40 50 0 24 48 GW Optimised demand process Providing system flexibility from the demand side 0 10 GW Optimised demand profile System peak reduction Reduced net load ramping Use coincident with PV output
  • 30. © OECD/IEA 2018 Demand response programs – in buildings, industry and transport - could provide 185 GW of flexibility, and avoid USD 270 billion of investment in new electricity infrastructure Smart demand response 1 billion households and 11 billion smart appliances could actively participate in interconnected electricity systems Residential sector
  • 31. © OECD/IEA 2018 EVs smart charging would provide further flexibility to the grid saving between USD 100-280 billion investment in new electricity infrastructure Smart charging of electric vehicles EVs standard vs smart charging Capacity requirement 150 million EVs 140 GW 75 GW 500 million EVs 300 GW 190 GW Standard charging Smart charging
  • 32. © OECD/IEA 2018 Digitalization can help integrate variable renewables by enabling grids to better match energy demand to times when the sun is shining and the wind is blowing. Integration of variable renewables Curtailment of solar PV and wind 7% 2040 Digital flexibility
  • 33. © OECD/IEA 2018 Digitalization can facilitate the deployment of residential solar PV and storage, making it easier to store and sell surplus electricity to the grid or locally Distributed energy resources Blockchain could help to facilitate peer-to-peer electricity trade within local energy communities
  • 34. © OECD/IEA 2018 Poll Q2 What will be the biggest barrier to achieving the benefits of digitalization? a) Data ownership / data privacy b) Cybersecurity c) Economic disruption and transformation (e.g. job losses) d) Market design challenges (e.g. ensuring accurate price signals) e) Lack of public acceptance / trust with new technologies
  • 35. © OECD/IEA 2018 Building digital resilience • To date, cyber disruptions to energy have been small • But cyber-attacks are become easier and cheaper – malware, ransomware, phishing / whaling, botnets • Digitalization also increases the “cyber attack surface” of energy systems • Full prevention is impossible, but impact can be limited: - Raised awareness, cyber hygiene, standard setting and staff training - Coordinated and proactive preparation by companies and governments - Design digital resilience in technologies and systems • International efforts can help raise awareness and share best practices
  • 36. © OECD/IEA 2018 Industroyer / Crash Override Cybersecurity: The ability to protect or defend the use of cyberspace from cyber- attacks and cyber incidents, preserving the availability and integrity of networks and infrastructure and the confidentiality of the information these contain. Commonly also refers to the safeguards and actions available to do this. Ukraine, December 2016 (reported May 2017) • A second brief but significant attack on the Ukrainian electricity system. • Thought to have been a test run for malware “Industroyer” (also known as “Crash Override”): a versatile malware enabling attackers to view, block, control or destroy grid control equipment, including circuit breakers. • Malware design suggested expert knowledge of several standardised industrial communication protocols widely used to control infrastructure – not only electricity grids – throughout Europe, Asia and the Middle East. • This was an example of a cyber intrusion into the control systems of critical infrastructure.
  • 37. © OECD/IEA 2018 Preparedness Key message: The handling of some attacks falls within the capability of companies themselves, while larger-scale attacks by sophisticated actors may require more active government responses. Beyond capabilities of most companies Capability level of large, well-prepared companies Most companies can handle Amateur hacker Ambitious hacker Professional cyber attackers State actors Top 10 cyber forces Limiting impact (resilience) is particularly important for critical infrastructure: the physical and institutional assets that are essential for an economy to function, such as large-scale energy systems. • Mexico: identified 3 000 “strategic installations”, half of them owned by the national oil company PEMEX and another 13% by the Federal Electricity Commission. • Germany: any infrastructure on which more than 500 000 people (1/160th of population) depend is considered critical. This includes all gas power plants and electricity transmission grids.
  • 38. © OECD/IEA 2018 Managing privacy concerns Source: Newborough and Augood (1999), “Demand-side management opportunities for the UK domestic sector” (reproduced courtesy of the Institution of Engineering and Technology).
  • 39. © OECD/IEA 2018 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. 1. Build digital expertise within their staff. 2. Ensure appropriate access to timely, robust, and verifiable data. 3. Build flexibility into policies to accommodate new technologies and developments. 4. Experiment, including through “learning by doing” pilot projects. 5. Participate in broader inter-agency discussions on digitalization. 6. Focus on the broader, overall system benefits. 7. Monitor the energy impacts of digitalization on overall energy demand. 8. Incorporate digital resilience by design into research, development and product manufacturing. 9. Provide a level playing field to allow a variety of companies to compete and serve consumers better. 10. Learn from others, including both positive case studies as well as more cautionary tales. No-regrets policy recommendations
  • 40. © OECD/IEA 2018 Digitalization: A New Era in Energy • The energy system is on the cusp of a new digital era • This first-of-its-kind “Digitalization and Energy” report will help shine a light on digitalization's enormous potential and most pressing challenges • But impacts are difficult to predict; uncertainty in technology, policy and behaviour • Much more work needs to be done… • Next steps for IEA, especially to focus on high impact, high uncertainty areas: - Automation, connectivity, and electrification of transport - Digitalization, electricity, and smart energy systems