The threat of climate change is driving the need for a dramatic shift in how we handle the energychallenges we face. Many industry observers see the emergence of a new energy ‘supercycle,’characterized by a rapid increase in electricity demand, coupled with a shift toward renewable energy sources as part of the clean energy transition and comprehensive strategies to reduce carbon emissions. We need to phase out fossil fuels as quickly as possible and deliver positive impacts for people and the planet. This transition represents a paradigm shift in the energy industry, and it carries with it enormous complexity as intermittent renewables also bring volatility into the picture.
To drive rapid change, we need to consider the three pillars of the Energy Triangle and handle 1) Security of Supply, 2) Affordability, and 3) Sustainability – all at the same time.
First, we see electricity demand increasing across countries and sectors. Decarbonization is a major driver for the shift toward electrification in industry, buildings, and transport sectors. Hard-to-abate sectors will leverage green molecules such as biofuels and hydrogen. This represents a fundamental transition. Add to this complexity the rapid growth in generative AI, and associated increases in energy demand from data centers. This factor alone has changed forecasts for overall electricity demand dramatically.
As a result, the infrastructure used to deliver all of this electricity, the power grid, is more important than it has ever been. As important, it needs to be modernized and reconfigured in some fundamental ways. For instance, we need to integrate a vast array of renewable energy sources and an equally wide variety of grid connected assets, things like solar panels, windmills, electric vehicles, heat pumps and more. No longer are we delivering power generated by very large thermal power plants at the edge of a cities to homes and businesses nearby. In many countries across the globe, we are now delivering power generated in far-flung windfarms and utility-scale solar arrays.
This complexity calls for a more intelligent energy system, one that is flexible, resilient, and able to cope with real-time data and an incredibly dynamic supply and demand environment. This intelligence will depend on enablers such as AI, machine learning, power electronics and digitalization, all required for efficient integration of renewables into the grid. The volumes of data and the number of new assets that are incorporated into the energy system today and in the future are way beyond anything humans could process directly.
Fortunately, there are accompanying trends that can help us manage this complexity. There are enormous opportunities available to us through the combination of information technology (IT), operational technology (OT), and services, which can support the kind of digital transformation we need.
While the energy challenges we face are real and daunting, there is reason for optimism. For instance, many of the foundational technologies and services needed to support this transition are available today. We have the tools we need to transport and distribute electricity to where it is needed, securely and reliably, to electrify the transportation sector, to generate clean, affordable electricity at scale. We also see progress in power quality, sustainable products, digitalization and addition of energy storage capacity, which are all important cornerstones for an energy system based on renewables that keeps the three perspectives of the energy triangle in mind, and where the energy system provides added flexibility and resiliency to help manage more variable generation, and loads.
We also see the industry stepping up, and we are encouraged to see government action, both in terms of policy and regulatory initiatives – such as streamlining of siting, permitting and other planning processes - and funding to support some of the larger infrastructure projects.
If we strengthen collaboration across sectors and geographies and keep the energy triangle in mind where we handle 1) Security of Supply, 2) Affordability, and 3) Sustainability – all at the same time, we can make a difference. Let’s act now - together, and leverage the momentum of this energy supercycle!