Powering The Future: How Digitalization And AI Are Transforming Global Electricity Grids – IRENA

The transition to a decarbonized global energy system necessitates a fundamental shift in how electricity is generated, managed, and consumed. As detailed in the IRENA report, “Digitalization and AI for power system transformation”, digital technologies are positioned as the indispensable tools for navigating the complexity introduced by the massive integration of variable renewable energy sources and the proliferation of distributed energy resources. The global drive for electrification—which IRENA projects will account for 52% of final energy consumption by 2050—demands a smarter, more resilient grid, a feat achievable primarily through advanced digitalization and Artificial Intelligence (AI).

Digital solutions deliver tangible benefits across the energy value chain, clustered into five key areas. Economically, AI-driven optimization slashes electricity costs for end-users; for example, improved forecasting in Denmark has yielded annual savings of over USD 9 million by reducing operating reserve costs by 10–15%. Operationally, digital grids drastically improve security of supply, with automated systems shown to reduce interruptions by up to 45% and shorten outage durations by more than half. Crucially for the energy transition, AI-enhanced forecasting is vital for integrating renewables, with applications in Australia, India, and the UK demonstrating up to 45% more accurate predictions for wind and solar generation, thereby minimizing curtailment and allowing the grid to safely operate at higher renewable penetration levels. Beyond system-level benefits, smart technologies offer end-users greater control and comfort, while AI-driven process optimization can cut energy consumption across industrial and commercial sectors by 10–60%, boosting overall business performance.

To fully realize this potential, the international community, particularly the G7, must address persistent barriers. These include regulatory hurdles, a significant deficit in the digital skills needed to manage these advanced systems, challenges related to data interoperability and exchange, and the imperative to manage escalating cyber security risks. IRENA’s action agenda advocates for strengthening data exchange protocols, funding measures to upskill the workforce, creating long-term, innovation-friendly regulatory frameworks, and fostering improved co-ordination between regulators, grid operators, and digital innovators. Successfully implementing these strategic interventions will accelerate the transformation toward secure, reliable, and affordable power systems that can support global prosperity in a net-zero world.