- Decentralization
- Digitalization
- Decarbonization
According to the International Energy Agency, in 2024, the global energy demand increased by 2.2%, which was almost double the annual increase over the previous ten years. This growing demand, naturally, requires decisive action to mitigate the approaching climate crisis. As outlined in the Global Energy Perspective 2024 report by McKinsey & Company, the energy sector is undergoing a shift toward higher costs, increased complexity, and escalating technology demands.
In order to tackle these challenges, switch to sustainable, zero-emission energy sources, and seamlessly adopt advanced technology solutions, companies need a holistic strategy in place. This should be built on the following key drivers: decentralization, digitalization, and decarbonization. Below, we’ll explain each of them in brief.
Decentralization
The transition to distributed, renewable energy generation necessitates implementing wind and solar power solutions, rechargeable energy storage units, autonomous power grids, on-site energy production units, and more.
The importance of this shift is confirmed by the fact that, in 2024, the unprecedented capital investments of electric power providers totaled $174 billion (by Deloitte), with 42% allocated to the development of transmission and distribution infrastructure.
The perks of this strategy include:
- Trimmed energy expenses: Any surplus energy generated locally can be fed back into the grid and monetized through net metering, vehicle-to-grid systems, etc. It can also be traded to end-users through decentralized blockchain-powered platforms. The energy production proves itself economical in the long run as it doesn’t rely on fossil-fuel power plants.
- Reduced dependency on dominant energy providers, which leads to a lower risk of grid-related power outages and increased power availability in areas lacking reliable energy access.
- Scalability and the possibility to adjust power consumption to various needs by tweaking existing infrastructure.
Digitalization
Implementation and usage of technology has penetrated every facet of the energy sector, from generation and transmission to local delivery and end-use. The creation of a low-carbon, digitally safe, innovation-driven, and fair energy service ecosystem and investment in it is backed by documents such as the 2022 EU action plan on digitalizing the energy system. These measures aim to lower steep energy costs, accelerate the integration of renewable energy sources, ensure that emissions are regulated efficiently, enhance grid dependability, promote transparent energy consumption, and allow end-users to effectively manage energy usage through progressive tools.
Decarbonization
Reaching net-zero emissions has been a popular concept that has been legislatively supported in a number of countries. For example, in Switzerland, the majority of the population (69%) has voted in support of expanding renewables and enabling local energy solutions stipulated in the Electricity Act. In total, as many as 85% of countries which have participated in the UN’s People’s Climate Vote in 2024 expressed their willingness to phase out fossil fuels in favor of solar and wind power and similar sustainable energy options.
With this being said, reaching climate neutrality is challenging. Even with technologies labeled as climate-neutral, emissions can still emerge. At every stage of the lifecycle of solar and wind power plants, there is a certain amount of emissions that can’t be eliminated. That’s why in long-term scenarios that aim for climate neutrality, whether when decarbonizing road traffic through the adoption of electric vehicles, decarbonizing high-temperature industrial processes of up to 600 °C by installing heat pumps and renewable-based thermal systems, etc., compensation measures eventually become necessary.
In summary, the above processes help address the growing electricity demand, which is one of today’s most pressing challenges. We can effectively address this demand through groundbreaking technologies, including AI-powered software for handling big data, the Internet of Things, and alternative energy sources like solar panels, wind turbines, and clean green hydrogen.
