Digitalization and artificial intelligence-based applications are becoming game changers for the energy transition. They cut electricity costs for end-users, increase energy security, improve business performance, and help integrate low-cost renewables, according to a new report.
Digitalization and AI for Power Systems Transformation: Perspectives for the G7 explores how Artificial Intelligence (AI) and enhanced applications such as forecasting or automated grid operations can create value across the power system. The report was published today by the International Renewable Energy Agency (IRENA) at the request of the Canadian G7 Presidency, during the G7 Energy and Environment Ministers’ Meeting taking place from 30-31 October in Toronto, Canada.
The analysis intends to guide G7 countries via five value clusters—monitoring, forecasting, operational optimization, end-use automation, and transparency—to address the global power systems transformation. It builds on close cooperation with emerging and developing economies (EMDEs) and highlights advantages for energy access and socioeconomic development in EMDEs, where modernized grids and targeted investment can unlock vast opportunities.
The report recommends G7 policymakers:
- Perform benefits-oriented assessment of power systems to guide policy and investment decisions
- Strengthen data systems and interoperability, with focus on regional networks and cybersecurity
- Address the digital skills gap across sectors to ensure workforce is ready for energy transition
- Boost energy planning to mobilise investment, particularly in EMDEs
- Enhance the cooperation between energy, digital and public sectors to accelerate and manage power system transformation
The Honourable Tim Hodgson, Canada’s Minister of Energy and Natural Resources, welcomed the report’s findings: “Digitalization and the rise of new technology like Artificial Intelligence (AI) are reshaping global energy systems, from increased electricity demand to industrial efficiency. Empowering Canada’s energy sector to harness digital solutions is vital to make it more secure, responsible, and competitive. Our government was pleased to collaborate with IRENA on a report that reinforces the energy security and innovation priorities that Canada is advancing at the G7 Energy and Environment Ministers’ Meeting.”
Francesco La Camera, Director-General of IRENA, said, “Preliminary IRENA data shows the world is set to smash renewable power records again this year, the strongest step toward tripling renewables by 2030. With electricity powering more than half of global energy by 2050, reliability, affordability, and security must be the backbone of the digital transition.”
He added, “The G7 can lead the way by scaling digital solutions that cut costs, boost efficiency, and build power system resilience. The potential is substantial across developed, emerging, and developing markets, which could unlock vast opportunities by improving links between the energy and digital sectors. IRENA stands ready to support its global membership and the G7 to build more affordable, secure, and reliable power systems through digital innovation.”
Today’s report encourages a holistic, integrated approach to digitalization, aligning financial incentives, regulatory frameworks, and workforce development to reduce uncertainty, encourage innovation, and ensure equitable technology adoption.
As countries modernize and expand their power systems, digital solutions should be embedded by design, developed in parallel with physical infrastructure and long-term energy planning.
With electricity’s share of final energy consumption projected to reach 52% by 2050, according to IRENA’s Outlook, digitalization will be essential to manage this unprecedented scale. The variability of the growing demand and generation and the rising number of distributed energy resources require a digital transformation in power systems to maintain reliability without diminishing the cost reductions brought by renewables.
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