Can the Energy Sector Keep Up with AI, Blockchain & Electric Vehicles?

The world has been living side by side with a global energy crisis since 2021. Shifting to renewables and decarbonization targets, challenged by gas and oil productions, and heavily influenced by new technologies, energy production is now challenged by an increase in demand in global energy consumption.

The increased consumption of energy is being driven by population growth, development, and new technologies like artificial intelligence (AI), the blockchain, and the move to electric vehicles. The question is, “Can the industry keep up?”

Techopedia sat with experts from the energy industry to understand how the sector is modernizing and digitally transforming to better produce, manage, and distribute energy.

Table of Contents Table of Contents

1. Key Takeaways
2. Why are global energy grids under transformation?
3. Aging and Strained Energy Grids Need "Dramatic" Investment
4. Technology Impacting Global Energy Consumption
5. The Role of AI and Machine Learning
6. The Bottom Line
7. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Why are global energy grids under transformation?
3. Aging and Strained Energy Grids Need "Dramatic" Investment
Show Full Guide
4. Technology Impacting Global Energy Consumption
5. The Role of AI and Machine Learning
6. The Bottom Line
7. References

Why are global energy grids under transformation?

The Electricity 2024 report of the International Energy Agency (IEA) reveals that global demand for energy is expected to accelerate significantly, growing at a rate of 3.4% every year through 2026.

Jon M. Williams, energy expert and CEO of Viridi — a company that works to transform the way energy is used and stored with scale lithium-ion-based energy storage systems — spoke to Techopedia about the causes of the energy transformation.

“There are several reasons why the global energy grid is undergoing transformation. First, the overall operations of the grid have not been updated in decades. The American Society of Civil Engineers has assigned the US grid an overall score of C-.

“Second, we are experiencing global “electrification” as efforts are made to reduce greenhouse gases by diminishing the use of other forms of energy, and third, we are continuously inventing new technologies — such as AI — that consume massive amounts of energy,” Williams said.

Williams explained that as populations emerge from poverty, the energy consumption per capita increases significantly.

“The outdated, unilateral energy system based on centralized generation and one-way transmission and distribution is transitioning to a more complex energy ecosystem. This new system features both generation and storage distributed in various ways.”

The Way the World Uses Energy is Changing

Sarang Gadre, Global Head, Infrastructure and New Energy at Honeywell — working to develop technologies that help businesses and industries use energy more efficiently and sustainably — said to Techopedia that the way the world uses energy is changing.

“We’re seeing the electrification of our cars, homes, buildings, and manufacturing processes. This growing demand, combined with the increased frequency and intensity of extreme weather events brought on by climate change, is placing more stress on the grid than ever before.”

“In addition, increased use of renewables is adding intermittency with the supply, resulting in additional stress on the grid,” Gadre said.

“Utilities are rethinking how they design, manage, and maintain the grid to increase its stability and reliability and meet varying power demands. Cybersecurity of the grid and grid-connected assets is also an important consideration in future grid operations.”

Aging and Strained Energy Grids Need “Dramatic” Investment

The IEA estimated the investment in energy grids needs to increase from $300 million in 2021 to an average of 6$30 million per year by 2030. The IEA adds that in 2050, the grids will need to invest about $830 million every year until 2060.

Stefan Zschiegner, Vice President of Product Management at Itron, a company that provides energy and water management for utilities and cities, described the investment required for grid modernization as “drastic”.

Zschiegner explained that 70% of American grid infrastructure is now over 25 years old, and daily reliance places a significant strain on the aging systems.

“Grid capacity needs a drastic expansion to accommodate the electrification of transportation and buildings, as well as the ever-growing energy demands of data centers.

“The current capacity is simply insufficient for the rising energy demand, especially with widespread electrification efforts.

“Fortunately, a shift to distributed energy resources, including renewable energy, can help address the evolving reality of the modern power grid,” Zschiegner said.

Technology Impacting Global Energy Consumption

Hannah Bascom, former Head of Energy Partnerships at Google and current Chief Market Innovation Officer of Uplight, a platform for energy providers, spoke about how new technologies are affecting the energy industry.

“After over a decade of flat growth, demand for electricity is rising fast. This is being driven by industrial-scale needs like new data centers (including AI processing), as well as electrification on the demand side.”

Besides AI, Bascom explained that as more devices and appliances become electric, such as electric vehicles, electric stoves, heat pumps, and others, the demand will also continue to increase.

While the U.S. needs to add enough new energy resources to a 200 GW of peak demand by 2030, Bascom said that “the grid cannot build the extra capacity fast enough — especially in localized areas, like the siting of a new data center.”.

“As energy demand grows, there is also an imperative to decarbonize — to save the planet and to meet decarbonization pledges made by utilities and regulators. This combination of increased demand, decarbonization needs, and electrification equals rapid transformation and innovation at a pace never seen before.”

The Role of AI and Machine Learning

A recent IBM study revealed that 74% of energy and utility companies are embracing AI. IBM said that energy and utility companies either have implemented or are exploring and using AI in their operations.

Casey Werth, Global Energy Industry General Manager IBM, said:

“Energy and Utility CEOs have moved beyond experimentation with AI to focusing on where they can drive the most business value with AI. As they manage ongoing transformation efforts, they can also capitalize on the great opportunities of generative AI and foundation models.”

Companies in the industry are using or experimenting with AI in different areas of business, including HR and governance. But one use case of AI immediately stands out: Smart grid management.

Zschiegner from Itron said that because utilities grapple with an influx of distributed energy resources and increasing grid complexity, AI can be a powerful tool to navigate the energy transition and better manage the grid edge.

Julia Sears, Chief Digital Officer (CDO) of Altus Power, the largest owner and operator of on-site commercial solar in the U.S., told Techopedia that AI, and particularly machine learning (ML), holds immense potential for the energy sector.

“By analyzing vast amounts of data on solar, usage, weather, and uptime, AI can predict energy usage patterns, anticipate peak demands, and optimize energy flows. This allows for proactive management and real-time adjustments, facilitating the seamless integration of renewables and enhancing overall grid efficiency.”

New Digital AI-Driven Control Centers Emerging

AI is also expected to be fundamental for the new emerging digital control centers where the new decentralized energy grid systems are expected to be managed. Sears explained that new digital control centers can improve visibility and access by providing real-time data on grid conditions, including demand fluctuations and available capacity, optimizing energy delivery.

“We can strategically inject clean energy into the grid at times of peak demand, maximizing its utilization and minimizing curtailment (reduction in energy production due to grid constraints).”

AI can also be used for demand response programs, Sears added. By understanding real-time grid needs adjustments can be made in energy production based on real data of grid requirements.

Williams of Viridi added that AI and ML will help generate, transport, and use energy in a way that meets consumers’ needs when they need it, but with significantly less waste throughout the system.

“A major source of inefficiency in our grid is lack of information. The amount of information required for a truly efficient grid is beyond the capacity of manual operation. This will require sophisticated, AI-enabled digital controls.”

Gadre from Honeywell added that AI and ML play key roles in terms of monitoring grid assets, effectively identifying root causes of issues, introducing predictive analytics, and automating processes such as demand response and distributed energy resource management.

By leveraging this technology, decentralized complex grid infrastructures will be able to have a holistic view of their operations and fully understand and even automate the supply/demand balance, Gadre said.

Bascom from Uplift added that traditional utility command-and-control methods aren’t suited to manage the various distributed energy resources (DERs) that are being incorporated into a modernized grid.

“Digital energy control centers can help utilities automate through AI/ML [machine learning] the monitoring, management, and control of demand-side resources and distributed IoT devices in a more reliable, scalable, and efficient way, saving consumers money both directly as well through avoiding traditional capital investments.”

Nuclear Energy and Reimagining Energy Grids

In March 2024, leaders from 32 countries, including Canada, China, the UK, and the U.S. signed the new Nuclear Energy Declaration, committing to harness nuclear power’s full potential today. Despite environmental group resistance and opposition, nuclear energy is considered vital to meet global energy demands.

Trey Lauderdale, CEO and Founder at Atomic Canyon — a startup using AI to help drive digital transformation in the nuclear sector, told Techopedia that digital energy control centers play a crucial role in modernizing the energy sector and meeting industry demands efficiently.

“The time is now to reimagine the grid, designing a system that integrates changes in how electricity is generated, stored and used.”

Lauderdale said that this energy transformation implies embracing decentralization and flexibility, and accommodating large-scale adoption of electric vehicles and distributed energy resources. To do this, the energy sector requires a vision of collaboration and industry-wide approaches that involve policymakers, innovators, customers, and utilities.

“These efforts are crucial as the world pushes toward the goal of net-zero emissions by 2050.”

The Bottom Line

While the global energy crisis is extremely complex and in a constant state of flux, the energy industry and grid operators are deeply immersed in the technologies that will help the industry overcome major obstacles.

From energy storage systems to smart management, armies of sensors and data points, and industrial IoT devices connected to new digital control centers powered by AI, the solutions are poised to take over. Investing in grid infrastructure, storage, and decentralization management technologies is the way the industry is moving forward.