In October, the International Energy Agency (IEA) declared that the world was in the middle of “the first truly global energy crisis”. The combination of soaring energy and food prices, volatile supply issues and rising inflation is sending shock waves through the global economy.
For millions of people, the energy crisis has become a personal matter. In parts of Europe, energy costs have quadrupled, and shortages have led to concerns of potential blackouts if a harsh winter depletes energy reserves.
With energy now a precious commodity, it is essential that we make the most of it. Currently, much of the advice is focused on reducing consumption through basic measures. For example, turning down thermostats, taking colder showers, washing clothes at lower temperatures, or delaying energy use (to outside peak times). These are important measures, but with 60% of energy currently lost or wasted, we need to prioritise demand efficiency as the first step.
This is not a new concept. In 1990, Amory Lovins introduced the idea of the ‘negawatt revolution’, urging companies to make smart swaps to save energy and, as a result, make substantial savings. Lovins argues that the best energy policy for nations, for businesses, and for the environment is one that focuses on using energy more efficiently. Indeed, energy efficiency is extremely important to reduce pressure on demand and is often overlooked. The best and cheapest watt is the one we don’t consume.
But to tackle energy waste, you first need to be able to see it and measure it.
Digitisation is key. First, digital tools can monitor, visualize and manage energy production, distribution and consumption, making the invisible visible. Second, we can then optimize energy use and eliminate any waste whether that’s in grids, factories, data centres, buildings, transport systems, or in our homes.
Moreover using digital technology has a faster payback than other approaches, better insulation, for example. We estimate a quick return on investment of just one to three years. And typically smart building technologies deliver a 30% reduction in energy usage with similar savings in operational costs.
So how can we start reducing energy waste? Here are three areas that could be tackled straight away with existing technologies.
1. In buildings
Buildings are already responsible for around 40% of annual global CO2 emissions and the impact of climate change is increasing demand for cooling and air conditioning. But with record energy prices and energy security at risk, saving energy and cutting carbon emissions in tandem must be the imperative for building managers and homeowners, helping them mitigate risk.
Studies show that using digital, energy management solutions in buildings can reduce carbon emissions by 20-30%. These energy-saving technologies leverage the power of smart, clean electricity through digitization – what we call Electricity 4.0.
2. In homes
A third of European homes and 48% of those in the U.S. still use gas for heating. However, in light of the energy crisis and recent climate legislation, the move to smarter and greener alternatives is picking up pace.
Installing and then operating smart heating systems, solar panels and electric heat pumps with home energy management apps (such as Wiser by Schneider Electric) are some of the ways that consumers are starting to control their energy bills. Residents can now decide what to heat, room by room. They can even use weather forecasting to automatically decide when the heating needs to be turned on or off, and avoid more waste.
Technologies like these, combined with households increasingly generating their own energy to live more sustainably will be essential to protect against price hikes and make our energy infrastructure more resilient. But this “at-home” energy revolution will only be considered a success if all homes can take advantage of energy-saving digital technologies. Support from governments will be vital to spur adoption and close the energy poverty gap.
3. In grids
The notion of a single, one-directional grid powered solely by large fossil fuel producers is fast becoming obsolete. Digital technologies make them bidirectional, resilient, and capable of balancing demand anywhere.
Using more locally generated, decentralized and renewable energy sources in microgrids will also be key for the grids of the future. Generating energy closer to where it is consumed, helps to efficiently combine multiple incoming power sources safely and reliably, and reduces energy wasted across transmission lines.
Despite all these ready-to-go solutions, the rate of global improvements to energy-saving measures fell to its slowest in a decade in 2020. And now with energy security a genuine concern for so many of us, it’s time to take more action. If we don’t, we risk exacerbating the energy crisis and failing to meet urgently-needed emissions targets.
Long-term decarbonization of the world’s energy will come from two sides. Around half will come from switching to clean energy, and this is widely accepted. The other half will come from increased electrification (having more things that can run on this clean energy) and from eliminating energy waste. The current energy crisis in parts of the world today may well be the catalyst for the much-needed action on energy demand.
By arming ourselves with the digital technologies to fight each and every energy efficiency battle, we can curb energy waste, build up our resilience and reach low carbon energy independence faster. And we’ll benefit both environmentally and economically in the process.
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