The three “Ds” in the energy transition: How can digitalisation aid decarbonisation and decentralisation?
BY KATIE BERRIMAN DAVIES
“In the context of growing energy demand from data centres, the ‘Fourth Industrial Revolution’ is increasingly seen by some as an additional complication in addressing the traditional dilemma: affordability, sustainability, and security of supply”.
With the GB grid unable to keep pace with data centre growth – and already struggling with renewables intermittency, millions of distributed resources, and the enormous backlog of connection applications – the shift towards cloud computing and technologies like AI is often presented as a blocker to the Government’s Clean Power 2030 (CP2030) target.
Yet digitalisation is not a barrier to decarbonisation and decentralisation; it is an enabler. At a macro level, digitalisation in the UK economy at large demands more data centres, leading to an increase in electricity, which in turn means the fixed costs required to upgrade, balance, and transport energy around the grid will be spread over a larger base. With transmission charges expected to rise significantly over the next price control period (RIIO-T3), the importance of balancing grid build with lower bills cannot be overstated. Data centres also represent a significant source of demand for renewable energy generation, with modelling from Aurora Energy Research suggesting that data centre growth could provide a “route to market” for up to 19GW of renewables in Great Britain by 2035.
At a micro level, digitalisation within the energy sector will be central to ensuring the grid is equipped to cope with the energy transition. Time and money are both in scarce supply, with 2030 looming fast and the rising cost of upgrading and balancing networks ultimately passed down to consumers, despite the UK already facing the highest industrial power prices in the International Energy Agency. The grid is currently confronted with multiple pressures: increasing renewables generation and intermittency, a data centre sector outpacing infrastructure delivery, and an urgent need for lower energy bills. Ensuring the energy system better optimises its existing assets and infrastructure is the key to navigating these demands – that’s where technology comes in.
“Electricity demand is at its most valuable when flexible, with the ability to turn up or down based on consumption and generation patterns”.
Technology has paved the way for consumer-led flexibility (CLF), as households increasingly adopt Low Carbon Technologies (LCT) such as rooftop solar, domestic EV chargers, and heat pumps. Aided by the rollout of flexible tariffs from energy suppliers, and the introduction of the Market-wide Half-Hourly Settlement which will settle all consumption on a half-hourly basis via smart meters, households not only benefit from greater agency and lower bills but are also contributing to a smarter, more flexible grid. Political appetite for CLF is clear, as demonstrated by DESNZ’s Smart Secure Electricity Systems (SSES) Programme, which will provide a regulatory foundation for the growth of the energy smart appliance (ESA)market i.e. LCT. Crucially, CLF is already offering tangible benefits to the grid: in 2025, smart charging cut EV peak electricity consumption by 42%.
One technology with huge potential to support CLF is AI, which – at its core – processes large volumes of data at a speed beyond human capability. AI can harness half-hourly data, price forecasts, and grid signals to identify low-cost and low-carbon periods and automatically schedule LCT dispatch. CLF is just one example of how AI can contribute to a cheaper, more resilient grid. The technology is also used to better match energy projects with available grid capacity to accelerate connection approvals; expedite advances in battery chemistry to unlock commercially viable Long-Duration Energy Storage (LDES); forecast weather, demand, and generation to help network companies mitigate curtailment; and create “self-healing” grids that automatically detect and resolve network faults.
“Ultimately, the technology required for transitioning to the energy system of the future is already there; the challenge for now is creating the commercial and regulatory environment in which these solutions can be scaled.”
Digitalisation extends far beyond CLF and AI: these are merely examples of how digital solutions are – and will be all the more so – vital enablers of a modern, cost-efficient, and decarbonised grid. Industry is acutely aware of this and increasingly so too are policymakers. On the back of NESO’s Sector Digitalisation Plan, we can soon expect a “digitalisation vision” from Ofgem and DESNZ. Given the potential for regulatory and policy fragmentation to result in uneven delivery and lack of accountability, of which some have criticised the Clean Flexibility Roadmap, a coordinated approach is needed from these three key stakeholders. Ultimately, the technology required for transitioning to the energy system of the future is already there; the challenge for now is creating the commercial and regulatory environment in which these solutions can be scaled.
Katie Berriman Davies is Head of Energy & Infrastructure Policy at techUK