The global energy sector is being transformed by three trends that are impacting demand and supply at an unprecedented pace: decarbonisation, digitisation and decentralisation.

These trends are reinforcing each other and helping to facilitate the growth of empowered consumers. This is happening at a time when we are seeing a shift in final energy consumption with demand for electricity doubling globally by 2060. There will be new opportunities and challenges for policymakers to navigate the Energy Trilemma.

This will require managing a greater diversity of market actors and technologies without fragmenting the energy system. Provided governments and regulators allow and plan for it, empowered consumers can play a key role in the grand energy transition. While the transmission system will remain important, the potential changes support the increasing significance of the distribution level to the optimal operation of energy systems.

KEY FINDINGS
Distributed energy resources are becoming increasingly important to the global energy system, particularly in the context of the energy transition. Improved efficiency and falling technology costs are expected to further accelerate this trend, with distributed generation, particularly renewables, playing a key role. In many countries, regulatory frameworks are trying to catch-up with technology options and shifting energy users demands. Policymakers must move quickly to seize new opportunities in meeting their countries energy needs.

More than 50% of energy leaders surveyed for this report expect a rapid increase in distributed generation to a share of 15% or higher of the installed generation capacity in their country by 2025. This represents a significant shift in the generating mix but there are large regional variations based on countries’ current electricity structures and how their regulatory systems impact the pace of change. Policymakers, energy utilities, innovative new entrants and consumers are the driving forces behind the increase in distributed generation, pursuing electricity access, affordability and competitiveness as well environmental goals. Small-scale industry-level off-grid and household level on-grid are the most common forms of distributed generation in many countries.

Along with the increase in distributed generation, energy storage, including batteries, are becoming a key element of the grid of tomorrow, helping to support flexibility to enhance system efficiency and cost stability. Over the past decade, storage installation projects have sharply increased and that trend is expected to continue over the coming years. Global energy storage capacity along with revenues from utility-scale applications are expected to increase dramatically over the next 5-10 years. But without dynamic policy frameworks this growth could stall.

Report by the World Energy Council