IRENA – Innovation landscape for smart electrification, 2023

IRENA's Innovation Landscape for Smart Electrification highlights the importance of innovation in driving the global energy transformation towards a carbon-neutral future. The report emphasizes the need to transform both the supply and demand sides of the energy system to achieve effective decarbonization. While renewable energy technologies like wind and solar have seen significant growth on the supply side, the demand side, particularly in sectors like transport and heating, still heavily relies on fossil fuels. IRENA's 1.5°C Scenario sets targets for increasing the share of direct electricity in total final energy consumption. This includes the adoption of electric-powered technologies such as electric vehicles (EVs) and heat pumps, as well as the use of green hydrogen produced from renewable energy sources for sectors that are difficult to electrify directly. Implementing these electrification strategies would triple global electricity demand by 2050, posing challenges to power systems and highlighting the importance of energy efficiency measures. The report argues that smart electrification should be seen as an opportunity rather than a threat, as it can accelerate economic growth, improve energy security, and mitigate the impacts of climate change. However, achieving smart electrification requires a comprehensive approach involving all stakeholders across the energy value chain. This approach, known as systemic innovation, goes beyond technology solutions and encompasses innovations in market design and regulation, system planning and operation, and business models. IRENA emphasizes that innovation must be integrated and coordinated to achieve a transformative impact on energy consumption. The report highlights the interplay between electrification and renewable energy, with electrification driving new markets for renewables and further technological innovation. This virtuous cycle can reduce costs, attract investments, and transform the policy landscape, accelerating the energy revolution. Ultimately, systemic innovation is crucial for achieving a structural transformation of the energy economy and maximizing the benefits of smart electrification.