By Dr. Andrea Nuesser
Record prices, fuel shortages, rising poverty, and slowing economies are just a few evidential pieces of the global energy crisis we find ourselves in. Provinces throughout Canada have a faster increasing energy demand than previously anticipated, and it is set to grow by 75 per cent leading up to 2050. While this calamity didn’t happen overnight, our next steps will be crucial in turning this crisis into a catalyst for the current energy landscape.
According to Capgemini’s 2024 “World Energy Markets Observatory” (WEMO) report, energy efficiency is a crucial measure to mitigate the rapidly increasing demand for energy and the effects it will have on our path towards net zero. Research also shows that global electricity demand is forecasted to grow by four per cent in 2024 and will continue into 2025 — the highest growth rates we’ve seen in the past two decades.
It’s imperative we understand not just the demand drivers, but the disruptors, and the crucial role consumers will play in achieving an effective and sustainable energy transition.
The surge in energy demand
While supply and demand are relatively straightforward concepts in the energy sector, the unprecedented increase in demand is forcing businesses to rethink how these two forces interact. A few major drivers include the adoption of electrification and electric vehicles (EVs), increased investment in manufacturing, growing data centres, and an emphasis on clean energy sources.
This shift is creating a progressively complex system, forcing electricity providers to rethink their planning and operations, and leveraging new tools to balance supply and demand in real-time. While often under-appreciated, the demand-side transition will be pivotal in a sustainable energy future with predictions in the WEMO report stating that enhanced demand-side management could cut peak demand by 10 per cent by 2030, reducing the need for new infrastructure.
Ontario’s Conservation and Demand Management framework, spearheaded by the Independent Electricity System Operator (IESO), is one practical example of how structured demand management can optimize grid reliability and reduce overall consumption. By implementing programs like these, utility providers can better anticipate and manage fluctuations in demand, ultimately lowering costs and enhancing energy efficiency.
While many utility companies either offer or sponsor Demand Response (DR) programs and Time-Variable Pricing (TVP) arrangements, these will become even more crucial to the success of this new energy landscape as their existence further reflects the volatile nature of electricity production costs.
Disruption in the market
With the smart energy world rapidly evolving, new markets, opportunities, and entrants are moving in. Market operators and aggregators from other sectors will play critical roles in leveraging all available energy sources. As such, we’re seeing increased interest and need for cross-industry collaboration, not only to reduce consumption at the source, but reduce demand through the energy networks and generators.
The synergy between the automotive, utility, and technology sectors will be essential as market disruptors begin to fully leverage and capitalize on data from implemented smart solutions in near-real time. Data from smart meters, connected devices, and energy management systems is now the new currency as artificial intelligence (AI), machine learning, and emerging technologies will play a fundamental role in optimizing energy use, predicting demand patterns, and integrating renewable energy.
We’re also seeing the convergence of Distribution System Operators (DSO), house builders, storage and mobility companies, and technology companies that are evolving to be intelligent networks in Europe — the first to set up rules for energy sharing communities in 2019.
Further regulation and government action will be essential to modernize Canada’s electricity grid. The $4.5 billion Smart Renewables and Electrification Pathways Program (SREPs) supports this effort by funding clean electricity infrastructure, such as wind turbines, solar panels, and energy storage systems, while encouraging innovation and supporting new business models. By modernizing and decarbonizing the grid, the program supports regional priorities, fosters Indigenous-led clean energy projects, and reduces dependence on fossil fuels, setting the foundation for a reliable, affordable, and sustainable electricity system for all Canadians.
Consumers are now prosumers
As the energy transition transforms traditional power systems, we’re seeing consumer engagement shape the future of grid value. Consumers are becoming prosumers and omni-sumers by integrating energy assets that monitor and control their own energy usage, such as smart thermostats and programmable EV chargers, into their new normal. The adoption of these electric devices and vehicles is further contributing to the significant increase in electricity demand and thus, an increasingly complex system.
While these investments are typically purchased with the consumers’ own benefit in mind, rather than for the good of the grid, electricity providers need to find new ways of engaging consumers as active participants in the energy transition. For instance, incentivized demand response programs can allow utilities to reduce peak demand and build flexible resources.
Another example is a Canadian-based utility company who is collaborating with the International Energy Agency (IEA) to evaluate consumer engagement methods that result in desired energy behaviour changes, creating a Virtual Power Plant (VPP) that will amass the value of consumer participation towards a clean and reliable grid.
Whether the consumer is acting for their own energy interests or participating in community energy saving initiatives, this momentum is driven not only by the accessibility of technology, but energy-saving behaviors among the consumers.
The world is under pressure to achieve net zero per the Paris Agreement, but currently we’re not on track to do so. Although we still have much to achieve, low carbon solutions and new markets supported by the continuous development and implementation of advanced technologies are sparking a new competitiveness in many sectors.
Ontario is already looking into meeting its domestic demand by undertaking a large procurement for new resources. Ultimately, it will take the collective efforts of local governments, public utilities, private entities and consumers all around the globe to enhance grid capacity, improve supply chain resilience, and streamline innovative solutions to drive this clean energy transition.
Andrea Nuesser is a grid modernization leader at Capgemini Canada. She is focused on developing smart grid solutions and growing Capgemini’s grid modernization practice to help clients meet their business objectives and energy transition needs.
Featured image credit: Getty Images
