The energy transition is for everyone
Technology and innovation are driving the democratization of the energy transition by enabling decentralized energy production, enhancing grid flexibility and offering a wide range of energy efficiency and demand-side management solutions for households, communities, utilities, cities and businesses. Energy-efficient appliances, smart thermostats and IoT devices empower consumers to optimize energy use, reduce consumption and lower costs, making sustainable practices more accessible. By enabling consumers and end-users to actively generate, store and/or manage their own energy – complementing large-scale energy infrastructure investments – these advancements foster greater energy independence and resilience across all sectors.
Energy services becoming more important than supply
The energy transition marks a new era for energy security that revolves around energy services rather than energy commodities. Technologies will be more important than fuels. In the past, energy security was addressed in large part through supply-side measures, whereas managing energy demand was considered less important. The geopolitical landscape will shift toward more localized energy dependency, with nations relying primarily on regional sources and having a reduced need for distant fossil fuel imports. Global connections will persist through shared clean technology markets and supply chains. Increasing focus will be on developing countries and their access to technologies, financing and intellectual property knowledge. Centralized systems will give way to more decentralized solutions that engage consumers. Environmental, sustainability and climate resilience impacts – including energy source diversification – will be increasingly incorporated into planning and investment.
Macroeconomic advantages of green energy transition
Most countries have renewable resources they can harness for energy security and independence, reducing the need for imported fuels and exposure to volatile fossil fuel prices. The energy transition will provide opportunities for developing countries which often lack domestic fuel reserves and stand to benefit from maximizing the use of renewable energy resources. Renewable technologies may not provide absolute energy independence, but they do allow countries to enhance energy security and resilience by using their own resource advantages. Countries that are heavily dependent on imports of oil, gas or coal will have the possibility of leapfrogging fossil fuel-based systems and national grids. Technologies that enhance energy access in developing countries (e.g., off-grid, hybrid, decentralized energy resources) can often be more cost-effective than fossil fuels in the long run. Countries can save roughly USD 156 billion in costs through using renewable energy sources (
Decentralized renewable energy infrastructures enhance flexibility and diversity of energy access
Decentralized renewable energy infrastructure is an increasingly attractive option for electrification of off-grid rural areas. It can help meet climate mitigation and adaptation goals, provide access to clean and reliable energy in underserviced areas, and cater to a growing preference in emerging and developed economies alike for energy flexibility and independence. Off-grid electrification systems are available based on various technologies and designs, increasing their flexibility and adaptability to local conditions. Smart grids use digital technologies, sensors and smart meters to monitor the flow of electricity. They track usage patterns, adjust grid load according to demand, and reduce energy losses by detecting and addressing inefficiencies within the grid quickly. They facilitate the integration of decentralized renewable energy sources by managing variable output and coordinating with other grid resources. This is vital to enhancing the grid’s resilience to disruptions and extreme weather events, thereby contributing to climate change adaptation. Microgrids, which can function independently of the main grid, are vital to the energy transition in rural communities, stimulating uptake of renewables while providing energy security, affordability and resilience.
New, efficient and cheaper energy storage solutions spread renewable energy solutions everywhere
As the use of decentralized renewable energy sources increases, balancing intermittent energy production becomes crucial to excess energy storage. Modern lithium-ion battery costs have decreased substantially in recent years, with batteries exhibiting improved energy density, longer lifespans and greater efficiency. Innovations in energy storage technologies have been on the rise, including flow batteries, pumped hydro storage, flywheel storage, and gravity storage exploiting gravitational potential energy, which is especially useful in rural and off-grid areas. However, energy storage needs to expand substantially to fulfil the COP28 pledge of tripling global renewable energy capacity by 2030 while at the same time maintaining electricity security.
Future global food demand must be met through new green solutions, not by business-as-usual
Renewable energy and energy efficiency are both central to feeding a growing population sustainably. Ironically, past innovation aimed at improving agricultural productivity has contributed to soil degradation, biodiversity loss, water pollution and greenhouse gas (GHG) emissions. During the first green revolution, machines increased productivity and drove an exponential rise in fertilizer and pesticide production that continues into the present day. But a new green revolution is underway, with many technologies currently available enhancing the sustainability of agricultural operations both on the farm and throughout post-harvest processing and storage. On-farm innovations include electric farm machinery, solar-powered pumps and incubators, energy-efficient livestock and greenhouse ventilation, renewable-powered aeration for aquaculture, and agrivoltaics systems producing both renewable energy and food. Drying technologies use less energy by adjusting air flow and using moisture sensors. Cold storage innovations are using solar power, electric transport units, advanced energy-efficient refrigeration technologies, smart monitoring and control systems, and alternative refrigerants with fewer climate impacts.
Energy efficiency and demand-side management is crucial for slowing the trend of growing energy consumption
Investing in energy efficiency is crucial for the energy transition. Although there is considerable patenting activity for energy efficiency and enabling low-carbon energy technologies in high-income countries, such investments remain significantly underfunded within the context of international climate finance. While renewable energy investments are essential, their current rate of penetration alone is insufficient to effectively combat climate change on a global scale. Continued reliance on fossil fuels, coupled with persistent national subsidies and the rapid growth of global energy demand, underscores an urgent need for progressive policies and innovative technologies that reduce energy consumption, increase energy recovery and introduce new ways of using appliances and goods. Emphasizing supply-side solutions while overlooking energy efficiency could lead to deeper challenges, including the need to secure sustainable raw material supply chains and mitigate land grabs that exacerbate social inequalities.
Look out for potential rebound effects and trade-offs from low-carbon energy technology investments
As evidenced throughout the chapters, investment in renewable energy, energy efficiency and demand management can cause unintended negative consequences and rebound effects. Examples include telecommuting which may reduce travel but also increases home energy consumption; electric vehicles and mobility-as-a-service (MaaS) solutions that risk replacing public transport and altering cycling patterns; and LED streetlights that affect urban fauna. The rebound effect of energy efficiency investment is better known, in which cost savings lead consumers to use more energy. Furthermore, there is the risk that decentralized energy investments and policies to enable more renewable energy “prosumers” are promoted at the expense of strengthening and greening national grid infrastructure. These trade-offs must be better researched and understood so as to mitigate harm and avoid reducing the expected gains from low-carbon energy investment.
Risk of stranded assets is not limited to fossil fuel infrastructure
The risk of a new form of stranded energy asset is real. There is the potential for rapid technological advancements to render existing renewable energy assets or infrastructure outdated. Like conventional vehicles and energy-inefficient buildings, early generation solar panels will become obsolete. Older wind turbines with lower efficiency, smaller capacity and less advanced control systems may be replaced by newer models that offer higher capacity, better performance and advanced blade design. Older battery storage systems may be rendered obsolete by newer technologies like lithium-ion or solid-state batteries that offer better energy density, longer life and faster charging. Ensuing negative impacts include excess waste, increased installation and upgrade costs, and declining value of renewable energy investments over time that in turn force earlier replacement. Though waste from renewables is projected to comprise a small fraction of total global waste in the future (compared to plastic waste, municipal waste, coal ash and e-waste), research and investment into advanced reuse and recycling programs and circular solutions for PV modules are imperative. This also brings the role of retrofits to the fore. Instead of manufacturing entirely new assets, retrofitting could be exploited further – for buildings, vehicles and industry. Retrofits not only save energy and material use, but can create new jobs, improve employee productivity and raise asset values.
Innovative technologies enable new energy solutions in challenging conditions
Recent advancements in low-carbon energy technologies are expanding their applicability worldwide, even in extreme climates. Innovations in electric vehicle batteries, for example, can enable advanced air heating and cooling systems, improved thermal management and new battery chemistry that allows electric buses to operate in cold northern regions. Solar panels are now designed with better efficiency in low-light conditions. New battery charging solutions are also making it possible to charge vehicles in those urban centers with weak grid systems. Additionally, sub-critical CO2 cooling systems, which have been effective in saving energy in supermarkets within Europe, can now function efficiently in warmer climates thanks to improved system design. Furthermore, heat pumps – traditionally most effective in temperate climates – have also undergone significant improvement, enabling them to provide heating and cooling during severe winters and hot summers. These innovations mark significant milestones in the global energy transition, enabling widespread adoption of solutions regardless of location. Modular technologies provide increased flexibility and accessibility for households. They include modular anaerobic digesters for domestic use and pico (very small) solar home systems that can be installed in small expandable units, making it easier to build up a system over time. These innovations are the output of effective innovation ecosystems. Intellectual property rights are a cornerstone of a well-functioning innovation ecosystem and enable technology transfer, not only from laboratory to market but between markets.
Innovative financing models trigger adoption of energy technologies in low-income areas
Innovative financing models, such as pay-as-you-go (PAYG), energy-as-a-service (EaaS), microgrid-as-a-service, and software-as-a-service, are transforming access by making clean technologies more affordable and scalable in underserved areas. They reduce the upfront capital required for adopting clean technologies. PAYG models allow users to pay in small, manageable installments, lowering financial barriers and enabling a more rapid scale-up across diverse regions. They often include performance guarantees and maintenance services, which reduce the financial risk for consumers. Similarly, leasing and cooperative arrangements for energy-efficient farm equipment provide farmers with flexible, cost-effective solutions, enabling them to adopt advanced technologies without the burden of large upfront investments. Innovative programs are increasingly offering grants, rebates, incentives and low-cost financing for agricultural producers and rural small businesses to install renewable energy systems and make energy efficiency improvements.
Untapped potential for energy recovery
Innovation enables energy to be harvested from sources so far overlooked. More waste management utilities are looking at making use of organic content through anaerobic digestion, combined heat and power (CHP), and other means of on-site energy production such as emerging microbial fuel cell technology. In cities, experiments are underway into using kinetic energy harvesting to recover energy from pedestrian traffic movement, or flat absorber lines to absorb urban heat. In rural areas, the use of compact and modular anaerobic digesters designed for smaller-scale farms and communities is gaining momentum, not only generating renewable energy but also contributing to waste management. And there are successful examples of how supermarkets have turned into energy suppliers, by recovering heat generated by cooling display cases and freezers.
More innovation needed in emerging energy-consuming sectors
Large emerging sectors introduce new uncertainties regarding future energy consumption – innovation must be directed toward addressing their energy consumption. Electrification of end uses will transform energy consumption patterns. The technical challenges, costs, and environmental and social facets of modernizing infrastructure should be addressed from the start. For instance, data centers, which could see their electricity demand double by 2026, is one such sector covered in this publication. Similarly, desalination is expected to be the main contributor to the water sector’s growing energy consumption as climate change further inhibits access to freshwater. Electric refrigeration systems used in transport vehicles to cool or freeze cargo are greatly needed within an expanding global supply chain. And considerable additional efforts are required to attract investment into renewables and grid expansion in less affluent countries, where certain areas are lagging because of ongoing investment and international support deficiencies.
Clean energy technologies also important for enhancing adaptation and resilience
Renewable energy and energy efficiency technologies bolster energy systems against the physical impacts of climate. This happens in several ways. They integrate different renewable energy sources and thus enhance grid resilience, increase flexibility and provide more options for managing extreme weather events. They also may reduce dependence on vulnerable infrastructure. And smart grid technologies and energy storage systems improve the grid’s ability to manage and respond to disruptions. Investing in renewable energy can stimulate local economies and create jobs, which again increases local peoples’ resilience to climate induced disruptions. Agrivoltaics optimize land use, so as to produce both energy and crops. This is especially important in those areas where agricultural land is under pressure from climate impacts and urbanization. Aquavoltaics, the integration of solar PV systems with water bodies, benefits off-grid remote fishing and aquaculture communities struggling with high fuel costs while also meeting food security needs.