Committee on Industry, Research and Technology (ITRE)

Smart and sustainable: The European Commission has promoted the implementation of Information and Communications Technology (ICT) in energy systems, aiming to improve their efficiency and sustainability. Considering the increased popularity of many ICT applications such as ‘smart energy grids’ and ‘smart cities,’ how can the EU securely develop and utilise digital technologies to improve the sustainability of its energy systems?


Key terms: Information and communication technology (ICT), energy efficiency, smart grids, blockchain, big data, Internet of Things (IoT)


by Naira Čamdžić (BA)


1.Background and relevance 

Ever since the proposal of the 2030 European climate and energy framework, the EU energy system has been going through an increase in decarbonisation and user-centric processes, with the aim of achieving a clean, affordable, and reliable energy system. With the efficiency of the energy system needing to improve by 32.5 per cent as outlined in the framework, its digitalisation will be a key factor in ensuring a smooth transition to a more sustainable Europe. Bearing this in mind, many are in favour of using more ICT, considering its potential to increase power efficiency and reduce the consumption of energy sources as well as greenhouse gas emissions. Furthermore, this transition will not only contribute to the European green plan but will prove to be financially beneficial for the European economy. The World Economic Forum estimates the total value of digitalisation for the power sector alone to be around $1.3 trillion globally between 2016 and 2025. 


The usage of ICT has large benefits for a more stable European energy system, mainly through better communication and integration of various components of the system. Furthermore, it leads to a higher efficiency across the energy supply value chain due to better analytics, the use of virtual environments, and the introduction of automation as well as artificial intelligence (AI). Currently, ICT is already a major contributor to the European energy sector with technologies such as smart energy grids, smart cities and blockchain all influencing changes in both energy companies as well as customer behaviour. On the other hand, the energy usage from the expanding use of ICT can be unsustainable in its own way considering that ICT is a major electricity consumer. Additionally, the future development of such technology raises concerns when it comes to security and privacy of their usage.


The European power system is heading towards a digital revolution that will enable smart energy solutions and incorporate a larger usage of renewable energy sources. This shift towards a greener Europe will be vital for fighting climate change and giving the youth a chance to build a more efficient European power system that uses analytics to forecast future energy requirements. 


2.Key stakeholders 


The subject of energy lies under the shared EU competence area, meaning both the EU and Member States have the jurisdiction to take action, with EU laws taking precedent. 



Click here to view this Stakeholder Map on Miro.


Directorate-Generals (DGs) serve as departments working under the European Commission, specialising in different areas of expertise. The Directorate‑General for Communications Networks, Content and Technology (DG CONNECT) develops and carries out the Commission's policies on the digital economy and society with the Directorate-General for Energy (DG ENER) making improvements in sustainable and secure energy systems.


The EU Agency for Cybersecurity (ENISA) is the body dedicated to achieving a high common level of cybersecurity across Europe. ENISA contributes to EU cyber policy, uses cybersecurity certification to enhance the trustworthiness of ICT, and cooperates with Member States and EU institutions to face future cyber challenges.


European Energy Research Alliance (EERA) is the largest energy research community in Europe with the goal of catalysing European power systems and recognising the importance of digitalisation by launching the Digitalisation of Energy programme. Its main aim is defining key priorities for the field and acting as a contact point with major European initiatives on various digital solutions. 


The International Telecommunication Union (ITU) is the United Nations agency that specialises in improving the ICT sector worldwide. In 2017 the ITU launched a report focusing on ICT benefits for the energy sector.


3.Challenges and measures in place 


ICT as an energy consumer

The plans to incorporate the ICT sector into the European energy system have been ambitious as the integration is expected to help the EU tackle the worsening state of climate change. Meanwhile, ICT systems are responsible for the same amount of CO2 emissions as global air travel, and their unsustainable ways may rather endanger the ambitious plans of fighting global warming. Through the production, distribution, and usage, ICTs currently account for between five and nine per cent  of total electricity consumption, and taking into account rapid growth, it is estimated that the share of ICTs may rise to 20 per cent  in 2030. On the other hand, ICTs could potentially help reduce emissions by 6-15 per cent  by 2030 through smart applications, efficient use of energy, and digital solutions. For example, through smart grids, energy consumption levels are always visible due to monitoring and measuring the electrical behaviour of the appliances resulting in the reduction of energy. Considering that larger use of renewables is vital for reduced carbon emission, these grids enable the grid operators to see further into the system and, thus, allows them to better manage the intermittency of renewables leading to their rapid deployment. 


On 11 March 2020, the Commission released the European Circular Economy Action Plan, a set of interrelated initiatives to establish a strong and coherent framework promoting sustainable models, such as the smart grids, and transforming consumption patterns to ensure that no energy waste is produced in the first place. The focus of the plan is on the sectors that use most resources and where the potential for circularity is high, such as electronics and ICT. Furthermore, the EU Strategy for Energy System Integration was introduced, aiming to connect multiple energy carriers, infrastructures, and consumption sectors. One of the core concepts of the Strategy is digitalisation, with the Commission planning to develop a Digitalisation of Energy Action plan later in the year. The plan is set to promote a competitive market for digital energy services that ensures data privacy and sovereignty as well as supports investment in digital energy infrastructure.


Lack of coherent approach

Another challenge within the ICT integration is the lack of regulatory framework leading to unclear, conflicting or non-existent standards for co-deployment, co-use and other potential collaborative solutions amongst the two sectors as well as Member States themselves. Individual information and communication technologies are proven and ready for their integration in the power system. However, they need to be massively scaled-up and utilised in order to offer cost-effective climate benefits. The possible tool for maximising their potential would be investments in collaboration amongst Member States. In this transition, there is a clear need for further and closer cross-border cooperation as well as a market design for transmission and joint developments. 


The EU recognised the importance of co-operative research and experience sharing by launching the European Innovation Partnership of Smart Cities and Communities where smart city solutions can be observed to determine areas functioning more or less effectively. Smart cities use digital technology to understand how demand patterns are changing and respond with faster and lower-cost solutions. Due to the needed development in their integration, the partnership aims to explore various sustainable solutions and address city-specific challenges from different policy areas such as energy. To increase interoperability, the EU has put forward the New standard for smart appliances in the smart home supporting communication between appliances that "speak the same language" in order to reduce their energy footprint.


The trust dilemma

With the energy sector undergoing a digital transformation in terms of infrastructure, citizens are increasingly participating in the energy market both as consumers and decentralised producers of energy also known as prosumers. For instance, Germany has feed-in tariffs that are fixed rates a prosumer receives for the renewable energy that it has not used and feeds into the grid. Additionally, prosumers can play an important role in urban generation as potential suppliers to the production facility as well as energy resellers to help optimise the energy balance. With this in mind, there have been raised concerns over digitalisation posing a security threat by the increased exposure to cyber-attacks and cybersecurity incidents. Hence, further digitalisation could potentially jeopardise the security of energy supply or the privacy of consumer data. 


Today, cybersecurity is one of the prioritieson the EU agenda, however, privacy and cybersecurity represent energy sector areas where regulatory development will need further improvement as their usage increases. As of right now the EU put forward the EU Cybersecurity Act set to develop risk assessment methods, organise EU-level cyber security exercises, and raise public awareness on cybersecurity risks through EU-wide campaigns and cyber literacy education. Furthermore, the Commission aims to strengthen the role of the European Energy–Information Sharing Analysis Centre by investing in the improvement of the energy grids’ cyber security and resilience through trust-based data and information sharing. Additionally, the EU introduced the Clean Energy for All Europeans package which puts forward the most advanced regulatory clean energy transition framework, thus, creating an optimal environment for strengthening its cybersecurity.


4.Further questions


  • Considering the need for further improvement of ICT in the power sector, how can Member States facilitate the exchange of best practices and models for the digital transition?

  • Taking into account the key role ICT energy consumption plays, what steps should the EU take to increase the circularity potential of such technologies?

  • What possible further steps should the EU take to develop and utilise ICT benefits in the European power systems?

  • Due to the distrust in digitalisation, how can the EU ensure the digital power sector is equipped for a safe and secure transition?


5.Faces of Sustainability 


In the face of the 21st century's most relevant challenge - climate change, the need for a sustainable energy system is prevalent now more than ever. This comes as no surprise considering the use of energy represents by far the largest source of greenhouse gas emissions from human activities. In Europe alone, energy processes account for 78 per cent  of total EU emissions. Incorporating the ICT sector into the European power system will be vital in ensuring the EU is on the right path towards a green and sustainable future. With such technologies enabling a more efficient and environmentally friendly power sector, the Union must ensure the digital transition is securely developed. The climate change race is a ticking time bomb and without ensuring the sustainability of the energy system, time will run out. 


6.Material for further research


Essential Engagement 


  • Head to this page for a complete guide to Internet of Things including a video.

  • Take a look at this mind map to understand what happens when wind goes digital.

  • Read this article from the Energy Post regarding the impact digitalisation will have on the energy landscape.

  • Watch this video from Berlin Energy Transition Dialogue explaining the power sector digitalisation.