Powering the Energy Systems Transformation: How Digitalization and AI are Changing the Game

A digitalized power system is no longer optional, it’s the key to electrification and decarbonization.

In fact, digital solutions like Artificial Intelligence (AI) are needed to accelerate the deployment of renewable energy capacities and meet the UAE Consensus tripling target by 2030, a commitment endorsed by world leaders during the UN Climate Conference COP28 in Dubai.

IRENA, in its capacity as the custodian agency for monitoring and tracking the UAE Consensus energy goals, reports annually on the global progress made.

So where do we stand today? The facts:

• The world added a record 582 GW of new renewable power in 2024, a global deployment record for a third consecutive year.
• Preliminary data suggests 2025 could be another record year for renewables.
• However, at this pace, the tripling target of 11.2 TW by 2030 will fall short.
Renewable capacity must grow by around 1122 GW every year util 2030.

It is true, the world has never been closer to closing the gap.

But we need modern infrastructure, robust policies and market design, resilient supply chains, and a skilled workforce to deliver a new energy system that is fit for purpose.

Digital solutions hold great potential to accelerate the transformation of power systems, as shown in IRENA’s latest publication, “Digitalization and AI for power system transformation.” They not only contribute to energy security, affordability, and reliability. Using sensors, smart meters, data platforms, and AI-based applications also create value across the system.

The global energy transition is entering a decisive decade: electricity is projected to become the dominant energy carrier, powering more than half of final energy consumption by 2050. AI along with other flexibility and storage solutions will be essential to prepare power grids for future needs, including an additional energy demand surge expected from data centers.

The variability of the growing demand and generation and the rising number of distributed energy resources require a digital transformation of power systems to maintain service reliability without diminishing the cost reductions brought by renewables. Indeed, 91 percent of new renewable projects are now cheaper than any fossil fuels alternatives. Renewable energy additions led to significant cost savings valued at about USD 57 billion.

Many countries already recognize digitalization as a strategic priority in energy planning. The current stage of policy development offers a timely moment to align digitalization efforts with regulatory and investment frameworks. Yet, implementation of digital solutions is often hindered by a lack of sufficient financial incentives and market readiness.

IRENA has calculated that achieving the UAE Consensus will require USD 29-30 trillion in cumulative investment in renewables, grids, flexibility, energy efficiency and conservation by 2030, USD 5 trillion on average every year.

A significant amount will have to be spent on digital solutions.

Investment in digital solutions is a key accelerator of the global energy transition towards renewables. Technologies, advanced data analytics, and the Internet of Things enable real-time monitoring, optimization, and integration of renewables into power systems:

• By improving grid flexibility and reliability, digitalization helps manage the variable nature of solar and wind, reducing curtailment and enhancing system efficiency.
• It also supports smart grids and maintenance, optimizes energy storage, and facilitates new business models like peer-to-peer energy trading and demand-side management.
• In emerging markets, digital platforms can expand access to clean energy through remote monitoring of off-grid systems and digital finance solutions.

Overall, investing in digitalization not only strengthens system resilience and efficiency but also accelerates the scaling of renewables, driving down costs and making clean energy transitions faster, smarter, and more inclusive.

This is why the role of digitalization and AI took center-stage at this year’s IRENA Assembly during Abu Dhabi Sustainability Week. Government and business leaders focused on actionable strategies to integrate digital solutions into energy planning and mobilize investment for grid expansion.

Leveraging IRENA’s global membership, Ministers and CEOs shared national experiences, identified regulatory priorities, and explored opportunities for international cooperation, particularly with emerging and developing economies.

A targeted, ambitious action agenda for digitalization sets the direction for power system transformation, taps into opportunities, and unlocks benefits for consumers and businesses.