Electricity is a foundation on which digital technologies — from semiconductor fabrication to the data centres that train and run artificial intelligence (AI) — depend. The relationship is bidirectional: digital innovation is itself reshaping how electricity is generated, moved, stored and consumed, creating efficiencies that in turn enable further technological advances.
This paper analyses innovation in the electricity system through patent data, which show a sharp acceleration in recent years. Patents in AI-based electricity applications rose more than fourfold between 2017 and 2022. On the supply side, connected sensors, phasor measurement units, digital twins and AI-based forecasting and fault detection are improving the control, reliability and asset life of generation, transmission and distribution.
On the demand side, end-users are shifting from passive consumers to active participants. Smart meters and thermostats, virtual power plants, residential storage and bidirectional electric vehicle charging are unlocking large reserves of flexibility. Of these innovations, the momentum rests with electric vehicles as a flexibility resource, with a threefold increase in patenting of these innovations in recent years.
Despite this momentum, while overall public energy research, demonstration and development (RD&D) budgets have stayed resilient and grown in real terms, the share directed to digital innovations in electricity systems has declined in recent years. Given the role of these technologies in accommodating surging demand, including from AI data centres, this paper closes by offering policy considerations to better promote and sustain digital transformation across electricity systems.