Unlocking digital innovation in the electricity system

3. Tracking digital innovation in electricity systems

The electricity system encompasses the full chain of activities involved in delivering electricity to end-users. Traditionally, electricity systems relied on a centralised model, where electricity was generated in power plants, transmitted via high-voltage electricity grids across long distances, and finally distributed via medium- and low-voltage grids by retail operators to the ultimate end-users of electricity, usually firms and households (IEA, 2017[8]).

Advances in digital technologies enable more interconnected electricity systems, with more distributed sources of generation and storage, such as solar photovoltaic cells or electric vehicles, at different edges of the system. Simultaneously, digital technologies like AI are driving up final energy consumption, including unprecedented demand from data centres, whose electricity needs are expected to more than double by 2030 (IEA, 2025[7]). Increasing decentralisation and rising demand put new pressures on electricity systems to reliably generate and deliver energy to where it is needed.

Digital innovations are key to managing this newfound complexity. The following sub-sections examine digital innovations in electricity systems, highlighting key policy examples and data on patenting activity over time, in both the generation, distribution and transmission of electricity, as well as its flexible demand and use.

Improving electricity generation, distribution and transmission through digital innovation

Digital technologies enable smarter and more interconnected electricity systems. Patents for digital innovations in electricity systems have seen a dramatic increase in the period since 2010, accounting for the growth in overall patenting in electricity systems (IEA/EPO, 2024[1]). Most digital patents in electricity networks relate to the innovative management of larger, grid-scale assets in electricity generation, distribution and transmission (Figure 2).

Figure 2. Patents for digital innovations in electricity generation, distribution and transmission have dramatically accelerated since 2010

Patenting trends in digital applications for the control of generation, distribution and transmission of electricity (International Patent Families, 2001-2022*)

Note: * Data for 2023 are included but should be interpreted with caution, as patent statistics are affected by structural time lags in the patenting process. See Endnote 1

Source: OECD based on IEA/EPO (2024[1]), Patents for Enhanced Electricity Grids, IEA, Paris https://www.iea.org/reports/patents-for-enhanced-electricity-grids.

Whether thermal or based on renewable energy like wind or solar power, power plants rely on the monitoring of a complex set of parameters, from the temperature of a coal furnace to the flow of coolant in a nuclear power system (IEA, 2024[9]). Connected sensors throughout power plants gather real-time information about the state and performance of these key components and outputs, enabling the better control of energy generation assets. Monitoring technologies are in constant evolution – for example, phasor measurement provides high-speed and synchronised data on energy assets (Box 2). Patenting activity in technologies that enable energy generation control rose almost threefold between 2009 and 2012, before seeing an approximately 50% increase in the period from 2013 to 2022 (Figure 2). Data from these technologies are the foundation for a host of powerful applications.

Better data from the equipment, components and sensors that proliferate throughout electricity systems can support better forecasting and decisions in system-wide management. Data from connected devices can be used to predict supply (e.g. power generation) and demand, while making decisions to optimise the overall grid (e.g. distribution and transmission). For example, virtual representations of complex power plants (“digital twins”) can help to model and optimise performance in complex energy systems, reducing operational and maintenance costs (OECD, 2024[10]). Over time, this can produce cumulative savings and help to extend the duration of capital assets and network components (IEA, 2017[8]). For example, simply extending the service life of all power plants by four years can help to delay the retirement of 435 gigawatts (GW) of capacity until 2035, deferring up to USD 760 billion in power plant investment (IEA, 2025[7]). Patents that relate to improved forecasting and decision-making in electricity systems have increased by almost 600% in the period since 2009 (Figure 2).

Box 2. Encouraging better monitoring of power generation through synchrophasor analysis

Phasor measurement units (PMUs) are devices installed in power systems to measure the voltage, current and frequency of electrical waves on the grid in real time. PMUs produce synchrophasors, time-synchronised measurements of voltage, current, frequency and phase angle. PMUs enable very rapid data collection, with up to 30-60 records per second, over 100 times faster than legacy technologies. Synchrophasors are highly accurate and are synchronised using signals from global positioning systems and can be taken across wide areas, enabling unprecedented monitoring of large and complex power systems.

In 2009, North America had just 200 research-grade PMUs in operation. Today, nearly 1 700 production-grade PMUs are deployed across the U.S. and Canada, continuously streaming data and providing almost complete visibility into the bulk power system. This rapid expansion has been driven by the North American SynchroPhasor Initiative collaboration among the U.S. government, private industry, and academia, supporting R&D initiatives to develop advanced synchrophasor applications, the creation of high-speed data networks, and the establishment of key standards for PMU measurements.

Source: United States Department of Energy (2025[11]) https://www.energy.gov/oe/big-data-synchrophasor-analysis, NASPI (2025[12]) North American SynchroPhasor Initiative, https://www.naspi.org/

Smarter electricity grids are also essential for integrating renewable energy sources into the wider energy system. By their nature, many renewable sources of energy are variable, with their generation depending on whether the wind is blowing or the sun is shining, resulting in varying loads on grid infrastructure. Technologies like inverters help manage power flow from solar and wind farms to distribution and transmission networks. Patents related to inverter control almost tripled in the period between 2009 and 2013, before experiencing more modest growth in the period from 2014 until 2022 (Figure 2).

Smart sensors can constantly track conditions across the grid, including the output from solar panels and wind farms, to enable grid operators to respond to fluctuations. AI and data analytics can also support greater stability for grids – for example, AI-based fault detection can help rapidly identify and precisely pinpoint grid faults, reducing outage durations by 30-50% (IEA, 2025[7]). Thirteen per cent of AI patents in the period between 2011 and 2022 related to outage and fault management (IEA/EPO, 2024[1]). Patents relating to an increased ability to detect faults in electricity networks have seen explosive growth, increasing almost 400% since 2009 to become the leader in digital patent applications in electricity generation, distribution and transmission in 2022 (Figure 2).

Empowering end-users with digital innovations to enable smarter demand-side flexibility

Before digital technologies advanced in capability, affordability and uptake, electricity end-users were unable to adapt to grid conditions or price signals. Now, innovative digitally connected devices have transformed end-users into active participants with the ability to respond flexibly to fluctuating prices and to make more informed decisions about their energy usage. Where end-users adopt digital technologies that help to enable a more flexible demand response, this can also reduce the pressure on the wider electricity system (IEA, 2023[13]). Patenting activity reflects these new possibilities for flexibility in end-user electricity demand (Figure 3).

Figure 3. Patenting activity related to flexible electricity demand and storage overwhelmingly focusses on the potential of electric vehicles

Patenting trends in digital applications for the control of demand for electricity and its retail (International Patent Families, 2001-2022*)

Note: * Data for 2023 are included but should be interpreted with caution, as patent statistics are affected by structural time lags in the patenting process. See Endnote 2

Source: OECD/EPO based on IEA/EPO (2024[1]), Patents for Enhanced Electricity Grids, IEA, Paris https://www.iea.org/reports/patents-for-enhanced-electricity-grids.

Smart meters and thermostats can alter when end-users draw electricity from the grid. For example, smart devices and appliances can automatically adapt to price signals from the grid to reprogramme operations or run at lower loads. This can help to reduce or shift consumption to periods where supply is likely to be more abundant. Where more countries adopt renewable energy sources, more flexible demand enables better matching with supply that is more variable by its nature.

The potential efficiency gains from more flexible capacity are enormous. Recent estimates outline that the widespread adoption of AI and connected devices within buildings could add more than 700 GW of flexible capacity to electricity systems in advanced economies, equivalent to almost 20% of peak demand (IEA, 2025[7]). For the wider network, this dynamic balancing of supply and demand can help to improve overall system efficiency. While smart meter patenting grew steadily from 2001 to 2010, patenting activity has fallen as this technology becomes increasingly mature and adopted by end-users (Figure 3).

Even more advanced forms of demand response are possible through digital innovation, with enormous potential benefits for end-users. Electrified and digitalised end-devices can function as batteries, providing both energy storage and the potential to export electricity to the grid. Other examples include solar photovoltaic panels, which have seen increasing adoption among households in some markets (IEA, 2025[14]). These consumers produce their own electricity and could also potentially inject electricity into local distribution networks through smarter grid technology (see previous sub-section). Advances in battery storage and more dynamic digitally enabled electricity systems would also potentially enable new forms of energy markets to proliferate, including transactive and peer-to-peer energy models (Box 3). Virtual power plants, for example, seek to aggregate flexible demand response into sufficient quantities for trading. Consistent with the increasing potential of virtual power plants and other demand response aggregated models, patenting activity has seen a steady increase over time, more than tripling in the period from 2010 to 2022 (Figure 3).

Box 3. Leveraging distributed energy resources in Germany through aggregated demand response

Digital technologies enable more distributed energy resources, which in turn enables new players to generate power and participate in energy markets. Virtual power plants are networks of decentralised power generating units and storage systems, which can aggregate sufficient quantities of energy to enable trading and optimise energy deployment. These networks help to use diverse distributed energy assets, including EVs, storage batteries and other demand-side resources.

Germany has been pioneering this concept since the mid-2000s, including by encouraging the emergence of operational virtual power plants aggregating up to 10 000 distributed energy resources. This was supported by policy actions, including the BMWK electricity storage strategy in 2023, which outlined the development of an electricity storage market in Germany, as well as updated legal frameworks that reduced surcharges for electricity storage and reduced or exempt grid use fees. In addition, battery storage facilities were made exempt from electricity taxes. In 2024, almost 2 million households had residential energy storage systems.

Source: BMWK (2023[15]), “Electricity Storage Strategy”, https://www.bmwk.de/Redaktion/DE/Publikationen/Energie/electricity-storage-strategy.pdf?__blob=publicationFile&v=4; IEA (2025[16]), “Germany 2025”, https://www.iea.org/reports/germany-2025

In recent years, much of the patenting activity in flexible demand-side electricity response has shifted to the potential use of electric vehicles (EVs) (Figure 3). The widespread adoption of EVs and related charging stations have the potential to increase electricity demand, resulting in surges. However, when enabled with bidirectional charging capabilities, EVs could become an important source of flexibility in the electricity system by discharging power to meet emergency energy demand. Unlocking this potential is increasingly important as thermal power generation sources are wound down in many countries, thereby reducing the ability to store energy in their generators and removing an important source of electricity system flexibility (IEA/EPO, 2024[1]).

Approximately 1 in 8 new EVs currently sold have bidirectional charging capabilities, although new policies, markets and business models will need to emerge so that grid operators can purchase this new capacity, and grid infrastructures will need to be upgraded to avoid grid congestion (see previous sub-section) (IEA, 2025[17]). Still, pilot trials and demonstrations are underway in Australia, Germany, Korea and the United Kingdom, with some households already selling energy back to the grid from electric vehicles (IEA, 2025[17]). As electric vehicles are a growing share of new vehicle sales, reaching more than 20% worldwide in 2024 and are projected to exceed 40% by 2030, this flexibility could support the wider resilience of the energy system (IEA, 2025[17]). Consistent with this growing potential, patents related to the remote or cooperative charging of EVs, increased more than threefold between 2016 and 2024 (Figure 3).

Notes

← 1.  Coverage for 2023 may not yet be fully complete. Each International Patent Family (IPF) covers a single invention and includes patent applications filed and published at several patent offices. It is a reliable proxy for inventive activity because it provides a degree of control for patent quality by only representing inventions for which the inventor considers the value sufficient to seek protection internationally. Calculations are based on country of IPF applicant, using fractional counting in the case of co-applications.

← 2.  Coverage for 2023 may not yet be fully complete. Each International Patent Family (IPF) covers a single invention and includes patent applications filed and published at several patent offices. It is a reliable proxy for inventive activity because it provides a degree of control for patent quality by only representing inventions for which the inventor considers the value sufficient to seek protection internationally. Calculations are based on country of IPF applicant, using fractional counting in the case of co-applications.