Energy system transformation is a key policy priority for many countries. Governments play a key role in supporting research, particularly where technologies are experimental or a commercial imperative for the work has not yet emerged. However, despite resilient public funding for overall energy research, development and demonstration (RD&D), a declining share of these budgets is allocated to key digital innovations in the electricity system (Figure 4).
Total RD&D budgets for energy have steadily increased over the period from 2015 to 2024, with a more than 70% rise in real terms from 2014 to 2024 (Figure 4). Investments in specific digital innovations such as grid communication and control systems, building management systems, and electric vehicle infrastructure varied over the analysed period, but their overall budget has been in decline in real terms since 2022. The share of public energy RD&D budgets allocated to these digital innovations peaked in 2021 at 0.38%, falling to just 0.31% in 2024. Grid and control systems consistently received the largest share of public funding, with more modest allocations to EV infrastructure and digital technologies for energy management in buildings, including smart meters. Public energy RD&D spending on optimising the use of energy data centres, for example to optimise the use of energy to perform computing tasks, has increased by more than fivefold between 2021 and 2024, in tandem with the rapid development of AI.
