The IEA Highlights Increased Investments in Energy Grids in 2022… Now, We Just Need to Make Them Smarter

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By Jake Saunders | 3Q 2022 | IN-6652

The International Energy Agency (IEA) reports that world energy investment is set to increase by over 8% in 2022 to reach a total of US$2.4 trillion. In particular, energy investment hotspots have included low-emissions hydrogen, as well as battery energy storage. However, these energy resources need to be managed in real time and be complemented by other energy sources. Multi-access Edge Computing (MEC) can play an invaluable role in that management.

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World Energy Investment in 2022 Set to Increase by 8%


The Russian invasion of Ukraine, combined with the economic rebound from the termination of COVID-19 social distancing restrictions and the resumption of global trade have driven up global energy prices—especially for gas. Governments, local authorities, businesses, and even residential homes have been looking for diversified energy sources. Pivoting investments away from oil & gas will be an incremental process, but energy authorities will need an energy grid that is more decentralized and digitalized than ever before.

In its latest World Energy Investment 2022 assessment released in June, the International Energy Agency (IEA) reports that world energy investment is set to increase by over 8% in 2022 to reach a total of US$2.4 trillion, which is well above pre-COVID-19 levels. That Investment is increasing in all parts of the energy sector, but the main boost in recent years has been in renewables and energy grids. In particular, energy investment hotspots have included low-emissions hydrogen, as well as battery energy storage. Investment in the latter is expected to double to reach almost US$20 billion in 2022. This is spearheaded by grid-scale deployments, which represented more than 70% of total spending in 2021. China is targeting 30 Gigawatts (GW) of non-hydro storage capacity by 2025 and the United States more than 20 GW. There is a distinct emphasis on improving end-use efficiency. Real-time and ultra-reliable energy management are needed in relation to more dynamic forms of energy storage.

Making Energy Grids Smarter


In a previous ABI Insight, we discussed how 5G can help support a versatile and reliable smart grid communications infrastructure. 5G will be an invaluable connectivity layer, but a smart grid can also benefit from edge computing functionality. Multi-access Edge Computing (MEC) helps reduce the service latency of power grids and prevents critical and confidential data from being transmitted over the public Internet, thereby improving data security and reducing transmission bandwidth lease costs incurred from centralized processing in the cloud. Traffic to or from power grids is distributed locally, as configured, in edge areas such as electrical substations, minimizing the need to transmit traffic to the core network for processing. 5G-enabled MEC has the advantage that data can be more rapidly transmitted over the 5G air interface than 4G. For example, in the case of enabling power system differential protection, 5G+MEC can help accurately control the service latency of power grid customers to within 15 Milliseconds (ms). This level of latency can ensure that a pool of customers can be connected to an alternative energy supply, such as switching from solar power during the day to grid-based battery supply during an interruption or during a spike in demand.

An energy supplier with an 5G+MEC+edge substation installation can also lower the total cost of operations by offloading traffic. The traffic generated by terminals, such as monitoring terminals, video surveillance cameras, inspection robots, and inspection drones in substations, can be directly offloaded to the local MEC edge application servers for processing as configured by the local telco’s core network. Data are collected, processed, and analyzed locally. For latency-insensitive services, or those that must be processed by the energy supplier’s network operations center, the application data can be sent to the core node through a dedicated Virtual Private Network (VPN)-protected connection from the substation to the provincial/municipal electric power center for aggregation and processing.

Investments in MEC Expanding to Multiple Sectors


Investment in MEC in 2022 is expected to eclipse US$871 billion and will grow at a Compound Annual Growth Rate (CAGR) of 25.4% to US$5.3 trillion by 2030. That MEC investment will be spread across a range of verticals—not just utilities—but it is indicative of the investment that is being allocated to MEC in the enterprise sector. The investment challenges in the energy sector have always been a challenge. In 2022, and likely well into 2023, those challenges are only going to increase. The dramatic increase in input energy costs for oil & gas are making heavy demands on energy budgets, but government and energy suppliers will need to make their energy supplies more versatile and more efficient. As electric vehicle adoption continues to grow, demand on the power grid is likely to diverge from historical cyclical norms. The energy supplier’s reserve energy capacity is likely to be more marginal than before. This will further underscore the need for dynamic and resilient energy supplies.