Innovation landscape for smart electrification

The global energy demand for cooling is expected to increase by 45% by 2050 compared with 2016 levels (from 7 to 12 exajoules [EJ]) (IEA, 2018). One reason for this is that only a third of the global population currently living in hot climates possesses cooling appliances (Camarasa et al., 2022). Another reason is that global temperatures are rising, with an increase of 1.5°C or more over pre-industrial levels expected by 2035 (IPCC, 2018). Both reasons are likely to cause an increase in the demand for cooling appliances, especially with rising standards of living in developing countries.

Electrification of the heating sector presents challenges that are widely known but have not yet been overcome. To begin with, homeowners and other small-scale end users have been reluctant to transition away from traditional fossil fuel–based heating technologies, such as gas boilers. In addition, users are not always aware of the benefits of smart electrification strategies, such as lower energy costs for homes or businesses.

To guide policy makers in formulating smart electrification strategies, we propose a toolBox with three kits: the essential kit, which should be implemented in any situation, followed by the heating kit and then the cooling kit, based on the needs. The heating kit is further divided into kits for buildings, industry and district heating

Direct electrification is difficult, if not impossible, in some end-use sectors, including steel-making, chemical production, long-haul aviation and maritime shipping. But there is a viable solution for decarbonising these end uses – “green” hydrogen and other fuels produced from renewable electricity (Figure 7.1) (IRENA, 2022e). IRENA’s 1.5°C Scenario projects that by 2050, clean – green and blue – hydrogen production will grow to 523 million tonnes per year by 2050 (IRENA, 2023). Hydrogen can also serve as an excellent energy storage medium.

Realising the promise of green hydrogen requires significant progress across its entire value chain: from research and innovation actions to make green hydrogen competitive, rapidly scale up electrolyser manufacturing and build the infrastructure needed to produce, store and transport hydrogen and its derivates, to new business models that attract new actors, and market design and regulations that allow setting up an international reliable market.

Effective smart electrification strategies will result from the synergies of innovations in technology, markets and regulation, business models, and system planning and operation. In general, these strategies add flexibility to the system and facilitate the integration of larger shares of renewable generation, resulting in “greener” hydrogen production. To guide policy makers in formulating smart electrification strategies for their own contexts, the following advanced hydrogen economy toolbox is proposed, featuring three individual toolkits.