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COP28 and IEA High-Level Dialogues conclude with strong consensus on energy transition
News
07 December 2023
COP28 Presidency and IEA held the last in their High-Level Dialogues series at COP28, with the final event featuring over 40 leaders from Europe,
the Americas, Africa and Asia
The COP28 and International Energy Agency (IEA) High-Level Dialogues concluded with strong consensus on the key elements of the energy transition. The conclusion
marks a significant achievement for the co-Chairs, COP28 President Dr Sultan Al Jaber and Dr Fatih Birol, Executive Director of the IEA.
The fifth and final Dialogue, held during the World Climate Action Summit as part of COP28 in Dubai, was attended by Heads of State and Government and international
organisations.
Over 40 high-level leaders, including four Heads of State, concluded the dialogues with clear convergence on the building blocks of a 1.5 °C-aligned energy transition
and strong support for an ambitious decision on the Global Stocktake at COP28.
Dr Birol set out an ambitious and integrated package across five pillars for COP28, for which there was strong support in the room:
Reflecting on the conclusion of the Dialogues, Dr Sultan Al Jaber told participants: “This series of dialogues has helped us to reach convergence on some of the critical
elements of the energy transition. This work is crucial in building momentum to deliver the most ambitious response possible to the Global Stocktake, bridging the
gaps to 2030, and helping us keep 1.5 °C – our North Star – in reach. I am encouraged by the practical actions brought forward by world leaders today at the final
dialogue, and I hope that you take this open mindset and optimism throughout this COP.”
Tripling global renewable power generation capacity by 2030.
●
Doubling annual energy efficiency improvements by 2030.
●
An orderly decline of fossil fuel use demand by 2030, starting with no new coal plants.
●
Commitment from the oil and gas industry to align their strategies and investment portfolios with 1.5 °C, with a focus on a 75% reduction in methane emissions by
2030.
●
Financing mechanisms for a major scaling up of clean energy investment in emerging and developing economies.
●


Dr Birol commented: “I’m encouraged by the support by governments around the world during the dialogue for the IEA’s five pillars for success at COP28, including the
need by 2030 for tripling renewable capacity, for doubling energy efficiency improvements, for the oil and gas industry to meaningful commitment to clean energy
transitions, for a massive increase in financing for developing economies, and for an orderly decline of fossil fuel use. We now need to see this support translate into
concrete commitments and action.”
Attendees highlighted the strong support for the COP28 Presidency’s Global Renewables and Energy Efficiency Pledge, which to date has been signed by 127 countries.
There was broad agreement on the need for urgent action on coal, not only on no new unabated coal plants, but also on accelerating the retirement of existing plants.
There was also acknowledgement that countries must seize the opportunity to develop and accelerate their own energy transition plans, while supporting developing
countries with finance and technology transfer. Initiatives such as the Just Energy Transition Partnerships (JETPs) were highlighted as an effective mechanism for
enabling a just and orderly energy transition that supports developing countries.
The final Dialogue follows a year of engagements, where key elements of the energy transition including renewables, energy efficiency, financing, fossil fuel demand
and supply, and decarbonization have been discussed. The series of Dialogues have been conducted in conjunction with the International Renewable Energy Agency
(IRENA) and supported by the United Nations Framework Convention on Climate Change (UNFCCC).
During the dialogue, world leaders displayed significant ambition to achieve concrete targets and accelerate deployment of renewable capacity and improve energy
efficiency. 
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G7 ministers draw on wide range of IEA recommendations to strengthen energy security and accelerate clean ener
News
30 April 2024
Communique welcomes and references IEA work on battery storage, clean cooking, COP28 tracking and more, as Executive Director meets with ministers from around the world in
Turin
Climate, Energy and Environment Ministers from the G7 group of advanced economies today gave strong and broad recognition to the work of the International Energy Agency as they pledged to further bolster
energy security and advance clean energy transitions.
In a communique following a two-day meeting in Turin under Italy’s 2024 G7 Presidency, the ministers vowed to strengthen energy security and keep the goal of limiting global warming to 1.5 °C within reach by
taking actions to achieve the ambitious energy goals set at the COP28 climate summit in Dubai last December. In doing so, they extensively cited the IEA’s analysis, recommendations and activities across all fuels
and technologies and repeatedly called on the IEA to take a leading role in the delivery of recent energy security and climate commitments by outlining pathways forward and tracking progress.
G7 Ministers in Turin underscored their focus on the implementation of the COP28 energy outcomes – part of what is known as the UAE Consensus, which includes goals such as tripling global renewable energy
capacity and doubling global energy efficiency improvements by 2030 and accelerating the transition away from fossil fuels in a just, orderly and equitable manner. They asked the IEA to leverage its unparalleled
data, analysis, policy advice and convening power to guide decision makers and ensure the security of energy supply through clean energy transitions.
Referencing recent IEA analysis, the G7 ministers reiterated their commitment to the target of tripling renewables, as well as confirming their commitment to achieving a fully or predominantly decarbonised
power sector by 2035 while making important new pledges to help meet that goal. Citing the Agency’s special report on Batteries and Secure Energy Transitions, they set the goal of increasing global power
storage more than six-fold between 2022 and 2030, which the report shows is crucial to ensure stable energy supply as more electricity is generated from renewables. Batteries are likely to account for the large
majority of the increase in power storage capacity. Additionally, the ministers pledged to “significantly scale-up” investment in electricity grids, noting IEA analysis that finds that investment needs to nearly double
by 2030 to over USD 600 billion per year to meet the climate targets that countries have announced.
Ministers also identified energy efficiency as an essential element of people-centred clean energy transitions and noted the need to speed up progress. They highlighted the role to be played by the IEA’s
upcoming Annual Global Conference on Energy Efficiency taking place in Nairobi, Kenya, which will convene energy and climate leaders from around the world to share best practices and build momentum
towards the goal of doubling global energy efficiency improvements by 2030.
Importantly, G7 ministers also asked the IEA to take the lead on determining what a secure global transition away from fossil fuels could look like in practice, calling upon the Agency to “provide recommendations
in 2025 to decision makers on how to design a roadmap to implement the transition away from fossil fuels in energy systems, including the technology pathways and timeframes to enable this transition” and
reductions in fossil fuels demand. They also specifically asked the IEA to report in 2025 on “actions to phase out unabated coal fired power generation globally.”
For critical minerals, another major area where international cooperation is vital for ensuring secure clean energy transitions, the G7 Ministers committed to accelerate the implementation of the IEA’s voluntary
Critical Minerals Security Programme and said they would consult closely with the working parties and advisory groups on critical minerals that are convened by the Agency, ensuring appropriate steps are taken
to balance supply with rising demand.
The IEA has long supported G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States – and their partners on energy and climate issues. Today’s communique agreed in
Turin also referenced the IEA’s work on topics including natural gas security, decarbonising industry and transport, energy technology innovation, methane emissions, fossil fuel subsidies, smart cities, just and
inclusive transitions, and sustainable energy development in Africa.


IEA Executive Director Fatih Birol addressed leaders at both the opening and the closing of the meeting. He highlighted the urgent need to implement the energy outcomes from COP28, which provide a global
framework for energy transitions – and emphasised that these transitions will only succeed if there is sufficient attention on developing diversified clean energy supply chains.
He also noted that the IEA will help maintain momentum on energy and climate between the G7 and other multilateral forums such as the G20 and COP – especially on vital issues such as ensuring fair and
inclusive people-centred transitions and improving energy affordability and access. He pointed to the upcoming Summit on Clean Cooking in Africa, which the IEA will hold with Tanzania, Norway and the African
Development Bank Group in Paris next month and which G7 Ministers welcomed in their communique, as an important venue to continue high-level conversations.
Dr Birol met bilaterally in Turin with a wide range of ministers from around the world, as well as leaders of international organisations. These included COP29 President-Designate Mukhtar Babayev of Azerbaijan
and Marina Silva, the Environment and Climate Change Minister from Brazil, which holds the G20 Presidency this year and the COP30 Presidency next year. Dr Birol also met with Algerian Energy Minister
Mohamed Arkab; Canada's Minister of Environment and Climate Change Steven Guilbeault; European Commissioner for Climate Change Wopke Hoekstra; Italy’s Minister of the Environment and Energy
Security Gilberto Pichetto Fratin; Japan’s Minister of Economy, Trade & Industry Ken Saito; and UN Climate Change Executive Secretary Simon Stiell. The IEA is working closely with UN Climate Change to track all
the energy outcomes from COP28, launching a new online resource earlier this month.
IEA Director of Sustainability, Technology and Outlooks Laura Cozzi, who was part of the IEA delegation with Dr Birol, met bilaterally with Mauritania’s Minister of Environment and Sustainable Development Lalya
Kamara to discuss plans for the Clean Cooking Summit on 14 May and how it can help deliver a turning point on the issue this year.
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Governments can help cities deliver innovative and people-centred solutions to drive clean energy transitions
News
02 May 2024
Report for G7 shows how urban planning, digitalisation and grid investment can help cities manage the impacts of climate change and growing energy demand
Reducing emissions in cities is essential for the world to meet its energy and climate goals – and digital solutions that manage consumption patterns and optimise infrastructure can play a significant role,
according to a new report by the International Energy Agency (IEA).
Empowering Urban Energy Transitions: Smart Cities and Smart Grids – the third report in the flagship series from the IEA’s Digital Demand-Driven Electricity Networks Initiative (3DEN) – was presented at
the G7 Climate, Energy and Environment Ministerial Meeting this week in Turin, Italy, and acknowledged by ministers in their communique. It explores a large range of innovative projects and initiatives to
improve power systems in cities around the world and provides insights on emerging best practices.
The report finds that cities need to raise their level of ambition in areas such as energy efficiency to meet the targets set at the COP28 climate change conference in Dubai. While a small number of cities
are stepping up through sustainability and carbon dioxide (CO2) reduction targets, more need to come forward. Cities currently account for around three-quarters of global energy consumption and 70%
of greenhouse gas emissions, and their contribution is set to rise. Despite this, only one in five cities has set a target to reach net zero emissions.
Meanwhile, cities are getting bigger, with urban growth by 2050 set to be equivalent to adding the combined land area of Germany, Italy and Japan. Climate change is also posing new challenges as
cities become larger and more densely populated – particularly during heat waves. In the hottest regions, electricity consumption can double in warm months versus milder ones, with cooling
accounting for over 70% of peak electricity demand. This – in addition to the growing electrification of the energy sector in cities, as more people use technologies such as heat pumps and electric cars –
places strains on electricity distribution infrastructure.
The report finds that digital solutions, including those that make electricity networks more flexible, can help. However, greater investment is needed. On a global net zero pathway, annual investment in
grids worldwide needs to more than double by 2030 to USD 750 billion. Approximately 75% of spending would need to go towards expanding, strengthening and digitalising distribution grids, including
in cities, to improve system efficiency and manage more complex flows of electricity and data.
According to the report, better alignment of planning timelines is important to reduce the risk of power outages and cut backlogs for new electricity connections for renewable assets, electric vehicle
chargers, businesses and housing developments. Misaligned planning can delay the deployment of renewable energy, constrain efforts to improve energy efficiency and lead to higher electricity costs
for consumers, it notes.
Improved access to and use of data for decision making would also support faster and more targeted implementation of energy and climate goals and help align city and power system planning. Digital
solutions and systems can be particularly powerful in cities, where high-density environments create economies of scale and can optimise infrastructure and create new opportunities. The number of
connected sensors and devices is set to rise sharply by 2030, according to the report.
Empowering Urban Energy Transitions highlights the role of G7 countries in fostering innovation through greater international collaboration. It suggests creating enabling environments at the city level for
scalable pilot projects, and notes that integrated urban and power system planning – together with improved data sharing – are crucial to maintain electricity security and prioritise people in clean
energy transitions. The report also explores the value of 3DEN pilot projects administered by the United Nations Environment Programme (UNEP) in Brazil, Colombia, India and Morocco, which leverage
advanced digital technologies to improve energy management, enhance affordability and manage grid flexibility.


As national policy makers consider how to best enable secure clean energy transitions in cities, the report suggests four key themes for them to consider:
The IEA will host a webinar to present the report’s findings on 16 May.
3DEN is the IEA’s initiative to accelerate progress on power system modernisation backed by Italy’s Ministry of Environment and Energy Security. After a successful first phase, the initiative will continue
into a second phase of work starting from 2025. 
Empowering Urban Energy Transitions
Placing people at the centre of policy making in order to build for the future
●
Supporting data-driven integrated planning to ensure that grids are fit for purpose
●
Addressing specific areas of focus to create a supportive environment
●
Pursuing the benefits of fostering strengthened international co-operation
●
Explore report
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Empowering Urban 
Energy Transitions
Smart cities and smart grids


The IEA examines the 
full spectrum 
of energy issues 
including oil, gas and 
coal supply and 
demand, renewable 
energy technologies, 
electricity markets, 
energy efficiency, 
access to energy, 
demand side 
management and 
much more. Through 
its work, the IEA 
advocates policies that 
will enhance the 
reliability, affordability 
and sustainability of 
energy in its  
31 member countries, 
13 association 
countries and beyond.
This publication and any 
map included herein are 
without prejudice to the 
status of or sovereignty over 
any territory, to the 
delimitation of international 
frontiers and boundaries and 
to the name of any territory, 
city or area.
Source: IEA. 
International Energy Agency 
Website: www.iea.org
IEA member 
countries:    
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Korea
Lithuania
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Republic of Türkiye
United Kingdom
United States
The European 
Commission also 
participates in the 
work of the IEA
IEA association 
countries:
Argentina 
Brazil
China
Egypt
India
Indonesia
Kenya
Morocco
Senegal
Singapore 
South Africa 
Thailand 
Ukraine
INTERNATIONAL ENERGY
AGENCY


Empowering Urban Energy Transitions 
Abstract 
PAGE | 3  
IEA. CC BY 4.0. 
 
Abstract  
In the context of the recent agreement at COP28 in Dubai and the current state of 
play of urban power systems – from G7 countries to emerging markets and 
developing economies – this report analyses the steps needed to achieve net zero 
emissions from electricity, and considers the wider implications for energy 
security, sustainability and affordability.  
The decarbonisation of cities is a global priority, and local governments are 
instrumental in achieving national commitments and objectives. Improved access 
to and use of data for decision making can support faster and more targeted 
implementation and help align city and power system planning. Digital solutions 
and systems can be particularly powerful in cities, where high-density 
environments create economies of scale and can optimise infrastructure and 
create new opportunities. Exploring a wide range of projects and initiatives 
implemented in power systems and cities around the world, the report provides 
insights on emerging best practices, innovative approaches and how barriers and 
challenges can be tackled. Our focus is on ways national governments can help 
cities accelerate clean, affordable and inclusive energy transitions, and ensure 
resilience and an ability to adapt to climate change. 
The report also underscores how G7 members can foster innovation through 
international collaboration, creating enabling environments at the city level to 
deploy scalable pilot projects, support integrated planning and promote data 
sharing, all while maintaining electricity security and placing people at the centre 
of clean energy transitions. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Empowering Urban Energy Transitions 
Table of contents 
PAGE | 4  
IEA. CC BY 4.0. 
Table of contents 
Abstract ..................................................................................................................................... 3 
Acknowledgements, contributors, and credits 
..................................................................... 6 
Executive summary 
................................................................................................................ 10 
Global agreement for renewed momentum to implement clean energy transitions 
............. 10 
Cities as catalysts for change ............................................................................................... 10 
Cities fostering innovative and cost-effective people-centred solutions 
............................... 11 
Matching urban growth with increased ambition for inclusive clean energy transitions....... 11 
Power grids feel the heat as climate change begins to take effect ...................................... 12 
Modernising and expanding power grids for sustainable urban energy futures .................. 12 
The power of digital-driven integrated planning 
.................................................................... 13 
International collaboration is essential to address global challenges .................................. 14 
Chapter 1: Urban energy revolutions 
................................................................................... 15 
Key takeaways 
...................................................................................................................... 15 
International climate goals .................................................................................................... 15 
Cities and the climate 
............................................................................................................ 16 
Opportunities for sustainable energy transitions in cities ..................................................... 19 
The role of grids in urban energy transitions ........................................................................ 22 
Chapter 2: Cities and grids on a heating planet ................................................................. 29 
Key takeaways 
...................................................................................................................... 29 
Impacts of a changing climate and energy system .............................................................. 29 
Activating flexibility in cities 
................................................................................................... 36 
Chapter 3: Community at the heart of the city 
.................................................................... 45 
Key takeaways 
...................................................................................................................... 45 
Community energy projects .................................................................................................. 45 
Examples of community-focused approaches for inclusive energy transitions in cities....... 47 
Best practice to support inclusive local energy..................................................................... 51 
Chapter 4: Systemic approaches for a sustainable urban energy future 
........................ 54 
Key takeaways 
...................................................................................................................... 54 
The case for change in urban energy planning .................................................................... 54 
The benefits and challenges of more data ........................................................................... 58 
Connecting the dots: Overcoming interoperability challenges to support clean energy 
transitions 
.............................................................................................................................. 62 
Smart, integrated infrastructure investment planning 
........................................................... 68 
Using sound frameworks for data-driven urban planning 
..................................................... 71 


Empowering Urban Energy Transitions 
Table of contents 
PAGE | 5  
IEA. CC BY 4.0. 
Chapter 5: Creating the conditions for implementing smarter urban energy systems . 74 
Key takeaways 
...................................................................................................................... 74 
The challenges facing smart cities 
........................................................................................ 74 
Navigating regulatory challenges in energy innovation 
........................................................ 75 
Developing digital skills and capacity for smart urban energy systems ............................... 78 
Strategies and solutions for financing urban energy innovation 
........................................... 81 
Chapter 6: New approaches to pilots and experimentation for large-scale 
implementation 
....................................................................................................................... 85 
Key takeaways 
...................................................................................................................... 85 
Chapter 7: Conclusions ......................................................................................................... 90 
Placing people at the centre, building for the future ............................................................. 90 
Supporting data-driven integrated planning 
.......................................................................... 91 
Creating a supportive environment 
....................................................................................... 92 
Fostering international co-operation ..................................................................................... 93 
Potential international actions spearheaded by G7 countries .............................................. 94 


Empowering Urban Energy Transitions 
Acknowledgements, contributors and credits 
PAGE | 6  
IEA. CC BY 4.0. 
Acknowledgements, contributors, 
and credits  
This study was commissioned by the Italian government’s Presidency of the G7.  
The IEA gratefully acknowledges the Italian Ministry of Environment and Energy 
Security for its support of this project as part of its contributions to the IEA’s Digital 
Demand Driven Electricity Networks Initiative (3DEN) on electricity grid 
modernisation and digitalisation and to the Clean Energy Transitions Programme. 
Special thanks go to Federica Fricano, Annalidia Pansini, Alessandra Fidanza, 
Emanuela Vignola, Stefano Raimondi and Alessandro Negrin. The IEA also 
thanks the Italian Ministry for Foreign Affairs and International Co-operation for its 
strategic guidance and collaboration, in particular Stefano Salomoni and Valeria 
Piazza. The IEA thanks Ricerca sul Sistema Energetico, RSE Spa and Luciano 
Martini for their technical advice to the above Italian ministries since the 3DEN 
project inception. We extend our sincere appreciation to the United Nations 
Environment Programme (UNEP) for their invaluable support throughout the 
3DEN Initiative and for leading the implementation of the pilot projects. Special 
gratitude goes to the dedicated team members, Myriem Touhami, Carolina 
Merighi and Aarth Saraph, for their efforts and expertise in contributing to the 
success of the initiative.  
This report was prepared by the Office of Energy Efficiency and Inclusive 
Transitions (EEIT) of the Directorate of Energy Markets and Security (EMS) of the 
International Energy Agency (IEA). Vida Rozite and Brendan Reidenbach co-
ordinated the analysis and production of the report. Other lead authors of the 
report were Emi Bertoli, Lucas Boehle, Silvia Laera, Jack Miller, Emma Mooney 
and Sungjin Oh. 
Other IEA colleagues who contributed to this work include (in alphabetical order): 
Heymi Bahar, Clara Camarasa, Marc Casanovas Simo, Jane Cohen, Michael 
Drtil, Darlain Edeme, Paolo Frankl, Pablo Hevia-Koch, Enrique Gutierrez Tavarez, 
Natalie Kauf, Martin Kueppers, Rena Kuwahata, Sacha Lachmann, Aloys Nghiem, 
Alessio Pastore, Ksenia Petrichenko, Isaac Portugal, Melanie Slade and Brent 
Wanner, Jacques Warichet, as well as former IEA analysts Josh Oxby and Zoe 
Hungerford. The work benefited from the expertise of consultants Andrei 
Covatariu, Chris Dunstan, Astha Gupta and Luis Munuera. 


Empowering Urban Energy Transitions 
Acknowledgements, contributors and credits 
PAGE | 7  
IEA. CC BY 4.0. 
The work benefited from strategic guidance by Keisuke Sadamori, Director of 
Energy Markets and Security, and Brian Motherway, Head of the Office of Energy 
Efficiency and Inclusive Transitions. 
The IEA would like to thank the following experts who provided valuable inputs, 
review and encouragement (in alphabetical order):  
Pankaj Agarwal (Panitek), Kwasi Akuffo (Energy Commission of Ghana), 
Savannah Altvater (Eurelectric), David Arinze (Diamond Development Initiatives), 
Niken Arumdati (Mining and Energy Provincial Office of West Nusa Tenggara), 
Eduardo Avila (Revolusolar), Rahul Banerjee (Panitek), Miriam Badino 
(independent 
consultant), 
Marine 
Baghdasaryan 
(European 
Bank 
for 
Reconstruction and Development [EBRD]), Marion Bakker (Dutch Enterprise 
Agency [RVO]), Lucia Bakulumpagi-Wamala (Bakulu Power), Steven Beletich 
(Beletich Associates), Fabrizio Bonemazzi (RES4Africa), Clelia Fabiana Bueno 
Guedes (Brazilian Electricity Regulatory Agency [ANEEL]), Liliana Campos 
(German Society for International Cooperation [GIZ]), Giulio Antonio Carone 
(Acea Spa), Stelina Chatzichristou (European Centre for the Development of 
Vocational Training [CEDEFOP]), Ercole De Luca (Areti), Lisa Diamond (Austrian 
Institute Of Technology), Alberto Dognini (Fraunhofer), Stephen Dunphy (Planet 
Smart City), Meriem El Mernissi (Les Eaux Minérales d'Oulmès), Alejandro 
Falkner (Enel), Stefano Fava (Planet Smart City), David Flynn (University of 
Glasgow), Yann Fromont (Schneider Electric), Alberto Gaeta (Enel), Dario 
Garofalo (RES4Africa), Cristina Ghione (Planet Smart City), Kanak Gokarn 
(ICLEI), Francesco Guarino (University of Palermo), Efren Guillo (Grupo 
Enercoop), Andy Hackett (Centre for Net Zero), Waqas Hussain (Government of 
Punjab), Greg Johnston (Energy Systems Catapult), Ghislaine Kieffer (Global 
Covenant of Mayors), Aicha Kouraich (Les Eaux Minérales d'Oulmès), Massimo 
La Scala (Politecnico di Bari), Sung Moo Lee (Korea Power Exchange [KPX]), 
Dmytro Leskiv (Khmelnytskyi City Council), Luca Lo Schiavo (Italian Regulatory 
Authority for Energy, Networks and Environment [ARERA]), Joaquín P. Mas Belso 
(Grupo Enercoop),Vincent Minier (Schneider Electric), Juan David Molina Castro 
(Colombia Inteligente), Juliana Andrea Moreno Daza (Enel), Sergio Olivero 
(Politecnico di Torino), Josh Oxby (Parliamentary Office of Science and 
Technology, UK Parliament), Victoria Papp (International Telecommunication 
Union [ITU]), Anna Carolina Peres Suzano e Silva (Brazilian National Energy 
Conservation Programme [PROCEL]), Giovanni Ponti (Italian National Agency for 
New Technologies, Energy and Sustainable Economic Development [ENEA]), 
Vito Ponzo (Enel), Giorgia Rambelli (Mission Innovation Urban Transitions 
Mission), Anil Rawal (IntelliSmart), Nick Regan (Australian Energy Market 
Operator [AEMO]), Jerson Reyes (Chile National Energy Commission [CNE]), 
Graziella Roccella (Planet Smart City), Laura Sandys (Challenging Ideas), Baris 
Sanli (Ministry of Energy and Natural Resources, Republic of Türkiye), Dietrich 
Schmidt (Fraunhofer), Sanjay Seth (The Energy and Resources Institute [TERI]), 


Empowering Urban Energy Transitions 
Acknowledgements, contributors and credits 
PAGE | 8  
IEA. CC BY 4.0. 
Hu Shan (Tsinghua University), David Shipworth (University College of London, 
Energy Institute), Aksinia Sinko (Zhytomyr City Development Agency), Stavros 
Stamatoukos (European Commission), Cassie Sutherland (C40), Fabiola Torres 
(Puebla State Energy Agency), Giulio Troncarelli (Energy of Things), Harry 
Verhaar (Signify), Viviana Vitto (Enel), Parag Vyas (Panitek), Molly Webb (Energy 
Unlocked), Selin Yilmaz (University of Geneva), Teslim Yusuf (South African 
National Energy Development Institute [SANEDI]).  
The report was also informed by the insights gathered during the high-level 
roundtable “Can we deliver decarbonised, reliable and affordable energy without 
an internet of power?”, held on 27 November 2023. The IEA would like to thank 
the following experts who participated in such discussions (in alphabetical order):  
Arash Aazami (Unify.energy), Savannah Altvater (Eurelectric), Jaiane Batista 
Alves Padilha (Brazilian Electricity Regulatory Agency [ANEEL]), Steven Beletich, 
(Beletich Associates, EDNA), Adeline Billard (ENGIE), Matthew Billson (PICLO), 
Kate Burson (KCB Advisors), Bram Claeys (Regulatory Assistance Project [RAP]), 
Doug Cook (Ohme-EV), Andrei Covatariu (Freelance consultant), David Cuckow 
(BSI), Killian Daly (Energy Tag), Michele de Nigris (Ricerca sul Sistema 
Energetico [RSE SpA]), Bertha Dlamini (African Women in Energy and Power), 
Richard Dobson (UK Catapult), Alberto Dognini (Fraunhofer), Simon Evans 
(Arup), Brian  Fitzgerald (EECA), Peter Fraser (Independent consultant), Yann 
Fromont (Schneider Electric), Jaime Garcia Sepulveda (Chile National Energy 
Commission [CNE]), Olivier Genest (BRIDGE), Max Goijarts (Unify.energy), Jack 
Greenwood (Krakenflex), Hanna Grene (Microsoft), Astha Gupta (IEA consultant), 
Andy Hackett (Centre for Net Zero), Steve Heinen (EY), Steven Humphries 
(Australian Energy Market Operator), Greg Johnston (Energy Catapult), Taehun 
Kim (Office of Strategic R&D Planning (MoTIE, Korea), Nina Klein (Ofgem), 
Valérie Anne Lencznar (France's Transmission System Operator [RTE]), Patrick 
Liddy (energy web), Cheryl Martin (Harwich Partners), Luciano Martini (ISGAN), 
Juan David Molina Castro (Colombia Inteligente), Antonello Monti (Fraunhofer), 
James Morgan (UK Department for Energy Security and Net Zero), Francis 
Mosley (Ofgem), Holger Mueller (Siemens), Luis Munuera  (independent 
consultant), Bruce Nordman (Lawrence Berkeley National Laboratory [LBNL]), 
Irina Oleinikova (Norwegian University of Science and Technology [NTNU]), 
Antonios Papaemmanouil (GO-P2P Task, Lucerne University of Applied 
Sciences), Samuel Paul N. (Kanpur Electricity Supply Company Ltd [KESCO]), 
Reji Kumar Pillai (India Smart Grid Forum), Giovanni  Ponti (Italian National 
Agency for New Technologies, Energy and Sustainable Economic Development 
[ENEA]), Somsak Prangthong (Electricity Generating Authority of Thailand 
[EGAT]), Shubhi Rajnish (UK National Grid), Anil Rawal (IntelliSmart), Chulwoo 
Roh (South Korean Ministry of Trade, Industry and Energy [MoTIE]), Nick Regan 
(Australian Energy Market Operator), Laura Sandys (Challenging Ideas, UK 
Energy Digitalisation Taskforce), Milda Savickaitė (Infobalt), S. C.  Saxena (Grid 


Empowering Urban Energy Transitions 
Acknowledgements, contributors and credits 
PAGE | 9  
IEA. CC BY 4.0. 
Controller of India), B. N. Sharma (Rajasthan Electricity Regulatory Commission), 
Emeline Slye (Energy Regulatory Commission [CRE]), Stavros Stamatoukos 
(European Commission), Reena Suri (India Smart Grid Forum), Maud Texier 
(Google), Saijai Thatavakorn (Electricity Generating Authority of Thailand 
[EGAT]), Ruediger Thomas (Microsoft), Ioannis Vlachos (energy web), Molly 
Webb (Energy Unlocked), James Yu (SP Energy Networks), Roberto Zangrandi 
(Hightech Partners, formerly EDSO) and Audrey Zibelman (energy transition 
advisor). 
Special thanks go to the IEA Communications and Digital Office for their support 
in producing the publication, especially to Jethro Mullen, Curtis Brainard, 
Astrid Dumond, Isabelle Nonain-Semelin, Clara Vallois,  Therese Walsh and 
Poeli Bojorquez. We thank Justin French-Brooks for editing the manuscript. 
The IEA is grateful for the vision and work of Kathleen Gaffney on energy 
efficiency and digitalisation. She is dearly missed. 


Empowering Urban Energy Transitions 
Executive summary 
PAGE | 10  
IEA. CC BY 4.0. 
Executive summary 
Global agreement for renewed momentum to 
implement clean energy transitions 
As part of the UAE Consensus at the COP28 climate change conference in Dubai 
in December 2023, an historic agreement was signed signalling the “beginning of 
the end” of the fossil fuel era. Governments agreed to double the annual rate of 
energy efficiency improvement by 2030 and, in the same timeframe, to triple the 
global deployment of renewable energy capacity, putting the principle of energy 
efficiency at the centre of policy making. While these ambitions will be translated 
into national action plans, cities are uniquely positioned to lead the way and serve 
as transition accelerators because of their high population densities and 
positioning as centres of commerce, productivity and innovation.  
Cities as catalysts for change 
Urban areas are the economic powerhouses of their nations. They are undergoing 
rapid development and contributing to higher energy consumption and rising 
greenhouse gas emissions. Globally, cities account for around 75% of global 
energy consumption and 70% of global greenhouse gas emissions – figures that 
are set to rise.  
Almost 10% of the increase in global emissions since 2015 can be attributed to 
urbanisation. It accounted for the record high urban-related emissions of almost 
29 billion tonnes of CO2. Despite this rapid escalation, many people in urban areas 
still lack proper access to power grids. For example, of the more than 100 million 
people living in cities without access to electricity, more than 90% are located in 
sub-Saharan Africa, the fastest-urbanising region of the world. 
Fortunately, cities also present unique opportunities for transformative change. 
Cities can leverage public procurement to create economies of scale and bring 
down costs of clean energy technologies. More than 60% of public investment 
occurs at the subnational level, of which nearly a third is channelled into transport 
systems, underlying the importance of cities investing in green and resilient urban 
infrastructure.  
This important potential of cities to be front runners in the energy transition is 
gaining recognition in many regions, including in multilateral forums. Recently, the 
G7 recognised the transformative power of cities, and the G20 identified the need 
to finance the infrastructure of the cities of tomorrow. This is critical because, 


Empowering Urban Energy Transitions 
Executive summary 
PAGE | 11  
IEA. CC BY 4.0. 
based on existing stated policies, without further urgent action globally in cities 
and on grids, climate goals will be missed and economic growth could be affected. 
Cities fostering innovative and cost-effective 
people-centred solutions 
A people-first approach exemplified by community energy projects not only 
promotes environmental sustainability, but it also stimulates local economies, 
reduces energy bills and fosters public trust in clean energy transitions. These 
advances are crucial to achieving the large-scale change needed to overcome 
today's status quo. Supporting city-level action has the potential to provide the 
greatest carbon mitigation return on investment and accelerate inclusive clean 
energy transitions. The evidence is that investing in infrastructure and technology 
to decarbonise the energy sector can reduce greenhouse gas emissions by up to 
75% by 2050 – as long as the right policies are in place.  
Most urban residents around the world are breathing unhealthy levels of pollution, 
a major portion of which is a by-product of using fossil fuels, which is responsible 
for around 5 million premature deaths each year. City-led action can improve air 
quality, reduce energy demand, improve grid stability, and create savings for 
households and businesses. It can empower people to take on a greater role in 
managing their energy demand through user-centred initiatives. City-led action 
can drive inclusive transitions with information campaigns, guidance and advice, 
policy support for efficient appliances and support for energy communities. 
Matching urban growth with increased 
ambition for inclusive clean energy 
transitions  
Globally, urban populations account for more than half of the 8 billion people on 
Earth today, a share that is increasing. The total global urban population grew by 
around 400 million between 2015 and 2020 alone. More than 90% of this growth 
occurred in cities in emerging markets and developing economies (EMDEs). 
Between 2024 and 2050 the share of the urban population is expected to increase 
from 56% today to around 70%, with the number of urban inhabitants increasing 
by around 1.8 billion. Projections show that urban land areas are expected to 
expand by around 1 million km2 up to 2050, equivalent to the total land area of 
Japan, Germany and Italy combined. 
A small number of progressive cities are stepping up and setting sustainability and 
CO2 reduction targets that are bolder than those of national governments. 
Globally, of the cities with more than 500 000 inhabitants, around 20% have 


Empowering Urban Energy Transitions 
Executive summary 
PAGE | 12  
IEA. CC BY 4.0. 
proposed or pledged net zero targets, of which only half have stated policies in 
place. Whereas there may be net zero targets at the national level, at the municipal 
level, more than 900 cities, many of which continue to grow in size, currently do 
not have net zero targets. 
Power grids feel the heat as climate change 
begins to take effect 
As the world heats up, so the demand for cooling is increasing. The installed 
capacity of space cooling equipment is expected to nearly double by 2030 from 
850 GW today, and then to double again by 2050. Demand for cooling also drives 
peak demand, which creates challenges for grid operators and poses access and 
affordability issues for customers. By 2040 cooling is expected to account for 30% 
of peak electricity demand in ASEAN countries, mostly concentrated in urban 
areas. This is up from around 10% today, and further studies suggest that globally 
each degree Celsius increase causes an average increase of almost 4% in peak 
electricity demand.  
Thus, climate change is posing new challenges to grids in increasingly densely 
populated cities. Around 70% of cities are already experiencing the negative 
impacts of extreme temperatures and frequent storms of increasing intensity, 
which push power infrastructure to the edge of its operating limits. 
Modernising and expanding power grids for 
sustainable urban energy futures 
The transition away from fossil fuels, including by tripling renewable energy 
capacity and switching to electrical demand-side energy assets, is vital for 
countries to achieve their climate goals. This transition leads to an increased 
demand for electricity in all IEA scenarios.  
To achieve the changes consistent with a net zero pathway, the EV fleet is 
expected to increase tenfold, from nearly 30 million today to around 315 million by 
as early as 2030, while total heat pump capacity may triple from 1 000 GW today 
to 3 000 GW by 2030. Substantial electrification of transport and heat, as well as 
across industry, will see demand for electricity increase. It could increase by up to 
two and a half times by 2050, depending on the pace of decarbonisation. Based 
on existing announced national policies, electricity grids will need to expand 
globally to manage the increased capacity, requiring up to 80 million km of new or 
upgraded lines by 2040. Crucially, grids will also need to become increasingly 
smart to manage the increased share of renewable energy capacity. 


Empowering Urban Energy Transitions 
Executive summary 
PAGE | 13  
IEA. CC BY 4.0. 
These ambitious but essential plans to decarbonise the electricity systems, 
coupled with rapid urbanisation, make it crucial to focus on investment in grid 
modernisation and digitalisation. As cities become focal points for energy 
consumption, efficient grid management becomes paramount in addressing urban 
energy challenges. To be on track for net zero, global annual investment in grids 
needs to more than double from around USD 330 billion per year to 
USD 750 billion by 2030, and approximately 75% of this will be needed to expand, 
strengthen and digitalise distribution grids. 
The power of digital-driven integrated 
planning  
Urban areas contribute more than 80% of global GDP. Electricity has facilitated 
the growth of industry and commerce in many regions, driving GDP and 
contributing to development. As demand for electricity continues to grow, power 
grids need to adapt rapidly to manage both today's grid constraints and the 
challenges of tomorrow, particularly in cities.  
Bottlenecks in power grids delay housing developments, prevent the completion 
of new renewable energy projects and can put the uptake of customer-owned 
clean energy resources at risk, such as rooftop PV systems and EVs.  These 
bottlenecks could create further problems for up to 1.5 million households by as 
early as 2030. In the United Kingdom, as an example, grid congestion costs may 
reach as much as GBP 2.5 billion each year in the same timeframe.  
In addition to investment in physical infrastructure, taking advantage of the 
proliferation of connected technologies, which are creating new data sources, 
offers the potential to better manage urban power systems and the increasing 
variability on them. Cities have the right level of density and granularity for 
demand-side energy assets to be optimised and aggregated at the building, 
neighbourhood and community levels.  
Analysis suggests that digitally enabled technologies could reduce the curtailment 
of variable renewable energy systems by more than 25% by 2030, increase 
system efficiency by 30% and reduce costs by up to 30% for customers. However, 
while regulatory and technological barriers stand in the way of maximising the use 
of data, many of these barriers could be overcome through closer international 
collaboration. 


Empowering Urban Energy Transitions 
Executive summary 
PAGE | 14  
IEA. CC BY 4.0. 
International collaboration is essential to 
address global challenges 
Meeting the ambition to double the annual rate of energy efficiency improvement 
as per the UAE Consensus requires a 4% sustained improvement in primary 
energy intensity through to 2030. While individual countries have achieved more 
than 4% in certain years, collectively the world has not reached this target in a 
single year since the beginning of this century.  
Meeting this goal requires global investment in energy efficiency to triple by 2030. 
However, there are large regional differences, as currently 9 out of every 10 dollars 
spent on clean energy since 2021 has been spent in advanced economies and 
China. This regional imbalance means that, whereas in advanced economies 
spending must more than double by 2030, the increase in emerging economies is 
closer to a factor of 3.5.  
Technologies and solutions exist to fast-track energy efficiency implementation 
and to support the integration of renewables in power systems; however, they are 
still not being widely used. Similarly, best practices and innovative approaches 
exist, but opportunities are being missed due to a lack of co-ordination. 
Illustrated by more than 100 case studies, this report showcases the leading role 
that cities can play in implementing faster decarbonisation and energy efficiency 
gains. The supportive roles that national governments and other stakeholders 
need to play are highlighted. We suggest four specific areas where national policy 
makers can take action to empower cities towards faster and more effective 
implementation. We have emphasised the potential for cities and national 
governments: to place people at the centre of policy making in order to build for 
the future; to support data-driven integrated planning to ensure that grids are fit 
for purpose; to address specific areas of focus so as to create a supportive 
environment; and to pursue the benefits of fostering strengthened international 
co-operation.  
 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 15  
IEA. CC BY 4.0. 
Chapter 1: Urban energy revolutions  
Key takeaways 
• 
Cities contribute around 80% of global GDP and their associated emissions were 
responsible for a record 29 billion tonnes of CO2 in 2023.  
• 
More than half of the 8 billion people alive today live in urban areas, and 
urbanisation is on an upward trend, with parts of Asia and Africa expected to 
continue to drive the proportion of the global population that is urbanised to around 
70% by 2050, with nearly 2 billion more people living in cities than there are today. 
• 
Cities have an essential role to play in tripling the capacity of renewable energy 
sources, deploying energy-efficient technologies and the electrification of 
transport and heating, commitments agreed as part of the UAE Consensus at 
COP28.  
International climate goals 
At the COP28 climate change conference in Dubai in December 2023, every 
participating government signed an historic agreement, agreeing to transition 
away from fossil fuels in energy systems as part of the UAE Consensus. The 
landmark pact also includes the call to collectively raise ambitions by doubling the 
annual rate of energy efficiency improvement by 2030 and accelerating the supply 
of low-carbon energy by tripling the total capacity of renewable energy sources in 
the same timeframe. 
The shift away from fossil fuels will see many sectors switch to electricity, 
increasing the demand for power. The biggest consumers of electricity are the 
buildings and industrial sectors, which together account for over 90% of global 
electricity consumption. Appliances, lighting, cooking, cooling and heating account 
for the bulk of energy consumption in buildings, and electricity demand increases 
for each of these end uses in all IEA scenarios, especially in emerging markets 
and developing economies (EMDEs). By 2050 electricity demand increases by as 
much as 150% on a pathway that achieves net zero by mid-century. 
Cities are major sources of energy demand for transport, industry and buildings. 
They are currently responsible for around 75% of global energy consumption and 
70% of global greenhouse gas emissions.  
 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 16  
IEA. CC BY 4.0. 
Cities and the climate 
Cities drive economic growth, but their emissions are 
climbing 
Cities are the engines of global economies and drivers of economic growth. While 
they are home to around 56% of the world’s 8 billion people, they contribute more 
than 80% of global GDP. Globally, the urban population grew by around 
400 million between 2015 and 2020 alone. Notably that more than 90% of this 
urban growth occurred in EMDEs, particularly in the regions of Asia and Africa, 
and above all in India, People’s Republic of China (hereafter, “China”) and Nigeria.  
Urbanisation together with a rising global population is continuing to change the 
shape of society, and at an extraordinary pace. In 2024 more than half of the 
world’s population already lives in urban areas, and this share is expected to grow 
to around 70% in 2050, an increase of around 1.8 billion people. In Asia, the total 
population is set to increase by around a third, while in Africa, the continent's 
population is projected to double between now and 2050.  
Historical and projected urban population by region, 1950-2050 
 
IEA. CC BY 4.0. 
Source: IEA analysis based on UN World Urbanization Prospects 2018. 
 
0%
10%
20%
30%
40%
50%
60%
70%
0
 500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Share of population 
Millions of people
Asia
Africa
Europe
Latin America and the Caribbean
Northern America
Oceania
Share of global population living in urban areas (right axis)
Predicted population change


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 17  
IEA. CC BY 4.0. 
Combining the overall increase in population and the continuing shift from rural to 
urban living, the proportion of GHG emissions originating in cities climbed from 
around 62% in 2015 to around 70% today, taking urban-related emissions to a 
record high of almost 29 billion tonnes of CO2 in 2023. 
Analysis by the IEA has identified that to double the annual rate of energy 
efficiency improvement as per the UAE Consensus requires a 4% sustained 
improvement in primary energy intensity each year through to 2030. While 
individual countries have achieved more than 4% improvement in certain years, 
the world's countries have not reached this target on average in a single year since 
the beginning of this century. 
These factors make the decarbonisation of cities a global priority and of special 
significance to achieving national objectives. 
Cities can play a central role in achieving international 
climate goals, but more action is needed 
Several cities are frontrunners in national climate ambitions, leading the way to 
achieving net zero emissions ahead of nationally determined targets. For 
example, London aims to be carbon neutral by 2030. In 2023 the city extended its 
ultra-low emission zone to the entire Greater London area, contributing to further 
reducing air pollution.  
Vienna has published a revised smart city strategy, which includes a target of 
climate neutrality by 2040 and interim goals to reduce per-capita energy 
consumption, greenhouse gas emissions and the material footprint. The strategy 
is centred around people, focusing on inclusion and equality, and enabling 
participation and active engagement. Vienna has created opportunities for the 
city’s inhabitants to collectively invest in clean energy through community-funded 
solar plants.  
Multilateral forums continue to recognise the important role of cities in the pursuit 
of net zero energy systems. The 2021 G20 Energy-Climate Ministerial 
Communiqué in Naples (Italy) highlighted the role of urban areas in accelerating 
the clean energy transition, while the 2023 G7 Ministers’ Meeting on Climate, 
Energy and Environment in Sapporo (Japan) concluded with the announcement 
of the first ever G7 Roundtable on Subnational Climate Actions in collaboration 
with Urban7. In their final communiqué, the G7 Ministers address “the vital role of 
subnational actors in realising the transformation toward net zero”.  
At COP28 in Dubai, over 40 ministers committed in a joint statement to support 
and integrate climate action across every level of government. Moreover, 
 
 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 18  
IEA. CC BY 4.0. 
71 countries joined the Coalition for High Ambition Multilevel Partnerships for 
Climate Action to enhance co-ordination between national and subnational 
governments in the planning, financing, implementation and monitoring of climate 
strategies.  
Cities with net zero targets in policy documents or laws, 2023 
 
Source: IEA analysis based on data from Net Zero Tracker. 
 
Climate action in urban areas is essential for achieving ambitious net zero 
emissions goals, and internationally, many cities are emerging as leaders to take 
a strong stance by supporting initiatives on climate action. The Cities 
Technological Collaboration Programme is the newest IEA collaborative 
international cross-cutting initiative that helps cities speed up their decarbonisation 
efforts by providing scientific and evidence-based information and an international 
forum on urban energy and mobility system transformation. The Global Covenant 
of Mayors for Climate and Energy brings together 12 500 cities and local 
governments to push for climate action, with a view to driving down GHG 
emissions. Similarly, the C40 cities initiative represents 100 city mayors with the 
ambition of limiting global warming to 1.5°C, while building equitable and inclusive 
communities. ICLEI works with more than 2 500 local and regional governments 
on sustainable urban development. The United for Smart Sustainable Cities 
(U4SSC) a global UN initiative co-ordinated by multiple agencies, is an 
international platform for information exchange and partnership building to assist 
cities and communities in achieving the UN Sustainable Development Goals. The 
Race to Zero is coalition of non-state actors including companies, cities, regions, 
financial, educational, and healthcare institutions leading a global campaign to 
halve global emissions by 2030. The CDP-ICLEI Track provides a platform for 
more than 1 100 cities to report and track progress on climate action.  


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 19  
IEA. CC BY 4.0. 
However, despite some examples of subnational ambition, globally, only around 
20% of all cities with more than 500 000 inhabitants have proposed or pledged to 
net zero targets. Further still, only 0.6% of these cities have translated net zero 
targets into law, with a somewhat larger number mentioning targets in policy 
documents.  
Opportunities for sustainable energy 
transitions in cities 
Examples of city-led action provide a vision for others 
Local governments wield significant influence in shaping urban sustainability 
through urban planning and policymaking. By adopting policies that support smart 
and inclusive sustainable energy solutions, they engender resilient communities 
and mitigate climate change. Through initiatives like district-wide renewables 
deployment and low-emissions transport policies, cities accelerate clean energy 
adoption. They also play pivotal roles in implementing resilient power strategies 
and integrating clean energy solutions into regulations, fostering socially inclusive 
transitions The following examples highlight the active role of cities in supporting 
a more people-centred approach, while also delivering national climate action. 
City governments can adopt policies that encourage smart and inclusive 
sustainable energy solutions. They can support neighbourhood- or district-wide 
renewables deployment and implement low-emissions transport policies. 
Community bulk buying programmes can also accelerate the implementation of 
energy efficiency and the adoption of local renewable energy sources. In 2023 Rio 
de Janeiro became the first Latin American city to use a renewable power 
purchase agreement to power public buildings with clean energy, through the Río 
de Energía Verde Initiative. By agreeing a long-term contract between the city and 
a renewable energy generator, the arrangement allows the municipality to benefit 
from stable electricity prices and progress towards its environmental objectives 
while giving the developer visibility on future revenues and making the operation 
of the generating facility easier. This first stage of the project is expected to avoid 
40 000 tonnes of CO2 over the next five years and to allow the municipality to save 
more than USD 6 million in electricity costs, which will be directed towards health 
and education projects. In Indonesia, the TransJakarta bus system tripled its 
routes and doubled the number of buses in operation between 2016 and 2020, 
allowing the bus rapid transit system to reach one million passengers per day in 
2020. Achieving the target of complete electrification of the bus fleet by 2030 could 
add 4 days of life expectancy per resident in the focus area. 
 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 20  
IEA. CC BY 4.0. 
Areas for city-led action on inclusive clean energy  
 
IEA. CC BY 4.0. 
 
• 
Cities have a powerful role in clean energy transitions by incorporating smart 
and clean energy solutions into regulations and codes. For example, the city 
of Vancouver now requires every residential parking space in new developments 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 21  
IEA. CC BY 4.0. 
to feature Level 2 electricity outlets to charge EVs. This change addresses the 
challenge of accessing EV charging in multifamily residential buildings, which is 
usually harder than in single homes. Cities can also act as aggregators of demand, 
procuring clean electricity in large quantities to cover the combined needs of 
residents and businesses, increasing competition, reducing risk and negotiating 
better rates for local residents.  
• 
Cities can expand on their planning function and make use of geographical 
information systems to map renewable energy potential at the city level and 
identify the best options for siting distribution network infrastructure. 
Through its Clean Energy Program, the New York City government aims to expand 
solar PV and other distributed energy resources across its portfolio of buildings, 
with the goal of installing 100 MW of solar PV on city-owned buildings by 2025. To 
this end, the city assessed all public buildings greater than 1 000 gross square 
metres for solar readiness and identified nearly 55 MW of rooftop solar potential.  
• 
They can accelerate the development and deployment of new power system 
infrastructure through local permit rules, municipal procurement policies, 
zoning ordinances and other bylaws. In some cases, municipalities are owners 
and operators of local utilities. In Germany, more than two-thirds of municipal utility 
companies use the roof surfaces of public buildings to locate their installations. In 
the United States, there are more than 2 000 municipal utilities, serving 10% of 
the country’s electrical needs. For example, the city of San Jose in California is 
creating its own power utility, an early study showing potential cost savings on 
electricity of between 15% and 25%.  
• 
Cities can develop resilient power strategies to ensure that critical public and 
private facilities can operate in the event of power disruption. Resilient power 
technologies, such as solar with battery storage, protect critical facilities from 
power outages. In the face of increasing heatwaves during summer, the city of 
Utrecht in the Netherlands is rapidly expanding its vehicle-to-grid (V2G) 
infrastructure, thus allowing EVs to store electricity during the day and inject it into 
the grid during the evening peak hours. The initiative aims to connect up to around 
10 000 bidirectional charging EVs to the grid, the estimated amount needed to 
solve the city’s grid congestion according to Utrecht University. In 2022 South 
Africa experienced over 100 days of rolling blackouts. Cape Town is working with 
the C40 Cities Finance Facility to install a large-scale solar power plant that will 
improve the city’s resilience. 
• 
Cities can lead the way in implementing smart solutions to ensure that local 
energy transitions are socially inclusive and people-centred. For example, Stirling 
Council in the United Kingdom plans to equip its entire social housing stock with 
sensors and tools to enable property owners to effectively address risks including 
dampness, mould and insufficient ventilation and help tenants better understand 
energy usage and improve efficiency. 
• 
Cities can use their powers to implement further solutions to reduce energy 
demand and improve well-being. In Australia, Melbourne is planting 3 000 trees 
every year to lower city temperatures by 4°C, thereby reducing the need for air 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 22  
IEA. CC BY 4.0. 
conditioning and providing additional recreation areas. Medellin in Colombia has 
created 30 green corridors and achieved temperature reductions of 2°C. A 
growing number of cities, including Paris, Milan and Athens, are providing 
inhabitants with apps to help monitor heat risks and provide guidance on how to 
reduce exposure. 
The role of grids in urban energy transitions 
Ensuring that grids are fit for purpose is necessary to 
realise decarbonisation ambitions 
Electrification is a critical element of reducing fossil fuel demand, alongside 
efficiency improvements and greater use of low-emissions fuels. The greater role 
for electricity in the energy mix will have significant consequences for power 
systems. In 2023 electricity’s share of total final energy consumption was 20%, 
and by 2050 this number increases to over 50% in the IEA Net Zero Emissions by 
2050 Scenario (NZE Scenario). Power systems are therefore facing the need for 
far-reaching change.  
Share of electricity in final energy consumption by sector, 2010-2022, and in the 
NZE Scenario, 2030 and 2050 
 
IEA. CC BY 4.0. 
Source: IEA (2023), Net Zero Roadmap: A Global Pathway to Keep the 1.5°C in Reach: 2023 Update. 
 
There are signs that the net zero transition is already well underway, such as the 
rapid adoption of efficient EVs that is taking place in many cities today, with sales 
of new EVs estimated to be 35% higher in 2023 than in 2022. EV ownership and 
the deployment of electrical equipment (e.g. heat pumps and air conditioners) and 
distributed energy generation (e.g. rooftop solar PV) are expected to continue to 
rise in coming years.  
0%
10%
20%
30%
40%
50%
60%
70%
80%
Industry
Transport
Buildings
Total
2010
2015
2022
2030 NZE
2050 NZE


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 23  
IEA. CC BY 4.0. 
Global sales of electric cars jumped from around 6.5 million in 2021 to 13.7 million 
in 2023, while in the previous two years, from 2018 to 2020, EV sales increased 
by only 950 000 units. In 2022 the global stock of electric cars was around 
27 million units and it is likely to increase almost ninefold by 2030 in the IEA 
Announced Pledges Scenario (APS) reaching 230 million units, driven mainly by 
China, while it increases to up to 315 million units in the NZE Scenario. 
Global stock of electric cars by region in the Announced Pledges Scenario, 2020-2030 
 
IEA. CC BY 4.0. 
Source: IEA (2023), Global EV Data Explorer. 
 
In the recent IEA report Renewables 2023, almost 3 700 GW of new renewable 
capacity is forecast to come online over the period 2023-2028, driven by 
supportive policies in more than 130 countries. Growth continues in mature 
markets, but there is also new capacity coming online in emerging markets and 
developing economies.  
Global distributed PV capacity is expected to increase on average more than 
7.5 times by 2028 compared to 2018, and by an astonishing 68 times in Latin 
America. Nigeria is expected to add 5 GW of distributed solar PV capacity 
between 2023 and 2028, with Angola and Kenya achieving 2 GW each. Brazil is 
expected to deploy 7 GW each year through to 2028. In some regions the ramp-
up of residential solar installations will play a particularly significant role, as in Latin 
America where the share of residential solar PV in total distributed capacity – 
which includes commercial and industrial installations as well as off-grid solutions 
– will almost double, reaching 58% in 2028.  
 
0
 20
 40
 60
 80
 100
 120
 140
 160
 180
 200
 220
 240
 260
2020
2022
2024
2026
2028
2030
Millions of vehicles
India
Rest of the world
United States
Europe
China


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Chapter 1: Urban energy revolutions 
PAGE | 24  
IEA. CC BY 4.0. 
Distributed PV cumulative capacity by region, 2018-2028 
 
IEA. CC BY 4.0. 
Source: IEA (2024), Renewables 2023. 
 
Simultaneously, the electrification of heating is rapidly increasing, with global sales 
of heat pumps increasing by 11% in 2022, marking a second year of double-digit 
growth. In 2022 heat pumps met around 10% of heating needs in buildings, 
corresponding to over 100 million households. According to the latest IEA 
analysis, in the Stated Policies Scenario (STEPS) the share of heat pumps in total 
heating equipment sales more than doubles by 2030, and in the NZE Scenario 
their share increases fourfold, tripling the global heat pump capacity. Also, in both 
scenarios around one-third of the global stock of heat pumps is in EMDEs by 2030, 
while in 2022 these countries accounted only for 16% of the global stock. 
Global heat pump sales and stock, 2010-2022, and by scenario, 2030 
 
IEA. CC BY 4.0. 
Note: GWth = gigawatt thermal capacity. 
Source: IEA (2023), World Energy Outlook 2023. 
 
0
 200
 400
 600
 800
1 000
1 200
1 400
1 600
1 800
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
GW
Latin America
North America
Asia Pacific
(excluding China)
Europe
Rest of the world
Forecast 
20%
40%
60%
2010
2022
STEPS
 NZE
2030
1 000
2 000
3 000
2010
2022
STEPS
 NZE
GWth
Stock
Advanced economies
EMDEs
Share of heating equipment sales
2030


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 25  
IEA. CC BY 4.0. 
Investment in grids is needed to deliver resilient grids 
and avoid bottlenecks 
Substantial investment in grid development will be needed to facilitate the 
integration of increased electricity demand and intermittent generation. There is 
already evidence that power system operators need to invest substantially more 
in digitalisation and flexibility to meet the challenges of clean energy transitions. It 
is vital to ensure that grids are fit for purpose, not just for today’s demands, but 
also for future challenges, enabling countries to follow their decarbonisation 
pathways in an equitable and cost-effective manner.  
Delays in grid investment and reform could substantially increase emissions, 
slowing energy transitions and potentially putting the 1.5°C goal out of reach. For 
example, grid congestion due to increased electrification of heating and mobility 
in the Netherlands is causing more than 3 500 large consumers to be placed on 
waiting lists for their applications for new or added grid capacity, and risks affecting 
up to 1.5 million residential customers in the coming decade. This is already 
happening in several regions in the Netherlands.  
Driven by soaring temperatures during May-August 2023, areas of Mumbai 
experienced power outages due to escalating peak demand for air conditioning. 
As African countries move towards the target of achieving universal access to 
affordable, reliable and sustainable electricity by 2030, cities are already facing 
challenges. Lagos is projecting an increase in peak electricity demand of 400% by 
2040.  
In urban environments, grid upgrades will be particularly important. Grid 
congestion due to clustered residential load can be exacerbated by the 
combination of space heating and cooling demand, EV charging and distributed 
solar. For instance, researchers found that the local distribution system in 
California would need to upgrade five times more feeder lines than originally 
planned in order to accommodate EVs by 2030.  
The grids of the future will need to support cities to adapt to new conditions, deal 
with greater complexity and manage significantly more actors and assets, all with 
diverse impacts on the system. Modernised and digitalised grids can also deliver 
significantly more efficient systems, at lower cost, with greater resilience and while 
achieving decarbonisation goals simultaneously. This requires national and local 
policy makers and utilities to act to deploy the technologies and establish the 
capabilities and functionalities necessary to support future power systems. 
Efficient and resilient power systems require urban planning to be aligned closely 
with power system planning.  
 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 26  
IEA. CC BY 4.0. 
Accelerating clean energy investment in Africa’s cities  
Africa accounts for around 20% of the world’s population, but attracts less than 2% 
of its spending on clean energy. To achieve the region’s 2030 energy development 
and climate goals requires energy investment to more than double from 
USD 90 billion currently, with around two-thirds going on clean energy. For 
example, energy efficiency spending needs to increase sevenfold by 2030, in 
areas such as green and efficient buildings and consumer appliances. 
At the same time, the unprecedented expansion of Africa’s cities is calling for 
massive investment in urban infrastructure. It has been estimated that African 
countries will need to invest about 5.5% of their annual GDP in their cities, 
approximately USD 140 billion per year. In particular, around 70 million new 
homes will need to be built by 2030, almost equivalent to a quarter of the current 
residential building stock in the entire continent. A substantial change in the 
transport infrastructure will be essential as well, as the demand for road mobility 
alone is expected to increase by two-thirds by the end of this decade in the entire 
continent.  
Unlocking green investment in Africa’s cities can result in a win-win situation. 
According to analysis conducted by the Coalition for Urban Transitions, the total 
benefits from delivering compact, connected and clean urban development across 
35 major cities in Ethiopia, Kenya and South Africa are valued at USD 1.1 trillion 
to 2050 (up to 250% of their annual GDP). 
To accelerate this process, the AfDB has recently announced that it will provide 
projected lending of around USD 2 billion in 2024 to cities and municipalities. In 
addition, the AfDB will direct its Urban and Municipal Development Fund (UMDF) 
to support cities with a budget of USD 50 million for the period 2023-2027, to be 
spent on urban project preparation, urban planning and municipal access to 
financial support ecosystems. The Africa Investment Forum (AIF) is now starting 
to prioritise bankable projects that can secure investment for cities. The UMDF is 
already supporting local governments in developing inclusive decision making 
processes and improving urban infrastructure, while addressing climate 
challenges.  
 
Modernising power grids can contribute to doubling 
efficiency and accelerating decarbonisation  
Ensuring that grids have sufficient capacity and flexibility to adapt to fluctuating 
electricity demand will facilitate decarbonisation on a massive scale, reduce 
emissions, improve air quality and see individual efficiency gains across the power 
system contribute to huge overall improvements in energy efficiency.  


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 27  
IEA. CC BY 4.0. 
Urban travel accounts for 40% of the global carbon dioxide emissions from 
passenger transport and contributes significantly to urban air pollution. Electrified 
public transport in cities plays an important role in reducing congestion and 
greenhouse gas emissions. Analysis of 192 cities indicates that subways have 
contributed to halving city population-related CO2 emissions from transport in 
those cities. The transition from internal combustion engine vehicles offers the 
prospect of achieving large efficiency gains as EVs are between three and five 
times more efficient. This switch is already contributing to significant emissions 
reductions. In Norway, for example, where EVs account for around 80% of new 
car sales, the positive effects are already being felt, with transport emissions falling 
by over 8% since 2014. This relies on a power grid that can manage significant 
flows of electricity on a bidirectional basis.  
Buildings also offer great potential for efficiency gains, particularly for 
decarbonising heat. In the United Kingdom, emissions from gas boilers are around 
twice that of the entire fleet of gas power stations. The deployment of heat pumps 
to replace oil and gas boilers will drive electricity demand, but this is far 
outweighed by the savings in fossil fuels due to heat pumps’ much greater 
efficiency, with those currently available on the market three to five times more 
energy efficient than natural gas boilers. The United States which has a high urban 
share of the population at around 80%, has adopted a roadmap for the nationwide 
adoption of efficient grid-interactive buildings (EGIBs), that is energy-efficient 
buildings with high-quality building envelopes and grid-connected smart 
technologies that leverage distributed energy resources to optimise energy use 
and energy flexibility. This could lead to energy savings from homes and buildings 
in predominantly urban areas in the range of 164-401 TWh per year and peak 
demand savings ranging between 42 GW and 116 GW, depending on the efficient 
and grid-interactive solutions implemented.  
Grid digitalisation by upgrading with new intelligent and energy-efficient 
technologies has the potential to bring significant benefits, such as improved 
visibility of distributed energy resources for power system operators, co-ordinated 
control and loss reduction. This is particularly valuable in EMDEs that are 
experiencing high levels of transmission and distribution system losses, but is 
central to achieving potential energy efficiency gains in all settings. A recent study 
of the potential for digitalisation of the power sector found that by 2050, based on 
electrification across all sectors, while electricity consumption would rise by up to 
20%, deploying cross-sectoral digitalisation would contribute to a 30% efficiency 
gain per year. A modern digitally enabled power system will be essential to 
achieve these efficiency gains and to contribute to the doubling of the annual 
improvement in global average energy efficiency. It can only be enabled by 
concerted action by national and subnational governments, regulators, utilities, 
communities and individuals. 


Empowering Urban Energy Transitions 
Chapter 1: Urban energy revolutions 
PAGE | 28  
IEA. CC BY 4.0. 
In this context, the Italian government is playing a transformative and far-sighted 
role in accelerating clean energy transitions through its support of the IEA Digital 
Demand-Driven Electricity Networks (3DEN) initiative.  
3DEN is developing analysis and guidance to help inform policy making in EMDEs 
and beyond on opportunities to scale up investment in smart power infrastructure, 
ensuring the benefits associated with digital investment are widely shared. At the 
same time, the IEA is convening a series of high-level and peer-to-peer exchange 
opportunities and supporting the creation of a community of practice around these 
topics. The uniqueness of the 3DEN approach lies in strongly linking policy 
guidance with implementation and the wide dissemination of findings. The IEA is 
working with the Italian Ministry of Environment and Energy Transitions (MASE) 
and the United Nations Environment Programme (UNEP) to support the 
implementation of pilot projects on how digitalisation can contribute to flexible and 
resilient energy systems and to disseminate the results. 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 29  
IEA. CC BY 4.0. 
Chapter 2: Cities and grids on a 
heating planet 
Key takeaways 
• 
Continuous record-breaking heat events together with more frequent storms are 
placing strain on people, cities and grids, driving the uptake of cooling appliances 
and challenging system reliability. China recorded a 70% year-on-year increase 
in air conditioner sales in 2023. Electricity demand for cooling in Africa could 
increase 400% this decade. Grids in cities are on the frontline of these challenges. 
• 
Global final energy consumption is undergoing a shift towards electrification, with 
a remarkable rise from a 20% share to more than 40% in 2050 on the basis of 
announced government pledges, even surpassing 50% on a path consistent with 
net zero. This shift is driving a significant increase in electricity demand, 
particularly in urban areas, where studies suggest a potential tripling of peak 
electricity demand by 2030. 
• 
To meet these challenges and ensure security of supply, it will be necessary to 
expand and reinforce grids, providing access for those currently underserved, and 
by 2050 to unlock more than four times the amount of new flexibility sources than 
exist today to manage peak demand and ensure continued affordability for 
consumers. 
Impacts of a changing climate and energy 
system 
Urban areas are seeing changes in peak demand 
The ongoing electrification of end-use sectors is poised to substantially increase 
the share of electricity in global final energy consumption. Projections from the 
latest IEA World Energy Outlook indicate a remarkable shift, with the share of 
electricity expected to rise from its current level of 20% to 41% in the APS and 
surpassing 50% by 2050 in the NZE Scenario.  
Power grids in many countries have been pushed to their operating limits in recent 
years due to climate change-related challenges, and increasingly beyond their 
limits, leading to a loss of supply due to events such as storms, as experienced in 
the United States, Europe and Japan. Furthermore, the power sector faces 
disruptions due to extreme temperatures, intensifying concerns, particularly in 
regions where electricity demand becomes more sensitive to rapid increases in 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 30  
IEA. CC BY 4.0. 
the call for heating and cooling, primarily met by electricity. Urban areas are at the 
nexus of these grid-related challenges, with around 70% of cities already 
experiencing negative impacts. Some studies have estimated a tripling of peak 
electricity demand in cities by 2030, especially if the decarbonisation of heat and 
transport occurs rapidly before grids adapt to the increased demands. While cities 
emerge as critical nodes where the adaptation needs of grids become significant 
(particularly at the lower-voltage distribution levels), they are also increasingly 
focal points in providing flexibility.  
Some cities that previously experienced a single period of peak electricity demand 
are now seeing a second peak period emerging. In cooler climates, the 
decarbonisation of heating is driving electricity demand in winter periods and 
causing higher peaks during cold spells. In the United States, peak demand was 
historically experienced during the summer, but many states are projected to 
become winter peaking systems. In February 2021, Texas was hit by a record-
setting winter storm, which resulted in power outages for more than 
4.5 million homes and disruption of the public water and heating systems. It 
impacted almost 15 million people across the state and is considered the costliest 
winter storm on record at over USD 20 billion.  At the same time, as global average 
temperatures continue to rise, there is additional growth in demand for cooling 
during persistent heatwaves. 
More extreme and frequent heatwaves accelerate the 
need for cooling  
Climate change is exacerbating extreme weather across the planet. Record-
breaking heatwaves, storms, floods, droughts and wildfires are all becoming more 
frequent and more intense, as are their impacts on power supply reliability. 2023 
was the hottest year on record, with summer temperatures exceeding 50°C in the 
United States, the Middle East and China. Europe is now the fastest warming 
continent on Earth.  
Online sales data from China in June 2023 revealed an almost 70% year-on-year 
increase in air conditioner sales. There are continuing signs that temperatures are 
on an upward trend. 2024 has already experienced the warmest January and 
February on record, marking nine consecutive months of record highs. The global 
increase in more frequent extreme temperatures is thus leading to rising global 
cooling needs.  


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 31  
IEA. CC BY 4.0. 
Daily electricity load versus temperature, May to September 2019 versus 2023 
 
IEA. CC BY 4.0. 
Sources: IEA (2023), Weather for Energy Tracker; IEA (2023), Real-Time Electricity Tracker. 
 
In the period 2000-2022, global final energy demand for space cooling rose at an 
average of about 4% per year, twice as quickly as for water heating. Furthermore, 
the number of residential air-conditioning units has tripled since 2000, reaching 
more than 1.5 billion in 2022.  
Extreme heat significantly boosts the purchase of air conditioners, leading to 
higher electricity demand. In the hottest regions, the capacity of the grid needs to 
cover a doubling of electricity demand compared with milder months and cooling 
can account for over 70% of peak electricity demand. In India, where air 
conditioner ownership is currently low, every 1°C increase in the average daily 
temperature above 24°C drives an increase in electricity demand of about 2%, 
whereas in Texas where ownership is much higher, it drives a 4% increase. 
Indeed, an assessment of 13 cities across different countries suggests that each 
degree of temperature increase causes an average increase in peak electricity 
demand of almost 4%. 
 20
 40
 60
 80
20
22
24
26
28
30
32
34
36
38
40
Maximum daily electricity load (GW)
Maximum daily temperature (°C)
Texas (US)
 80
 100
 120
 140
 160
 180
 200
 220
20
22
24
26
28
30
32
34
36
38
40
Maximum daily temperature (°C)
India
2019
2023
Trend 2019
Trend 2023


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 32  
IEA. CC BY 4.0. 
Final energy consumption and carbon emissions from space cooling by region, 2000-
2022 
 
IEA. CC BY 4.0. 
Source: IEA (2023), Tracking Clean Energy Progress on Space Cooling. 
 
Lack of access to appropriate cooling technologies can have severe health 
impacts. In Bangkok, for instance, heat stroke and food poisoning resulting from 
bacteria growth in unrefrigerated food have been seen to increase during heat 
waves. Vulnerable communities are often among the most affected by the heat. 
For example, in the United States heat-related deaths are higher in disadvantaged 
communities, revealing stark inequalities associated with rising temperatures in 
urban areas. Similarly in Buenos Aires, both the income and health impacts of 
extreme heat are expected to primarily affect its low-income residents.  
Between May and September 2023 power grids saw record levels of peak 
electricity demand in more than 10 countries around the world, including China, 
the United States, Canada, India, Brazil, Thailand, Malaysia and Colombia – 
together accounting for more than 60% of total global electricity demand. In some 
regions, such as in the Middle East and parts of the United States, space cooling 
can represent more than 70% of peak residential demand on hot days.  
In the United States it is estimated that for each degree Celsius of warming at the 
city scale, the energy used per square foot to cool urban buildings will increase on 
average by nearly 14%. Researchers found that more extreme heat and larger 
populations will have dramatic effects on energy use in US cities by 2050, pushing 
up the amount of electricity used to cool urban buildings per unit of floor area by 
at least 20% in some parts of the country. 
0
0.2
0.4
0.6
0.8
1
1.2
0
 1
 2
 3
 4
 5
 6
 7
 8
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
Gt CO2
EJ
Eurasia
Africa
Central and South
America
Middle East
Europe
North America
Asia Pacific
Total carbon
emissions (right
axis)


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 33  
IEA. CC BY 4.0. 
Looking ahead, energy demand for fans and air conditioning in Africa is expected 
to quadruple this decade as urbanisation and climate change rapidly increase the 
need for cooling. In Morocco, the penetration of cooling devices in the residential 
sector is expected to grow from just over 9% in 2015 to nearly 50% by 2030.  
According to the latest IEA World Energy Outlook 2023, based on stated policies, 
peak electricity demand in India rises fourfold by 2050 from the 2022 level, more 
than half of this driven by cooling demand. This surge in demand has the potential 
to strain power grids, increasing the risk of energy shortages. In April 2022, India 
faced its worst electricity shortage since 2016 in the middle of an extreme 
heatwave. Electricity supply fell short of demand by around 1.9 billion units, or 
1.6%. Some regions had to schedule power cuts in order to manage the surging 
power demand. 
Space cooling demand by region in the Stated Policies Scenario and Announced 
Pledges Scenario, 2021-2050 
 
IEA. CC BY 4.0. 
Source: IEA (2022), World Energy Outlook 2022. 
 
While more frequent extreme temperatures are affecting both rural and urban 
areas, cities heat up disproportionally when compared to greener countryside 
locations. With dense concentrations of buildings and paved surfaces absorbing 
and amplifying heat – especially in areas with little tree cover or green space – 
cities are increasingly becoming heat islands.  
By 2050, three times as many cities as today are expected to experience average 
summertime highs of 35°C and many of them could experience substantial 
warming of up to 4°C before the end of the century. The number of extreme heat 
days by 2050 is expected to increase 15-fold in Freetown, Sierra Leone, compared 
4%
8%
12%
2 000
4 000
6 000
2021
STEPS
APS
STEPS
APS
Japan
European Union
Africa
Central and South America
Rest of world
Southeast Asia
Middle East
United States
China
India
Share of electricity demand
(right axis)
TWh
2030
2050


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 34  
IEA. CC BY 4.0. 
to 2020, and fivefold in Miami, United States, where a loss of labour productivity 
of an additional USD 10 billion could be incurred.  
At the international level, many countries are already paying attention to heat-
related risks. At COP28 over 60 nations signed a Global Pledge for Cooling, 
committing to take action across cooling sectors and applications in the context of 
achieving net zero emissions by 2050 by means of deploying passive cooling, 
increased efficiency and low global warming potential refrigerants.  
Grids need to expand to enable decarbonisation 
At the same time that grids are under pressure from rapidly growing demand for 
cooling in cities, they are also required to handle the surge in renewable 
generation resulting from the energy transition. As international agreements such 
as the historic UAE Consensus at COP28 signal the beginning of the end of the 
fossil fuel era, they also signal a need for global ambition for concrete measures 
to accelerate the energy transition. This means a dramatic increase in renewable 
energy development, with significant implications for electricity grids.  
Global installed renewable capacity by technology in the NZE Scenario, 2010-2030 
 
IEA. CC BY 4.0. 
Source: IEA (2023), World Energy Outlook 2023. 
 
In recent analysis by the IEA, the potential growth in renewable electricity 
generation projected out to 2028 demonstrates that new renewable capacity 
exceeds the expected global growth in demand. This outpacing indicates a slow 
decline in fossil fuel-based generation. In 2028 renewables would account for 42% 
of global electricity generation, with wind and solar PV making up 25%.  
0
2 000
4 000
6 000
8 000
10 000
12 000
2010
2015
2021
2022
2030E
GW
Other
Bioenergy
Hydro
Wind
Solar


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 35  
IEA. CC BY 4.0. 
Electricity generation by technology, 2000-2028 
 
IEA. CC BY 4.0. 
Source: IEA (2023), Renewables 2023.  
 
In parallel with increasing shares of renewables, cross-sectoral decarbonisation 
continues through electrification. This evolving landscape of increasing electricity 
demand and renewables requires substantial grid upgrades to manage peak 
demand, not least in cities where the growing need for services, such as cooling 
and EV charging, coupled with distributed generation are having a particular 
impact. Achieving national goals could require adding or refurbishing over 
80 million kilometres of grids by 2040 globally, the equivalent of the entire existing 
global grid.  
Grids need to expand for universal electricity access  
Currently, sub-Saharan Africa accounts for 80% of the global population lacking 
access to electricity. This issue not only affects rural areas. To achieve universal 
access to reliable electricity in Africa by 2030, 20 million people living in urban 
areas need to gain access each year starting from 2022. Bringing access to 
modern electricity could require an annual investment of USD 25 billion, of which 
USD 22 billion would be needed for power grids (mainly distribution networks).  
While mini-grids are an important vehicle for providing electricity access and 
improving resilience among rural communities, grid-based electricity service plays 
a major role in urban areas. For example, in Kampala, Uganda, the grid is the 
main source of lighting for two-thirds of the city population. 
Reinforcing and expanding the grid at the same pace of urbanisation will be a  
unique challenge for utilities, national governments and municipalities due to 
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
All renewables
Variable
renewables
Hydropower
Solar PV
Wind
Other
renewables
Predicted
generation


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 36  
IEA. CC BY 4.0. 
obstacles such as insufficient access to finance, regulatory barriers, and political 
instabilities in some areas. For instance, in sub-Saharan Africa, the cost of capital 
can be several times higher than in advanced economies.  
In some countries, steps are being taken to expand and reinforce the power grid 
to improve access in cities. In Mauritania, grid expansion plans between the major 
cities of Nouakchott and Nouadhibou were announced in early 2023. Upgrading 
the circuit capacity is likely to provide access to 12 000 additional customers. Mali 
is about to receive more than USD 200 million to upgrade the electricity grid in 
certain areas, including Bamako and its surroundings. The investment is expected 
to reduce the city’s reliance on small and polluting rental power plants and 
decrease transmission grid losses (from 8.5% to 4.5% by 2028). Also, expansion 
in secondary cities will provide electricity to about 400 000 people and more than 
1 000 public facilities.  
Share of urban population with access to electricity in selected regions, 2000-2021 
 
IEA. CC BY 4.0. 
Source: The World Bank (2021), Access to electricity (percentage of urban population). 
 
Activating flexibility in cities 
Future grids need new sources of flexibility 
At present, dispatchable thermal power plants and pumped hydropower, currently 
the largest source of renewable energy, provide most of the flexibility required 
across all timescales. Flexibility, in the most basic terms, is the ability to respond 
in a timely manner to variations in electricity supply and demand. New sources of 
50%
60%
70%
80%
90%
100%
2000
2003
2006
2009
2012
2015
2018
2021
World
North
Africa
Sub-
Saharan
Africa


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 37  
IEA. CC BY 4.0. 
flexibility need to come online to maintain grid reliability as thermal power plant 
production declines as they are phased out in the coming decades.  
The main sources will particularly be batteries and other storage, and demand 
response. Demand response refers to balancing demand and supply on power 
grids by encouraging customers to shift electricity demand to times when 
electricity is more plentiful or other demand is lower. Electricity storage and 
demand response are identified as critical services to power systems. Batteries, 
both distributed (behind-the-meter) and larger grid-scale installations, can provide 
valuable system flexibility, especially in systems with high shares of PV and peak 
demand in evening hours, by absorbing excess generation during the day and 
releasing it during the evening. Curtailment, the switching off of renewables to 
prevent grid exports, is a further source of flexibility, albeit an unwelcome one.  
Global power system flexibility needs and supply in the Announced Pledges Scenario 
 
IEA. CC BY 4.0. 
Notes: Short-term and seasonal flexibility needs are computed for 2030 and 2050 taking into account changes in electricity 
supply and demand and weather variability over 30 historical years. Demand response includes the flexible operation of 
electrolysers. 
Source: IEA (2023), World Energy Outlook 2023. 
 
While curtailment is rising overall in an increasing number of countries, the 
percentage of wind and solar PV generation going unused remains relatively low. 
Typically, curtailment rates range from 1.5% to 4% in most major renewable 
energy markets, although they tend to be higher in regions that need substantial 
grid infrastructure expansion to connect renewable energy installations to 
 1
 2
 3
 4
 5
Flexibility needs (2022 = 1)
Demand
Wind
Solar PV
Curtailment
Thermal
Hydro
Batteries
Demand response
2050
2030
Short term
Seasonal
2022
2022
2050
2030
Flexibility supply
Flexibility needs driver


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 38  
IEA. CC BY 4.0. 
consumption centres. Failure to invest in infrastructure can contribute to increased 
curtailment, with further financial consequences. 
In the United Kingdom, the cost of wind curtailment hit a record high of more than 
GBP 500 million in 2021, while in 2022 consumers paid GBP 215 million to turn 
wind farms off. If this electricity could have been stored and dispatched when 
needed, then the cost of almost GBP 720 million to buy gas-fired power to make 
up the difference in supply and demand could have been avoided, with the 
additional GHG emissions also avoided. National Grid estimated that curtailment 
due to grid constraints could increase fourfold, with costs forecast to reach 
GBP 2.5 billion a year by the end of this decade. IEA analysis suggests that 
digitally enabled demand response could reduce the curtailment of variable 
renewable energy systems by more than 25% by 2030, increasing system 
efficiency and reducing costs for customers. 
The progressive electrification of end uses offers new opportunities for load 
shifting in cities, with EVs and electric heating/cooling playing a major part. To 
make progress towards achieving a net zero energy system, the contribution 
needed from demand response would need to rise to as much as 500 GW in 2030, 
around a tenfold increase from 2020 levels.  
EVs are expected to make up nearly 40% of global new car sales by as early as 
2030 on the basis of announced policies. Integrating EVs into the grid requires 
careful balancing with other distributed energy resources such as heat pumps, air 
conditioning, battery storage and rooftop solar. It is important to note that while 
urban demand response can offer significant system- and cost-related benefits, it 
typically requires upfront investment to become available in the first place. 
Consequently, local grid upgrades become imperative, especially in urban 
environments where residential charging clusters or space conditioning can 
contribute to grid congestion during peak periods. A cost-benefit analysis on EV 
deployment in New York indicates potential challenges, with around 
USD 2.3 billion more required in grid upgrades unless peak demand is managed 
efficiently.  
In the US city of Palo Alto, 80% of all vehicles need to be EVs by 2030 to meet its 
Sustainability 
and 
Climate 
Action 
Plan 
goals, 
equivalent 
to 
around 
100 000 vehicles. A recent impact study found that without improvements to its 
grid infrastructure, more than 95% of the city’s low-voltage transformers would be 
overloaded. Similar challenges are faced in New York, where summer peak load 
leaves large urban areas with insufficient capacity to manage high EV demand. 
While not exclusive, many of the locations with low grid capacity are also 
associated with disadvantaged communities. 
However, despite these challenges, smart technologies enabling demand 
response are capable of providing part of the solution to managing peak demand 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 39  
IEA. CC BY 4.0. 
periods, with their potential to reduce grid stress often being demonstrated in cities 
first. There are plans to expand the use of virtual power plants (VPPs) in which 
digitally enabled technologies act as management systems to operate many 
aggregated distributed systems as a single unit, to maximise their assets.  
In Australia, the University of Queensland installed the state’s largest behind-the-
meter battery, with 1.1 MW of capacity and 2.15 MWh of storage. By joining Enel 
X’s Virtual Power Plant, the university earned more than USD 47 000 in the first 
quarter of operations, while supporting renewable integration and grid balancing.  
In the city of Huzhou, China, an air conditioner demand-side management pilot 
was the first of its kind aimed at the residential sector. Wi-Fi-connected air 
conditioners were enabled, allowing users to adjust their settings via a smartphone 
app in response to prompts from the system operator. The Chinese government 
has developed demand-side management plans to cover at least 5% of the 
country’s electricity consumption by 2025, mostly from industry and cooling in 
public sector buildings. The city of Pinghu is developing an air-conditioning flexible 
regulation and control system, with a controllable load of 15 MW to allow flexible 
control of air conditioning. By modifying the local central air-conditioning 
temperature regulation settings, the city can benefit from an additional 15 MW of 
flexible load.  
There is also the potential to boost efficacy by blending digital innovation with more 
traditional measures. A renovation project in San Diego, California, combined 
energy efficiency measures to reduce demand in the long-term and help to 
alleviate peaks, together with a VPP consisting of batteries and solar PV. The 
project achieved a 30% reduction in the total energy demand and a notable 
reduction in peak demand. 
The benefits of flexibility are multiple 
New infrastructure is clearly necessary to respond to the growing peak load and 
ensure that grids can manage greater amounts of electricity. In the 
European Union cross-border interconnections between member states’ grids 
need to double due to electricity demand rising by as much as 60% by 2030. In 
the United States it is estimated that 10% of all infrastructure investment costs are 
incurred to manage 1% of the annual demand. However, deploying demand 
flexibility and energy efficiency, if properly leveraged, could reduce some of the 
need for costly grid upgrades, with the potential to save USD 2-3 for each USD 1 
spent on peak demand reduction.  
Flexibility-related benefits extend beyond immediate cost savings, and offer the 
potential for continued economic benefit into the coming decades. In the 
United Kingdom recent studies have demonstrated that maximising energy 
system flexibility has significant benefits. By 2030 system flexibility from heating 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 40  
IEA. CC BY 4.0. 
and transport could reduce renewable curtailment annually by around 30 TWh, 
avoid the need to increase distribution system grid capacity by 25%, and save 
about GBP 5 billion each year. Examples from the Centre for Net Zero underscore 
the potential for cities to play a pivotal role in managing peak demand, aligning 
with broader user-centred approaches. In Paris, in an ambitious scenario where 
80% of vehicles are EVs by 2030 and 10% of buildings are equipped with solar 
PVs and battery storage, 20% of heating and cooling peak demand as well as 
40% of EV charging demand could be shifted to off-peak hours of the day, with 
significant benefits to the system. 
Status of demand-side flexibility options 
 
Sub-hourly 
Daily 
Weekly 
Smart EV charging  
 
 
 
Electric water 
heaters 
 
 
 
Heat pumps 
 
 
 
Data centres 
 
 
 
Note: Ability to provide flexibility:  = yes;  = yes, under conditions/not mature;  = no. 
Source: Artelys (2023), Power System Flexibility in the Penta region, as modified by the IEA. 
There is significant potential to deploy flexibility services in the form of demand 
response to offset some of the costs of increasing power generation capacity. 
Flexible assets can react to signals in the market to reduce or shift demand for a 
period of time until the load on the grid reduces. Alternatively, grid conditions may 
be such that there is an excess of renewable energy available, and grid operators 
may encourage customers to increase their demand to absorb abundant clean 
electricity to reduce curtailing supply. By accessing a large, aggregated volume of 
customers to reduce demand and ensure grid conditions are met, more efficient 
grid expansion could become possible. One estimate is that leveraging residential 
demand flexibility in the United States could avoid annual grid investment of 
USD 9 billion, representing more than 10% of the forecast total national 
expenditure on grids.  
There is also an energy security consideration during periods of anticipated high 
demand. In New York, the system operator offers several demand response 
programmes designed to reduce load on the system during grid emergencies or 
when shortages are anticipated. The Emergency Demand Response Program 
offers the opportunity to earn up to USD 500/MWh for curtailing energy 
consumption, thus benefiting programme participants. As of July 2022, a total of 
4 630 end-use locations were enrolled in one of the demand-response 
programmes, representing a total capacity of 1 234 MW of demand response. 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 41  
IEA. CC BY 4.0. 
Digital technologies and analytics enable flexible urban 
solutions 
Tapping into the latent demand-side flexibility and energy efficiency potential 
requires a high level of digital integration to process large data flows in real time, 
which is not possible using traditional computational methods. The emergence of 
machine learning and artificial intelligent models may help unlock more rapid 
progress on efficiency by providing more granular information and timely 
processing of data. This could increase the visibility of information and maximise 
energy savings for individuals, enable businesses to manage operations more 
efficiently, provide system flexibility and improve predictions and forecasting for 
system operators. Cities are often the first to implement new digitally enabled 
systems and are poised to enable the development of smarter power systems. 
Digital technologies play a pivotal role in the evolving energy landscape, and 
smarter power systems in particular. Smart charging (also known as responsive 
charging), electric heating, battery storage and demand response are crucial 
elements in meeting flexibility needs. For instance, smart charging of EVs and 
demand response in buildings and by urban and peri-urban industrial users could 
provide up to 35% of the short-duration flexibility needed to manage the variability 
of renewables.  
Recent IEA analysis illustrates the impacts of flexible resources in India’s future 
power system. By using digitalisation and flexible-load strategies for buildings 
appliances by 2030, the peak load (total load minus solar and wind generation) 
would be reduced approximately by around 13% compared to the base case in 
which appliances operate under a fixed pattern. Additionally, the flexible operation 
enabled by digital tools in this model decreases variable renewable energy (VRE) 
curtailment by around 78%. Reducing curtailment of renewables will be important 
to maximise the potential of assets as India strives to achieve 100 GW of installed 
capacity in the same timeframe. 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 42  
IEA. CC BY 4.0. 
India net load curve of sample days in summer in the Announced Pledges Scenario, 
2030 
 
IEA. CC BY 4.0. 
Notes: Net load refers to total load minus wind and solar PV generation. In the Base case electrical appliances operate 
under a fixed operation pattern. In the Flexibility case digital technologies determine the operational patterns of electrical 
appliances, considering market conditions (one-hour flexibility for heating and cooling assumed). In the Enhanced flexibility 
case digital technologies enable electrical appliances to have more extended and larger-scale demand shifting than in the 
flexibility case (five-hour flexibility for heating and cooling assumed). 
Source: IEA (2023), Using Digitalisation in Emerging Markets and Developing Economies to Enable Demand Response in 
Buildings. 
 
Half of the global potential for demand response is anticipated to come from 
buildings, particularly those adopting zero-carbon practices that rely on 
digitalisation and automation. Therefore, accelerating the deployment of grid-
responsive appliances is paramount to untapping demand response. As a part of 
the IEA Technology Collaboration Programme Energy Efficient End-use 
Equipment (4E), the Efficient, Demand Flexible Networked Appliances 
Annex (EDNA) is providing analysis and policy guidance to members and other 
governments aimed at improving the energy efficiency and the flexibility readiness 
of connected devices. For example, heat pumps equipped with smart technology 
play an important role in more than doubling EU demand‐side flexibility by 2030, 
their share of total flexibility resources jumping from 8% in 2021 to around 12% in 
2030.  
Leveraging distributed energy resources and microgrids 
in cities 
There are many potential benefits to leveraging distributed energy resources such 
as rooftop solar PV, battery storage and other grid-connected assets. In the case 
of outages, one way to provide backup power is through distributed energy 
resources. City governments can consider adding distributed energy resources 
 20
 40
 60
 80
 100
 120
12am
12pm
12am
12pm
12am
12pm
Index (100 = highest net load in the Base case)
Hour
Base
Flexibility
Enhanced
flexibility


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
PAGE | 43  
IEA. CC BY 4.0. 
such as batteries to municipal buildings as a way of ensuring continuity of 
government function during power outage. Incentives to encourage distributed 
energy resources in other locations can also promote wider community resilience, 
especially for buildings providing critical services, such as hospitals. 
Santa Barbara has installed a battery energy storage system at its water treatment 
plant that is projected to alleviate pressure on the power grid and save the city 
USD 700 000 in energy costs over the next 20 years. In the US, AVA Community 
Energy serves more than 14 cities, providing access to distributed solar PV 
systems and batteries at no upfront costs and reinvesting earnings to create local 
clean energy jobs and projects.  
Microgrids can help improve resilience and provide power during outages. 
Los Angeles Department of Water and Power established a community-oriented 
microgrid facility at one of its fire stations. The project consists of a rooftop solar 
system combined with a 40 kWh battery energy storage system. In the event of a 
grid outage, the facility can operate independently using the microgrid system. 
Beyond applications in urban areas, microgrids are an important vehicle towards 
increasing access and improving resilience of communities as was demonstrated 
in August 2023 in Kenya, where despite a 24-hour power outage across the whole 
country, the village of Kitonyoni managed to keep the lights on thanks to a solar 
mini-grid. 
Rome demonstrates urban flexibility for higher 
renewables integration 
Effective system planning is thus crucial for well-integrated wind and solar PV 
growth and should encompass considerations such as the regional distribution of 
generation and the development of policies to encourage system flexibility. 
Additionally, power markets can evolve beyond the traditional design and 
regulation models to create a more accommodating environment for higher 
renewable energy integration, as demonstrated by the Romeflex project. In 2021 
ARERA, the Italian Regulatory Authority for Energy, Networks and Environment, 
set rules to allow distribution system operators (DSOs) to experiment with projects 
for local flexibility markets, aimed at providing local ancillary services 
(e.g. congestion resolution, voltage regulation) to the distribution network. Among 
the DSO projects approved by ARERA, Rome’s DSO Areti started to implement 
the Romeflex pilot project, while Italy’s largest DSO, e-distribuzione, awarded its 
first round of tendering under its EDGE project at the end of 2023, with additional 
rounds planned for 2024. For this pilot project, e-distribuzione identified specific 
areas in Benevento, Cuneo, Foggia and Venezia provinces, characterised by the 
presence of users eligible for providing local flexibility services and thousands of 
prosumers connected to the medium- and low-voltage networks 


Empowering Urban Energy Transitions 
Chapter 2: Cities and grids on a heating planet 
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IEA. CC BY 4.0. 
Flexibility needs and solutions in Rome 
A study carried out by the DSO Areti in the city of Rome estimated that peak load 
could reach 3 300 MW by 2032, with periods of peak electricity demand above 
2 500 MW occurring for about 1 000 hours per year. Deploying demand-side 
flexibility measures during peak hours could help reduce peak demand and 
contribute to slowing the need for grid expansion by leveraging up to 720 MW of 
distributed resources by 2032, consisting of battery storage, EVs, and heating and 
cooling systems. 
Estimated flexibility potential in Rome, Italy, 2023-2032 
 
IEA. CC BY 4.0. 
Source: IEA analysis based on data by Areti. 
To explore the potential flexibility available, in partnership with the electricity 
market operator GME, Areti is implementing the Romeflex pilot project to test a 
local flexibility market that would allow 1.7 million customers to modulate their 
energy consumption and production in return for remuneration based on the 
capacity they make available and on the actual service provided, thus offering 
flexibility services to the electricity grid.  
Under Romeflex, customers ranging from 3 kW residential houses to industrial 
sites can individually or in aggregated form participate in auctions targeted at 
specific urban zones and for an identified period. The first auction closed in 
November 2023 and saw wide participation among aggregators and prosumers, 
resulting in 3 MW of flexibility mobilised for the period February-April 2024.  
The open digital platforms used to procure flexibility in Romeflex were initially 
tested in a European pilot project (PLATONE). They have been scaled up and 
integrated into the grid control systems and the market platform of Italy’s national 
energy market operator, indicating their potential for replication in other energy 
markets. 
0
 100
 200
 300
 400
 500
 600
 700
 800
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
MW


Empowering Urban Energy Transitions 
Chapter 3: Community at the heart of the city 
PAGE | 45  
IEA. CC BY 4.0. 
Chapter 3: Community at the heart 
of the city 
Key takeaways 
• 
Community-focused initiatives can improve access to clean energy technologies, 
reduce costs and relieve strain on power systems. In the United Kingdom more 
than 200 000 people are engaged in projects and have contributed to reduced 
bills for participants worth over GBP 3 million. 
• 
Interest in community and local energy projects is growing, with some countries 
providing significant financial and technical support. In the European Union at 
least 2 million people are engaged in more than 7 700 community projects. 
• 
Implementation of community projects is on the rise, creating opportunities to 
learn and build on emerging best practices. Local solar development in the 
United States can create five more jobs on a per-megawatt basis than utility-
scale solar generation. 
Community energy projects 
Community-focused initiatives can offer multiple 
benefits 
Increasingly, community-centred approaches are being developed and 
implemented to accelerate the transition to clean and efficient energy systems, 
for example, community procurement, people-led renovation, community 
microgrids, energy communities, community virtual power plants, and positive 
energy districts. Community energy projects can be framed as part of a broader 
effort to promote environmental sustainability and social inclusion, by reducing 
reliance on fossil fuels and promoting clean energy technologies. At the same 
time, these initiatives enable individuals and communities to take an active part 
in clean energy transitions and can also build trust, enhance public acceptance, 
and support affordability, equity and fairness.  
Moreover, from a city and power system planning perspective, community or 
neighbourhood-focused approaches can offer economies of scale via 
aggregation and enable more systematic approaches to achieving efficient and 
flexible electricity demand. Digital technologies such as smart meters, 
management systems, trading platforms and systems to collect and share data 
 


Empowering Urban Energy Transitions 
Chapter 3: Community at the heart of the city 
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IEA. CC BY 4.0. 
are also enablers opening up new opportunities. Digital platforms and tools are 
making it easier to set up co-operatives, engage stakeholders, make investments 
and exchange electricity. 
There are many examples of initiatives worldwide where communities are taking 
ownership of their energy resources, managing them collectively, and benefiting 
economically and socially. These global movements of community-owned and 
managed renewable energy projects demonstrate that they not only contribute to 
the fight against climate change, but also address social and economic 
challenges within communities. Specific awareness campaigns and training on 
community energy management, including for energy community managers, 
have been established in Canada, France, Spain and the United Kingdom, as 
well as by ICLEI in Europe.  
Community-centred energy projects are also effective vehicles for more 
inclusive, equitable and resilient energy systems. They are showing clear 
benefits across the globe by deploying renewable technologies as indicated 
below, by improving efficiency, supporting reliable power supply, reducing bills 
and generating local jobs.  
Community-focused initiatives and their impacts 
 
IEA. CC BY 4.0. 
 
Interest in community approaches is growing 
An increasing number of countries are allocating significant funds to support 
community-based clean energy projects. The Italian National Recovery and 
Resilience Plan has allocated EUR 2.2 billion to support energy communities 
and self-consumption, while the USD 370 billion US Inflation Reduction Act of 
2022 offers additional financial incentives for community-based clean energy 


Empowering Urban Energy Transitions 
Chapter 3: Community at the heart of the city 
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IEA. CC BY 4.0. 
projects. In January 2023 the US Department of Energy launched a 
USD 50 million programme to help communities meet their clean energy goals. 
The programme connects local governments, electric utilities and community-
based groups, and provides tools, technical partnerships and peer-to-peer 
learning. The Australian government launched the AUD 40 million (Australian 
dollars)1 Energy Efficiency Communities Programme in 2020, offering grants to 
small businesses and community organisations to undertake collective efficiency 
and renewable projects. In Colombia, Las Comunidades Energéticas (the Energy 
Communities) initiative was launched with the objective of promoting collective 
actions to improve access to clean and affordable energy for vulnerable 
communities as well as to decentralise and democratise energy. These 
communities generate, and efficiently use, clean energy and distributed energy 
resources. The number of registered communities in Colombia amounts to 
almost 13 000 as of February 2024. 
Levels of interest in participating in energy communities is increasing as new 
opportunities are created and as awareness rises about the benefits that can be 
accessed. At least 2 million people in the European Union are involved in more 
than 7 700 energy community projects. In Australia community energy groups 
now have more than 44 000 members – a doubling compared to 2015. In the 
United Kingdom approximately 220 000 people are engaged in community 
energy projects. 
Examples of community-focused 
approaches for inclusive energy transitions 
in cities 
Local procurement initiatives advance clean energy 
Community-led or community-centred bulk clean energy procurement, when 
effectively planned, is an advanced way of integrating diversity, equity and justice 
into the community’s energy transition, as well as improving the resilience of local 
energy systems. Community-centred inclusive procurement and ownership yield 
multiple benefits to the community, including strengthening clean energy 
investment in the area, enabling local vendors to provide better customised 
services to the community, creating local jobs, and improving the affordability of 
technologies and energy. In a pilot project in the Indian city of Lucknow, residents 
were able to sell their surplus rooftop electricity production to other prosumers 
and consumers through the use of a peer-to-peer (P2P) digital trading platform. 
This allowed for surplus production to be sold to peers at a price higher than the 
 
 
1 Exchange rate: 1 Australian Dollar (AUD) = EUR 0.61 = USD 0.66 (as of 04 April 2024). 


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Chapter 3: Community at the heart of the city 
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regulated one and for consumers to benefit from local clean energy while also 
cutting their electricity bills, as the electricity price in the trial was 43% below the 
central market price.  
Community-focused approaches can help reduce the cost of technologies and 
improve energy access. In the United Kingdom, Solar Together, a group-buying 
scheme for PV panels and battery storage, is helping bring down technology 
costs to improve affordability and access in co-operation with local councils. In 
the city of Liverpool, this approach reduced average installation costs by 26%. 
Other UK community energy projects targeted energy storage, new EV charge 
points and a mixture of solar, wind and hydro generation, producing over 
500 GWh of electricity – enough electricity to satisfy the demand of almost 
175 000 homes. They also resulted in GBP 3.35 million of savings on energy bills 
in 2021 – equivalent to the annual average energy bills of more than 
2 500 households in that year – and created more than 180 new full time 
equivalent jobs.  
In the United States, a recent study indicated that a community solar pilot project 
in Ohio could yield earnings of almost USD 2.5 billion, with local tax revenue of 
and around USD 410 million over its lifetime. Community solar subscribers in the 
US generally save 10-20% on their monthly energy costs, lowering the energy 
burden that many low-income households experience. In the United States, local 
solar development can create five more jobs on a per-megawatt basis than utility-
scale solar generation. Integrating, optimising and growing local solar and power 
storage could create 1.4 million US jobs by 2050, increasing to 2 million if 
supported by clean electricity targets. Creative and conscious procurement, 
although not directly operated by the community itself, ensures more equitable 
energy transitions for local communities. These procurements are done by large 
buyers, mostly leveraging corporate renewable energy purchases to enhance 
local communities’ engagement and benefits. For example, the Clean Energy 
Buyer Institute aims to support climate-resilient communities, focusing on 
communities of colour, rural communities, and coastal and island communities.  
A local approach can deliver social benefits  
Community-focused projects can also enhance access to energy and increase 
resilience. Peace Renewable Energy Credits (P-RECs) are an extension of 
Energy Attribute Certificates, which are an internationally traded virtual 
commodity representing 1 MWh of renewable energy generated to include 
environmental and social benefits from projects in fragile settings. Governments, 
utilities, companies and individuals can purchase credits to meet mandatory or 
voluntary sustainability goals. The funding stream can provide developers with 
an additional revenue stream, enabling access to term finance that may not 
otherwise be available. The major ICT company Microsoft secured two 


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Chapter 3: Community at the heart of the city 
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IEA. CC BY 4.0. 
investments in the Democratic Republic of the Congo, the first in 2020 and the 
second in 2022. One of the funded projects installed night-time street lighting 
connected to the neighbourhood solar mini-grid, which enabled 70% of 
businesses to operate longer hours in the evening. Another expanded support 
on energy access, such as first-time electricity connections for the community 
and contributing a new 3.7 MW solar metro-grid to benefit almost 20 000 people.  
Community microgrids can also enable prosumers to exchange and trade energy 
via P2P energy sharing. This sharing co-operation within communities minimises 
energy imports from other suppliers outside the community while also minimising 
the energy cost. The Community Microgrid Initiative in the United States aims to 
provide indefinite renewables-driven backup power to critical facilities. It focuses 
on enabling disadvantaged groups to meet emergency power and instant 
recovery needs, and even to build back better after disasters such as wildfires 
and heavy rain.  
Also in the United States, the Valencia Gardens Energy Storage project was 
designed to support low-income and senior housing facilities consisting of around 
260 units in San Francisco. It is expected to deliver multiple benefits such as 
reducing peak loads, enabling ancillary grid services, and enhancing grid 
resilience and security. Over 20 years, it is estimated that the project will save 
USD 1.3 million off electricity bills and achieve USD 4.6 million in economic 
stimulation.  
In Adjuntas, Puerto Rico, some residents were without power supply for almost 
a year after Hurricane Maria in 2017. A new co-operatively owned solar microgrid 
project harnessing 700 solar panels in the town centre and a 187 kW battery 
storage system will enable 14 local businesses to produce their own electricity 
and to run for about 10 days, even when disconnected with the main grid. In 
Bawley Point and Kioloa, two small, remote coastal towns in Australia prone to 
bushfires and strong storms, are in the process of developing self-contained 
microgrids where approximately 100 homes would purchase rooftop solar and/or 
a battery with subsidies from the USD 5.3 million project.   
Community energy initiatives can support power system 
reliability 
There are obvious direct benefits to the local communities, as demonstrated, but 
supporting community-based projects also offers wider grid benefits. Consuming 
electricity close to the generation source can help avoid power system losses 
and enhance energy efficiency and can also provide additional grid balancing 
services, further improving grid resilience. For example, in northern Perth, 
Australia, a battery resource shared by around 120 households resulted in 
collective savings of over AUD 81 000 during a five-year period. The battery also 


Empowering Urban Energy Transitions 
Chapter 3: Community at the heart of the city 
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IEA. CC BY 4.0. 
helped ease the strain on the grid by enabling an 85% reduction in consumption 
of electricity from participating households at peak times.  
In Italy, the Magliano Alpi energy community installed solar PV on the town hall 
roof, and in collaboration with the EU Joint Research Centre has developed 
digital tools to forecast energy generation and demand and share electricity. This 
investment has enabled the community to use their solar PV systems more 
effectively and cover 35% of their electricity needs. Increased reliance on their 
own generation resources during peak demand periods alleviates grid stress and 
has helped defer expensive infrastructure upgrades. Based on Magliano Alpi’s 
experience, a local company specialising in solar PV installations and EV mobility 
created an operational group, GO-CER, to support the creation of renewable 
energy communities. The network gathers a variety of local professionals and 
experts to help set up and operate energy communities.  
When configured as community-based VPPs, energy communities can further 
contribute to the provision of flexibility to the electricity system. When coupled 
with advanced digital technologies such as machine learning algorithms, they 
have significant potential to improve the economic value to the community and 
carbon emission reduction performance. A study in the city of Greater Bendigo, 
the third-largest city in the Australian state of Victoria, showed that one project 
enabled by advanced digital technologies could halve the carbon emissions 
within the area in ten years with a probability of more than 70%, and lower the 
electricity price by up to one-sixth of the current level. In the United Kingdom the 
Flex Community is bringing together households and businesses to trial new 
approaches to community solar projects, electricity trading between neighbours 
and managed EV charging to better match electricity demand and supply.  
Flexibility contribution from energy communities 
 
Source: Regulatory Assistance Project (2021), Energy communities with grid benefits: A quest for a blueprint, as modified 
by the IEA.  
 


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Best practice to support inclusive local 
energy 
Policy makers and utilities can support inclusive local 
energy solutions  
Utilities in several countries are providing support to local energy schemes, such 
as collective self-consumption and energy communities. In Italy, the distribution 
system operators collaborated with the state-owned energy service system 
operator, Gestore dei Servizi Energetici, to create an interactive map of primary 
substations, which allows interested groups to identify the boundaries of self-
consumption and energy communities under the agreement (current transitional 
measures set the boundary at secondary substations).  
The French distribution operator, ENEDIS, is collecting consumption and 
production load curves for collective self-consumption projects. This helps it 
allocate the quotas for self-consumed electricity among participants for billing 
purposes (including through a direct interface with energy suppliers) and 
provides tools for operation and data visualisation. 
Municipalities also play a key role in designing strategic public procurement 
schemes to incentivise communities, as identified in the Procurement Guide for 
Community Energy from REScoop. Municipalities can assist communities adopt 
renewable energy and enhanced energy efficiency, supporting the creation of 
energy communities. The municipality of Strasbourg, France, in its procedure to 
allocate concessions for rooftop solar, specified that only energy community 
organisations can participate in the tender. 
However, conducive frameworks and support from national governments have a 
critical role to play in scaling up inclusive local energy solutions. From a technical 
perspective, it is important to ensure that the right digital technologies are in 
place. The revised Swiss Federal Act on a Secure Electricity Supply from 
Renewable Energy Sources requires electricity operators to install smart meters 
at the request of participants in energy communities, thereby helping to ensure 
that the right technology enablers are in place.  
Capacity building in communities for socio-economic 
development 
Some projects focus on education, training and awareness campaigns to enable 
communities to actively participate in managing their energy resources 
effectively. These initiatives are not only about energy, but also about creating 
jobs, providing training opportunities and reinvesting profits back into the 


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Chapter 3: Community at the heart of the city 
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IEA. CC BY 4.0. 
community 
to 
address 
issues 
like 
unemployment 
and 
poverty 
The RevoluSolar energy initiative was the first PV community founded in a 
Brazilian favela, enabling renewable energy access for many families, with more 
than 170 kW of solar capacity installed, offsetting 16 tonnes of CO2, and directly 
benefiting 2 000 people. The community opted to reinvest the profits from the 
projects into charities, training 70 residents to tackle rising rates of local 
unemployment and supporting the education of more than 100 children. This 
ability to determine where, how and to whom the revenues from the project are 
distributed, improved overall welfare in the favela while also enabling the 
community to protect people from rising energy prices, saving them around 
USD 11 000 to date. 
Brixton Energy, the United Kingdom’s first community-owned social housing 
renewable energy project, has evolved into a P2P network, allowing participants 
to reduce their energy bills by more than 20%, while also creating training and 
work placement opportunities for residents including young people and 
unemployed electricians. In 2021 a three-month trial of a smart local flexibility 
service was implemented, where they integrated new storage with existing solar 
and helped provide residents with more than 40% of their household electricity 
needs. 
In Italy, the Ministry of the Environment and Energy Security offers grants of up 
to 40% for energy communities and collective self-consumption projects in 
municipalities with less than 5 000 inhabitants. The programme has ambitions to 
achieve at least 2 GW of installed capacity by June 2026. These initiatives can 
also help rehabilitate suburban and peri-urban areas. The first solidarity local 
energy community was established in 2021 in the suburbs of Naples, Italy, 
actively involving, from the design phase, 40 families living in social housing. This 
energy community was established to increase awareness of energy and 
environmental issues, to fight energy poverty and to train local young people in 
clean energy skills. The project is expected to save participants EUR 300 000 
over a 25-year period. 
Institutional support for community projects  
Institutional support and monitoring, in particular at the start of local energy 
projects, is also important to accelerate progress and to ensure the right rules 
and incentives are in place and opportunities are leveraged. Best practice policy 
solutions are starting to emerge. For instance, the European Parliament has 
recently provided funding for the creation of an advisory hub and support service 
to help collect and disseminate best practices and provide technical assistance 
to community initiatives across the European Union. The European Commission 
has published a short guide with examples of how to set up community energy 


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one-stop shops to facilitate the process, and digital tools for energy communities, 
with practical examples of how these are used in projects across Europe.  
From a financial standpoint, instruments to channel national and international 
funding can help further facilitate the creation of local energy projects. The 
EU-funded COMPILE Project designed a guide to support municipalities in 
choosing the most appropriate funding mechanism for energy communities, and 
has produced five pilot projects, of which four are in urban locations. In Spain, 
the Community Transformation Offices have been established to support the 
creation of energy communities through the empowerment of new energy actors 
such as residents, small and medium-sized enterprises and local authorities, 
providing technical, financial, legal and administrative advice, and education and 
training.  
In Chile a platform called Comuna Energética has been established to support 
municipalities and local actors in implementing replicable and innovative clean 
energy projects. Comuna Energética supports the creation of local energy 
strategies, helps strengthen capacity in municipalities and ensures alignment 
with other national initiatives and instruments. It has implemented around 
50 projects to date. In Italy the Energy Communities’ Observatory has been 
established to identify persistent challenges and to support the creation of 
conducive policies, to promote a national roadmap for the development of energy 
communities and to help local governments and residents setting up and 
managing such initiatives.  
Further mapping of initiatives and benefits is underway as part of the IEA People-
Centred Clean Energy Transitions Programme and the Digital Demand-Driven 
Electricity Networks Initiative (3DEN). The IEA User-Centred Energy Systems 
Technology Collaboration Programme, through its Global Observatory on Peer-
to-Peer, Community Self-Consumption and Transactive Energy Models, is 
tracking developments across the world in the area of local energy models, 
mapping their implications for energy systems and collecting policy insights.  


Empowering Urban Energy Transitions 
Chapter 4: Systemic approaches for a 
sustainable urban energy future 
PAGE | 54  
IEA. CC BY 4.0. 
Chapter 4: Systemic approaches 
for a sustainable urban energy 
future 
Key takeaways 
• 
Agile, integrated planning processes are essential for meeting renewable energy 
targets and addressing grid infrastructure challenges while aligning with urban 
development needs, avoiding delays and integrating distributed generation 
effectively. More than 3 000 GW of renewable power projects are currently 
awaiting connection globally. 
• 
Given the increasing complexity of urban energy systems and the urgency of 
meeting clean energy transition objectives, urban and energy planners and 
operators need more granular real-time insights. These can be derived from 
analysing an increasingly wide range of data sets as the number of connected 
sensors and devices rises from 13 billion today to exceed 25 billion by 2030.  
• 
Better alignment of energy system and urban planning processes and supportive 
policy action to help anticipate future changes and investment needs can result 
in reduced costs and assist energy efficiency implementation. In China, 
integrated planning enabled a reduction in investment of USD 13.5 billion. 
The case for change in urban energy 
planning 
Rapid and large-scale changes require more agile and 
integrated planning 
It will be necessary to move fast to implement projects at scale to stay on track 
with international clean energy transition commitments. Many regions are already 
facing challenges at the planning stage, which is leading to delays in deploying 
renewable energy, with around 3 000 GW of renewable power projects currently 
in the queue for connection to the grid, alongside reports of energy efficiency 
schemes stalling. Analysis suggests that due to outdated grid planning in some 
countries in the European Union, more than 200 GW of new solar capacity is 
being planned than accounted for by national grid plans, with a potential shortfall 
in planned infrastructure investment of at least EUR 5 billion. 


Empowering Urban Energy Transitions 
Chapter 4: Systemic approaches for a 
sustainable urban energy future 
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IEA. CC BY 4.0. 
With the global pledge to triple the capacity of renewables and to double annual 
energy efficiency gains by 2030, it is imperative that governments – both local 
and national – overcome the current barriers and deploy new streamlined and 
integrated planning processes.  
Power systems must be expanded to manage the demand for increased 
capacity, reinforced to increase stability, and hardened to withstand extreme 
weather conditions with a combination of both adaptation and mitigation 
measures. One challenge is that grid planning must now consider more diverse 
future operating conditions than historical data allow, so as to be resilient by 
design. When looking specifically at infrastructure requirements in urban areas, 
it is also important to recognise the density aspect, which offers potential but may 
also create engineering challenges. While in general rural grids prioritise 
accommodating power generation, urban power grids focus on meeting the high 
electricity demand of cities, driven by multiple customer connections and dense 
loads.  
Managing the intersection between power systems and 
urban planning 
With the dramatic growth in distributed generation and electrical equipment, such 
as distributed solar PV installations and EV charging stations, urban power 
systems are increasingly required to manage dynamic multi-directional electricity 
and data flows, necessitating additional infrastructure. Given these profound 
changes to the energy landscape, realising the potential for the intersection 
between power systems and urban planning is imperative to support successful 
clean energy transitions.  
As emphasised by the 2023 IEA Special Report Electricity Grids and Secure 
Energy Transitions, governments need to further align and integrate planning for 
transmission and distribution grids with broad, long-term planning processes. 
Deploying new power grid infrastructure often takes 5 to 15 years to plan, permit 
and complete, compared with 1 to 5 years for new renewables projects and less 
than 2 years for new loads such as EV charging infrastructure, housing 
developments and industrial facilities. Better planning can help ensure that these 
contrasting timescales do not lead to a logjam in bringing projects to fruition.  
Cities are increasingly turning to integrated planning approaches to sustainable 
urban development, focusing on integrating policies and actions across sectors, 
multi-level governance and stakeholder involvement in implementation. 
Integrated energy planning is the systematic analysis of all the factors that 
influence the evolution of energy systems. It facilitates problem solving and 
makes it possible to explore linkages, evaluate trade-offs and compare 
consequences, thereby helping countries to develop an effective energy strategy 


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that supports national sustainable development goals. It increases transparency 
and provides information to stakeholders, informing project developers, grid 
operators and authorities and helping co-ordinate investment in generation and 
grids. It is also useful for foreseeing the potential outcome of changes and events.  
Integrated planning plays a pivotal role in identifying and implementing energy-
efficient technology policies, ultimately enhancing the overall performance of the 
urban power system. The benefits of a co-ordinated approach extend to 
improving urban resilience in the face of disruption and ensuring a reliable 
response during emergencies. As cities anticipate increased energy demands 
due to urbanisation, population growth and shifts in consumption patterns, 
integrated planning becomes instrumental in addressing the associated 
challenges. Efforts can be geared towards avoiding excessive power system 
redundancy, optimising resources and identifying synergies to provide cost-
effective solutions. 
Short-term action is required to deliver long-term vision 
Length of planning horizons and update frequency for grid planning studies 
 
IEA. CC BY 4.0. 
Notes: Horizons are based on the main transmission planning study for each region, noting that some have additional 
longer-term studies used to inform the main plan. CAISO = California Independent System Operator.  
Sources: IEA analysis based on Electricity Grids and Secure Energy Transitions; data from National Transmission Needs 
Study for the United States; Ten-Year Network Development Plan for the European Union; Electricity Supply Plan for 
Japan; Plano Decenal de Expansão de Energia for Brazil; Transmission Development Plan for South Africa; Five-Year 
Plans for China; National Electricity Plan Volume II (Transmission) for India. 
 
Challenges arise in meeting clean transition needs as rapid renewable energy 
and technology deployment may outpace infrequent grid updates. Additionally, 
the planning horizon for urban development is often shorter than high-level 
climate targets, hindering efficient alignment with longer-term ambitions.  
0
 5
 10
 15
 20
 25
CAISO
European Union
Japan
Brazil
South Africa
China
India
Germany
Years
Primary horizon
Additional perspective
Frequency


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A recent study showed that strategic grid planning based on a longer-term vision 
enables existing low-voltage grids to support new charging infrastructure for EVs 
and heat pumps, addressing budgetary constraints. Dynamic load management 
can partially mitigate or postpone investments in transmission and distribution 
systems, proving cost-effective in about 90% of cases. Additionally, a study on 
East China found that introducing integrated planning in a wider regional area – 
rather than focusing on local problem solving – could avoid infrastructure 
investment of USD 13.5 billion while maintaining a robust power system.  
Main characteristics of traditional and integrated planning for power grids  
 
Traditional resource planning 
Integrated and co-ordinated 
planning 
Electricity grid context 
Large, centralised conventional 
electricity plants, unidirectional 
electricity flow 
Increasing shares of variable 
renewables including distributed 
PV, demand-side resources and 
bidirectional flow, transforming the 
energy landscape 
Leader 
A company that owns the assets   
A selected entity with a neutral role, 
ideally with no conflict of interest 
Objectives 
Meet legal requirements 
(reliability, sustainability) and 
balance sheet constraints or 
shareholders return 
Meet climate and energy policy 
objectives and maximise overall 
market benefits at reasonable risk 
Planning process 
(transparency) 
Top-down, transmission-
distribution system planning with 
limited interactions; assumptions 
and details may be restricted, with 
only headlines made public; public 
consultation at the end of the 
process 
Participatory and transparent 
process; continuous engagement 
with relevant stakeholders to 
develop scenarios, select 
sensitivities and challenge 
assumptions; results made public 
and open to debate 
Resources considered  Centralised generation, 
transmission and distribution 
Generation, both centralised and 
distributed, transmission and 
distribution, demand-side resources 
and system flexibility 
Input parameters and 
estimation tools 
Approximation, reserve margin 
calculations 
Multi-dimensional analysis, 
including environmental and social 
aspects 
Outputs 
A plan focused on investments 
Several outputs to guide decisions 
of policy makers and market 
players 
Sources: IEA (2022), Steering Electricity Markets Towards a Rapid Decarbonisation, and US Aid (n.d.), Best Practices 
Guide: Integrated Resource Planning for Electricity, as modified by the IEA. 
 
Collaboration is central to aligning planning with cities’ 
needs and timelines 
Collaboration between local governments and utilities is important to ensure that 
the grid is expanding and decarbonising in line with each city’s needs and 
timelines. Municipalities can engage directly with electric utilities and promote 


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new solutions, or influence utility strategy by providing long-term plans, updating 
them on a multi-year basis while acting as representatives of their communities. 
Such collaborative initiatives enable utilities and cities to leverage resources, 
improve infrastructure reliability and reduce costs, thus resulting in a higher 
quality of service. In the United Kingdom, for example, the Infrastructure 
Coordination Service under the auspices of the mayor of London was able to 
identify short-, medium- and long-term solutions to enable new housing 
developments to proceed on a faster timeline by working closely with the grid 
operators.  
Some local governments have partnered with utilities to develop renewable 
energy, efficiency programmes and joint working to enhance energy metering 
and data access. In the United States, the city of Denver developed a Strategic 
Energy Plan with the local utility to lay out a plan to achieve 100% renewable 
electricity by 2025. Through this partnership the utility supported the local 
government by providing analysis based on energy data and plan strategies, and 
staff training. Another US city, Charlotte, created a strategy for co-operation with 
the local utility, aimed at developing a plan to advance the Low Carbon, Smart 
City Collaboration, and recently announced a High Energy Use Pilot to provide 
homeowners incurring high energy usage with energy-efficient retrofits.  
The newly formed international Cities Technology Collaboration Programme 
aims to optimise urban energy planning for improved living standards. It will focus 
on gathering energy-related data, sharing knowledge, promoting data-driven 
planning, and discussing legislative and socio-economic factors. This 
collaboration has potential to guide national policy implementation to support 
cities utilise data for more efficient planning. 
The benefits and challenges of more data 
Managing increased data complexity and volumes has 
become a priority 
As the energy access sector undergoes deep transformation, a pressing need 
remains to better inform decision makers with actionable and targeted tools for 
integrated electricity planning. This is especially important in locations where 
data availability is suboptimal. The IEA has collected geospatial models and 
datasets that are crucial for stakeholders across the African energy sector 
looking to deliver an effective path towards universal electricity access. 
 
 


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The growth in data, both quantity and type, can be a powerful asset in effectively 
managing the evolving power system, but only when it is accompanied by 
enhanced data accessibility, utilisation and sharing, along with more robust 
analysis tools.  
Drivers of electricity data volume and increasing complexity 
 
 
IEA. CC BY 4.0. 
Notes: AC = air conditioning; DERMS = distributed energy resources management system; DSO: distribution system 
operators; IoT = Internet of Things; TSO = transmission system operator; VRE = variable renewable energy. 
 
With technology adoption varying immensely in every location, each energy 
system faces unique challenges. A major challenge for system operators is that 
they lack visibility of customer-owned equipment and its impacts on electricity 
demand, known as “seeing behind the meter”. This currently necessitates 
tailored visibility solutions that also consider the urban context due to the density 
of energy demands, where most utilities today still have limited visibility and have 
to rely on bespoke digital tools such as DERMS. As many regions are seeing 
decentralised energy systems grow at different rates, regulators can prioritise 
addressing system reliability, especially in urban environments, by increasing 
visibility and data availability. The Australian Energy Market Operator established 
a distributed energy resource register in 2020 that provides visibility on the 
location and capacity of devices installed in customer premises thereby 
supporting power system planning and operation. In 2024 India has initiated a 
consultation process towards developing a national registry.  
Paving the way for innovative planning solutions 
Leveraging data from technological advancements, such as smart meters and 
digital communication, is a key aspect of integrated planning. Insights based on 


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data and advanced analytics and improved data and information sharing can help 
forward planning for periods of high demand, lessening reliance on costly peak 
generation sources and enhancing grid reliability.  
Misaligned planning timelines could increase the risk of power outages due to 
power system resource adequacy issues (i.e. the ability of a power system to 
supply enough electricity at the right locations during all hours of the year), and 
the inability to provide new electricity connections for renewable generation 
assets, data centres or housing developments. Misaligned planning can delay 
the deployment of renewable energy, constrain the achievement of increased 
energy efficiency and lead to higher electricity costs for consumers.  
There are means to better manage these risks. Data sharing mechanisms allow 
policy makers to design more efficient power systems. For example, in the 
Netherlands, central government, local governments, utilities and planning 
agencies work closely together to share data on power systems. Since 2022 data 
have been publicly available on electricity consumption and production by 
province and municipality, which allows planners to anticipate grid needs and 
adjust capacity installations accordingly. To help municipal planners, a specific 
data tool shows on customisable maps the annual energy consumption by 
household, the energy label of the house and the capacity of its renewable 
production that can be fed back into the grid. 
Towards resolving data challenges 
Integrated planning fosters stakeholder co-ordination, but regulatory constraints 
and data management challenges persist. Cities and power systems generate 
complex data in varying formats, with much of the data currently unused or 
unreliable, presenting untapped potential. Establishing a common protocol and 
reference architecture for digitalisation and assumed open data sharing could 
contribute significantly to reducing costs, help drive rapid innovation and expedite 
the energy transition across diverse systems. This could help reduce the friction 
caused by the increased system complexity.  
Governance gaps and digital skills gaps persist and impede data utilisation, 
preventing the development of innovative tools and methodologies. Power 
system data that are proprietary and fragmented across utility departments or 
entities hamper data interoperability, and access to data is also sometimes 
constrained by data protection. Simplifying information sharing, co-ordinating 
markets and establishing robust data governance are essential for data 
interoperability. Standards for data interoperability are key to achieving these 
outcomes.  


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Examples of standards and norms to control and monitor equipment 
Region 
Name 
Description 
Type 
European Union 
Norm EN 50631-1:2020: 
European Norm 
Describes the necessary control and 
monitoring for household appliances. 
Norm 
United Kingdom 
PAS 1878:2021  
Requirements and criteria for electrical 
appliance to be classified as energy smart.  
Norm 
Australia 
AS 4755 – Demand 
Response Standard  
Demand response capability and modes of 
appliances and smart device. 
Standard 
United States 
ANSI/CTA-2045  
Specifies a modular communications 
interface to facilitate communications with 
residential devices for applications such as 
energy management. 
Standard 
International 
IEC 62746-10-1  
Open automated demand response system 
interface between the smart appliance, 
system or energy management system and 
the controlling entity. 
International 
standard 
United States,  
California 
Senate Bill 49 – The 
Flexible Demand 
Appliance Standards  
Authorises the Energy Commission to adopt 
standards for appliances to facilitate the 
deployment of flexible demand technologies. 
Bill 
International 
OpenADR 3.0 
Open automated demand response system 
that provides two-way information exchange 
between utilities and customers’ smart 
appliances. 
International 
standard 
 
Regulations can define access rights, data formats and consent mechanisms, 
ensuring consumers have control over their data. Cybersecurity guidance and 
standards, such as the Cyber Assessment Framework, can help utilities mitigate 
risks, and policy makers should remain vigilant about emerging technology 
cybersecurity gaps. 
 
 


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Connecting the dots: Overcoming 
interoperability challenges to support clean 
energy transitions  
One of the main reasons that renewable projects are facing permitting delays is 
the bespoke nature of each agreement. These permitting processes are highly 
manual and involve co-ordination across many different authorities at local, 
regional and national level. The lack of standardisation of the process and the 
poor visibility of data and project tracking, together with the high volume of 
manual input, risk missing the global pledge to triple renewable capacity by 2030 
if they are not remedied. There is, however, the potential to overcome many of 
these hurdles by leveraging digital solutions.  
In the European Union, the large ICT company, Amazon Web Services, has 
sought to overcome this impasse whereby around 80 GW of renewables are 
awaiting permitting. It is working with permitting staff across several EU member 
states to develop a digital platform to: 
• 
Reduce processing time. 
• 
Automate data management to reduce manual input. 
• 
Standardise the process using automated checklists and workflow triggers and 
notifications. 
• 
Collect, manage and process all documents in a single repository. 
• 
Increase transparency on progress throughout the permitting process. 
Several pilot projects are underway, connected to the Horizon Europe 
programme, to develop solutions that the tackle data interoperability challenges 
facing increased power system digitalisation. The Interconnect project brings 
together 50 European partners across 11 countries to develop a data and 
communication architecture to connect homes and buildings to the electricity 
sector. To identify ways to leverage flexibility, the OneNet project is developing 
a communications architecture for demand response, storage and distributed 
generation. PLATOON focuses on smart grid services, increasing renewable 
energy consumption, greater energy efficiency and optimised energy asset 
management. Other projects are exploring ways for the private sector to create 
new business models. To lay down the groundwork in understanding the state of 
the market, BD4OPEM is developing products and services to improve the 
planning, monitoring, operation and maintenance of distribution grids towards an 
open innovation marketplace. Denmark has implemented DataHub, a digital 
platform that centralises electricity consumption data and clearly defines use 
cases for access by third parties. 


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Data analytics can enhance the efficiency, resilience 
and sustainability of urban energy systems 
Access to data is only the first step. It is then necessary to understand what the 
data infer, for example by using advanced analytics such as artificial intelligence 
(AI) or machine learning models. Other means of data analysis are the creation 
of digital twins, which are virtual models of real-world systems. The coverage of 
digital twins varies from an individual building or site to entire districts, systems 
and cities. They can help identify where interventions are needed, for example 
by identifying areas likely to become heat islands. They can identify where energy 
efficiency interventions can bring greatest positive impacts by mapping heat 
losses and income levels. And they can be used to trial different options and 
understand possible outcomes to help inform planning processes and optimise 
investment.  
Singapore, for example, started developing a 3D representation of the city in 
2012 in order to identify areas that were most at risk from flooding. The digital 
twin is now shared across different government agencies and has many practical 
uses around green space management, urban planning, network coverage and 
transport flows. A project to map EU-based local digital twins has been funded 
by the European Commission, both to consider the current state of the digital twin 
ecosystem and develop a roadmap towards use of data and advanced analytics 
for enhanced planning and operation of urban systems. The cost savings from 
using digital twins to make data-driven decisions in cities globally have been 
estimated at up to USD 280 billion globally through to 2030 from improved 
planning. 
Data-driven insights and advanced digital controls can contribute to enhanced 
grid efficiency in urban locations by reducing power system losses, reducing 
curtailment of renewables, and providing more control, greater resilience, 
improved reaction times and consequently lower system costs. In the 
United States, a recent study by the Department of Energy simulated the grid 
conditions resulting from a 70% share of renewable sources by 2030. It found 
that deploying advanced digital hardware and software could result in increased 
efficiency and a reduction in curtailment of between 23% and 43% through grid 
optimisation.  
For urban and power system decision makers, diverse, large and frequently 
updated sets of energy data are increasingly available, and data volumes are 
increasing significantly. IoT connection points are expected to reach 83 billion 
worldwide by 2024, and everything that is communication network-connected 
provides data. Datasets can cover air quality, weather, energy consumption 
patterns in buildings, geospatial data and traffic control systems. The ability to 
provide more insight through data visualisation is an emerging tool to aid decision 


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makers – it can simplify complex data by displaying large data sets in various ways 
that can reveal patterns or trends or identify areas that need further attention. 
In European Union, under the Horizon 2020 funding programme, the Hotmaps 
geographic information system (GIS) toolbox has been developed as an open-
source platform for mapping heating and cooling demand in European countries 
to support authorities and energy planners in the development of a strategic 
heating and cooling plan for their region. 
Total heat density of buildings in Paris, France 
 
Source: Reproduced from Hotmaps. 
 
Advanced analytics can be used to merge diverse datasets to improve decision 
making in urban energy planning, enhancing asset efficiency and service 
provision. Advanced spatial energy planning, with GIS and digital twin modelling, 
maps local potential and measures impacts before implementation. The VESTA-
MAIS model in the Netherlands is a spatial energy planning model that forecasts 
the energy use and CO2 emissions of the built environment until 2050. The 
potential benefits and costs of building measures such as insulation and heat 
pumps, and spatial measures such as district heating, geothermal and heat 


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exchangers, can be calculated integrally. Effects on avoided CO2 emissions, 
energy use, investment costs and financial benefits can be identified to improve 
planning. The model is open source, so municipalities, utilities and others can 
also access it. 
Planning models like these aid in locating high-value energy efficiency 
interventions and planning mixed-use zones to flatten demand curves and 
reduce CO2 emissions. Areas needing efficiency interventions in urban planning 
can be identified by mapping heating and cooling demand and combining 
weather and demand data. There are an increasing number of assets that can 
provide granular and more real-time data for decision making.  
Data challenges can be overcome by leveraging AI and 
machine learning 
As increasing numbers of digitally enabled technologies come online offering 
data points from nodes all across the grid, the analytical methods traditionally 
used become overburdened by the sheer volume and speed of data availability. 
However, technological advances in the fields of AI and machine learning in 
recent years are presenting the potential not only to overcome data bottlenecks, 
but also to make great leaps towards new applications not thought possible even 
up until very recently. The major advancements are that AI drives down the time 
taken to perform big data analytics and repetitive tasks can be done with the help 
of machine intelligence, reducing human input and error, and improving the 
degree of precision. 
Global stock of smart meters, 2010, 2020-2023 
 
IEA. CC BY 4.0. 
Note: For 2023 data “E” indicates estimated total. 
Sources: IEA analysis based on data from Guidehouse and BloombergNEF. 
 
0
 200
 400
 600
 800
1 000
1 200
1 400
2010
2020
2021
2022
2023E
Million units
Middle East &
Africa
Latin America
Asia Pacific
Europe
North America


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Previously, insufficient volume and quality of industry data hampered efforts to 
attain better insight, but modern digital transformations have driven progress, 
with emerging uses of AI beginning to be considered. 2023 marked a significant 
milestone as the global count of smart meters exceeded 1.2 billion, representing 
a remarkable tenfold increase compared to 2010. In a wider context, the number 
of connected devices equipped with automated controls and sensors to monitor 
and measure energy use and flows is projected to exceed 13 billion in 2024. 
Projections further indicate that this figure could soar to 25 billion or more by the 
year 2030. This extensive deployment of smart meters and advanced sensor 
technology is already generating large volumes of data. Making use of these data 
necessitates the deployment of cutting-edge storage and analytical tools. 
Additionally, there is a trend towards increased consumer engagement in energy 
systems. Given greater data availability, and the will to capitalise on the data, 
there is also a need to manage increasingly large and complex data sets and to 
ensure strong data governance. However, many energy utilities currently do not 
have analytics departments, suggesting that these organisations are missing out 
on the opportunities better data offer. There is also a growing need for 
organisations to increase collaboration between departments on data and data 
management. 
AI could be a useful tool to leverage consumption data, while preserving 
consumer trust and safety. AI-generated synthetic datasets can produce realistic 
profiles for each consumer archetype, not attributed to specific individuals. In the 
United Kingdom, the Centre for Net Zero has developed Faraday, a generative 
AI model trained on existing smart meter data and capable of providing realistic 
synthetic consumer profiles. This allows for protection of customer data while 
enabling policy makers, planners and operators to model impacts of changes 
such as new types of tariffs, uptake of EVs, new building developments, and 
extreme weather.  
It is also possible to examine power system resilience. In Ireland, the state 
electricity distribution system operator has partnered with an AI modelling 
platform to mitigate the impact of extreme weather events on energy supply, with 
results of the digital twin analysis available in weeks rather than months of 
manual input.  
The Building Energy Efficiency (BEE) Pilot is a project developed in the cities of 
Helsinki, Finland, and Stavanger, Norway, to shift energy consumption to times 
of high availability of renewables. The system is linked to the building 
management system (BMS), where it gathers data on energy consumption as 
well as indoor air quality data. The AI-based system forecasts the next day’s 
energy grid mix and weather conditions, and adjusts how energy is used in the 


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building. Based on the initial simulations, a 10-20% increase in use of renewables 
and 15-20% energy savings through optimised control are possible. 
While the use of AI in energy systems is still at a nascent stage, applications are 
emerging – from power generation through to supply, transformation and end 
use.  
Use of AI for urban energy system applications 
Application 
Impact 
Texas utility ONCOR uses machine learning and AI 
technologies to identify overloaded equipment to 
target for predictive maintenance, and identify 
geographic areas where vegetation poses a safety 
risk to transmission lines. 
In 2019, 2 000 power quality 
issues detected before causing 
an outage, avoided 5 000 
potential outages from 
overloaded or damaged 
transformers.  
E.On’s self-learning algorithm predicts when medium-
voltage cables on the grid need to be replaced, using 
data on power flows and weather. 
E.On research suggests the 
technology can reduce the 
number of outages by 30%. 
Hepta Airborne uses a machine learning platform in 
combination with drone footage of transmission lines 
to analyse images of the line for defects within 
15 minutes. 
250 km of lines analysed in 
5 minutes, and on average 11 
more defects per line-km 
identified. 
Nokia AVA Energy Efficiency – an energy 
management system – uses a range of AI 
applications to reduce power demand in 
telecommunications networks. 
Up to 30% energy savings and 
lower CO2 emissions from 
telecommunications radio 
network. 
Octopus Energy’s Kraken is a software platform, 
based on advanced data and machine learning 
capabilities, that allows management and optimisation 
of resources. 
40% reduction in cost to serve 
customers, according to 
Octopus Energy. 
The United Nations Innovation Technology 
Accelerator for Cities (UNITAC) developed an 
AI-based tool to identify rooftops and evaluate 
structure footprints in the city of eThekwini, including 
a focus on informal settlements. 
Help develop solutions for 
informal settlements through 
ability to map rooftops across 
the entire city in 72 hours. 
 
Increased use of AI warrants efforts towards monitoring and counteracting risks, 
including potentially increasing energy demand. Appropriate data safeguards 
also need to be in place to ensure privacy and security. Furthermore, increased 
use of automated and self-learning software raises questions about who is 
responsible for the outputs or outcomes of these systems – if noncompliance with 
regulations occurred due to the failure of the analytical model, or if there was a 


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privacy leak, for example. In an effort to address some of these issues, the OECD 
AI Principles – adopted by OECD member governments and many non-member 
governments – provide guidance on pursuing a human-centric approach to 
trustworthy AI. Efforts are also underway to understand and assess the impacts 
of AI in the urban context, map risks and explore governance considerations.  
Smart, integrated infrastructure investment 
planning  
Many regions have understood the need to invest in power grids to enable 
economies to continue to flourish, expanding and reinforcing them to anticipate 
future demand. The European Union, for example, recognised the need for 
anticipatory investment and is introducing regulatory incentives for forward-
looking grid build-out as part of the Action Plan on Grids announced in 2023. 
Substantial investment is needed for the transformation of the energy system, 
and planning at the national and urban level plays an important role in managing 
this investment to maximise benefits. Urban grid planning should extend beyond 
the grid to consider the changing shape of customer load profiles and the 
increased demand for electrification of transport, heating and cooling. 
Smart planning solutions are being tested in many locations, where decision 
makers are taking a more inclusive approach to the energy transition decision-
making process. The Local Inclusive Future Energy (LIFE) City platform in 
Amsterdam is testing innovative solutions for the clean energy transition. 
Focusing on Amsterdam Zuidoost, the project aims to reduce the need for grid 
expansion through smart energy management. A digital twin covers charging 
stations, solar panels, buildings, heat pumps and a mobility hub, digitally 
interconnected to explore system optimisation using data and AI.  


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Local Inclusive Future Energy City Platform, Amsterdam  
 
Source: Spectral Energy (2021), LIFE: A Holistic View on Energy Innovation, as modified by the IEA . 
In Italy, the Bologna Digital Twin project was deployed with the aim of optimising 
existing datasets, infrastructure and other solutions that were available but not 
fully utilised. The municipality is placing a strong focus on ensuring that the tool 
provides value for people and communities, including improved local social 
policies through better insights and using data to enhance services to inhabitants. 
In the United States, the New York State Public Service Commission has initiated 
a process towards an Integrated Energy Data Resource that securely collects, 
integrates and provides access to a large and diverse set of energy-related data 
and information on one state-wide platform. It is expected that this data will be 
available to support urban and energy planning processes towards higher levels 
of clean energy and demand-side flexibility, as well as to facilitate the 
development of new business models such as community solar and demand-
side flexibility aggregation. Also in the United States, in California, efforts are 
underway to explore electricity price-based grid co-ordination and an associated 
reference data model. The objective is to develop a simple system for data flows 
that make it possible for consumers to have their devices react to changes in 
price – the changes in price would be based on the grid’s need for flexibility.  
 


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Smart grids in Latin American cities: São Paulo and Bogotá 
Enel's Urban Futurability project in Vila Olimpia, São Paulo, represents the 
combination of ground-breaking technologies for the power grid and the proactive 
engagement of local stakeholders and communities in a “living lab” to co-design 
and create an open data platform. This will help stakeholders to contribute to and 
potentially co-finance new solutions by providing better understanding of energy 
and other resource use, efficiency and savings opportunities, environmental risks 
and mitigation options. The technologies applied include self-healing grid 
capabilities, safer and more resilient underground cables, smart lighting and 
electric mobility initiatives. The project features South America's first network 
digital twin, a 3D model using 5 000 sensors for real-time communication. It 
supports grid resilience, a reduction in the duration and frequency of outages, and 
enhanced future power system flexibility by leveraging the potential of grid-
connected buildings and electric mobility. 
More broadly, Enel has installed 500 000 smart meters in the São Paulo 
metropolitan area, one of the largest deployments in Latin America, investing a 
total of BRL 470 million (Brazilian reals 2 ; USD 95 million). A third of the 
investment was supported by the Brazilian Regulator, ANEEL, as part of its R&D 
programme, aimed at stimulating innovation in the Brazilian electricity sector to 
improve security of supply and reduce environmental impacts. Smart meters act 
as grid sensors, bringing benefits to the system and the consumers, such as 
operational efficiency thanks to remote operation, reductions in energy losses, 
shorter outage durations and more accurate billing. Tariffs based on time of use 
and dynamic tariffs can also be easily implemented allowing for energy use cost 
savings and service differentiation. 
A similar Urban Futurability approach has been replicated in Bogotá, where Enel 
is implementing a digital circular city model as part of the Progresa Fenicia Project 
led by the University of Los Andes. This is a participative urban renovation project 
implemented under the municipality’s Urban Renovation Partial Plan and will 
assist the municipality to improve the quality of life of residents from a social and 
environmental standpoint, strengthening the offer of affordable housing and 
supporting the economic rehabilitation of the area. Currently, the digital twin of 
the Fenicia project is being developed, connecting and analysing data from 
buildings, roads and public spaces, streetlights, and weather and air quality 
sensors.   
 
 
2 Exchange rate: 1 Brazilian Real (BRL) = EUR 0.18 = USD 0.20 (as of 05 April 2024). 


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Using sound frameworks for data-driven 
urban planning 
There are many examples of good practices at the local and regional level that 
focus on data-driven urban planning. These case studies highlight urban 
planning that incorporates data ecosystems, data sharing and innovation, and 
which has the potential to be scaled up, sustained and further developed. 
Clear data governance frameworks are essential for efficient data management, 
protection and transparency. Data visibility, including well-described metadata, 
is crucial for effective use. The open source Energy Transition Model is one such 
tool for national and local agencies to perform energy simulations to enable 
informed decision making. 
The Energy Digitalisation Taskforce, commissioned by the UK government, 
Ofgem and Innovate UK, published a report with recommendations on 
modernising the energy system. The taskforce outlined the first step as unlocking 
smart meter data and initiated a study to examine the opportunities, risks and 
potential architectures. Additionally, a feasibility study has been carried out to 
establish a “digital spine” for the energy system in support of delivering 
interoperability across the energy sector, through defined governance roles and 
responsibilities that will enable the secure exchange of energy system data. 
The European Union is monitoring the progress of cross-border interoperable 
data services, to give priority to reuse of existing data and to initiate automated 
data collection to reduce the reporting burden on member states through the 
Interoperable Europe Act proposal. Efforts are also underway to create a 
common data space for smart and sustainable cities and communities, with the 
development of the Common European Energy Data Space to design a 
mechanism enabling data sharing across energy and non-energy domains.  
India has developed a Data Smart Cities framework in collaboration with city-
level governments to enable cities to better handle data and solve complex urban 
challenges. The Indian government launched an open data platform to centrally 
collect datasets from cities. While it is continuously expanding, the platform 
currently contains over 3 500 data catalogues. The India Smart Cities Mission 
has also developed a strategy and roadmap for data smart cities and a data 
maturity assessment framework.   
In Australia, the scale and growth of rooftop solar has already exposed the 
complexities and challenges of operating a power system that sources a 
substantial portion of its energy from individual homes. The Australian Energy 
Market Operator, in collaboration with several key organisations, is currently 
implementing several projects to develop the data exchange, modelling and 


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monitoring tools to ensure better visibility of distributed energy resources and 
their impacts on the electricity system. Australia’s Project EDGE, developed in 
collaboration with utilities, the system operator and the regulator, defines clear 
guidelines for data ownership, access, quality and completeness.  
In New Zealand the FlexTalk platform has been designed using Open Automated 
Demand Response (OpenADR) to trial how flexibility from EVs could be 
accessed and scaled up to include further demand-side assets. 
Platforms, tools and regulation can help policy makers 
use city data effectively  
A range of initiatives and pilots are seeking to address part of the data challenge 
and demonstrate that the technical prerequisites for power system data 
ecosystems already exist. In recognition of the escalating complexity, various 
jurisdictions have embarked on different approaches, acknowledging that 
entrusting utilities with developing bespoke solutions is insufficient. Instead, they 
are looking for comprehensive and collaborative solutions to tackle this evolving 
challenge head-on. Over the past two decades, a wide range of national and 
international bodies have been developing interoperability standards for energy 
system assets, including customer-owned assets.  
To ensure sufficient communication network stability, security and coverage to 
support data-driven planning and processes, it is also important for cities to bring 
together telecommunication network operators and grid developers to build 
communications and data resilience. The International Telecommunication 
Union, the United Nations specialised agency for information and communication 
technologies, is working with countries to improve access to digital technologies 
to underserved cities and communities. They additionally develop technical 
standards that ensure that networks and technologies interconnect seamlessly, 
to support climate change adaptation and mitigation actions in cities.  
Developing interoperable data registries is essential for effective electricity 
market functioning. Regulators can establish rules regarding data formats, 
exchange protocols, governance and consumer consent mechanisms. Initiatives 
like the Norwegian Elhub data hub and the Green Button Data service in the 
United States demonstrate effective centralised and decentralised data 
management. Cape Town's SmartFacility platform integrates smart meter data 
for decision making. International co-operation, like the Data4Cities Initiative, 
fosters data access and standardisation. 
Steps are being taken to enable better access to energy data. In June 2023 new 
EU rules were adopted to regulate access to electricity metering and 
consumption data. These rules aim to protect consumers, empower them in the 


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energy transition and establish common reference models for data in EU 
countries, allowing consumers to permit third-party data access. In the 
United Kingdom, the regulator Ofgem has established that data best practice 
includes a requirement for aggregated smart meter data to be presumed open 
as part of the Digitalisation Strategy and Action Plan Guidance.  
Increasing focus is being placed on developing platforms and tools for more 
effective use of city data. For instance, the Global Covenant of Mayor’s Data 
Portal for Cities is an open data platform that helps communities fill critical 
information gaps by providing estimates of previously unavailable data drawn 
from national and regional sources. 
Additionally, moving from a one-off project mindset towards a planning approach 
driven by key performance indicators (KPIs) can also enhance the effective 
deployment of smart grid and city solutions. This shift involves moving beyond 
isolated initiatives and embracing a systematic framework that emphasises 
performance metrics and how to leverage existing open-source or new data to 
build such metrics. Building on international best practices, the OECD is 
developing harmonised indicators for smart cities across the dimensions of well-
being, inclusion, sustainability and resilience. The United for Smart Sustainable 
Cities (U4SSC) Initiative’s KPIs are a consistent and standardised method to 
collect data on a wide range of economic, environmental, societal and cultural 
factors “to assess the achievement of sustainable development goals”. Over 200 
cities worldwide are already implementing these KPIs. 


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Chapter 5: Creating the conditions 
for implementing smarter urban 
energy systems  
Key takeaways 
• 
A range of barriers are constraining large-scale implementation of smarter urban 
energy systems.  
• 
The lack of an enabling policy and regulatory environment can constrain action 
and the development of new business models.  
• 
Without additional efforts in capacity building, reskilling and upskilling and 
attracting new talent, there is a risk that the implementation of new solutions and 
approaches will stall and that the full range of benefits from digitalisation will not 
be captured. 
• 
Cities and utilities are still facing significant challenges in accessing finance for 
smart project implementation; policy makers can remove obstacles and promote 
the development and use of new approaches. 
• 
Solutions to these challenges are starting to emerge and there is a growing body 
of promising approaches that are being developed and tested.  
The challenges facing smart cities 
Despite some progress, implementation is lagging  
While some progress has been made in areas such as smart grids, smart urban 
solutions and demand response, the widespread adoption of clean energy 
strategies 
is 
lagging. 
Ongoing 
challenges 
are 
preventing 
large-scale 
implementation despite a growing evidence base on the need for and benefits of 
smarter urban energy systems.  
Pilot and demonstration projects have great potential, but may not always lead to 
faster diffusion due to a lack of mechanisms to further develop a scalable solution. 
Often there is a lack of skilled personnel with knowledge of moving from 
demonstration to larger deployment. Frameworks for data governance, data 
sharing and interoperability may be missing, and complementary infrastructure 
may not be in place. Funding gaps are also a key blockage, reflecting the lack of 
a transparent financial ecosystem.  


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Three key interrelated areas need addressing: 
• 
Enabling regulatory environments that allow for testing, investing in and deploying 
new solutions. 
• 
Skills and capacity to develop projects and leverage new technologies. 
• 
Access to finance.  
Solutions to address these challenges are being developed and tested around the 
world, as discussed in the following sections.  
Overview of challenges facing smarter sustainable cities  
 
IEA. CC BY 4.0. 
 
Navigating regulatory challenges in energy 
innovation 
Nurturing innovation in the energy sector encounters various challenges. They 
encompass intricate regulatory environments, a dearth of clear guidance for 
innovators, restricted access to resources for smaller entities, risk aversion among 
regulators and policy makers, fragmented collaboration among stakeholders, and 
challenges in assessing the impact of projects. But policy makers and regulators 
have options for overcoming these hurdles, in particular:  
• 
Simplifying regulatory procedures. 
• 
Offering transparent guidance and resources. 
• 
Fostering collaboration. 
• 
Encouraging a culture of experimentation and risk-taking to cultivate a supportive 
environment for energy innovation. 


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Regulatory experimentation can be instrumental in overcoming barriers and can 
be pursued by using regulatory sandboxes, regulatory pilot projects and pilot 
regulation. These may often be necessary to reduce the potential for exposing bill 
payers to cost uncertainty. When developing new regulations, policy makers can 
hold public consultations and establish regulatory sandbox programmes to 
facilitate temporary rule exemptions for innovators to trial promising new solutions 
that require regulatory adaptations.  
In the United Kingdom, the regulator Ofgem has established a policy instrument 
called the Future Regulation Sandbox to test and trial changes to its energy 
rulebook in a controlled environment before implementing amendments. Among 
recent developments to facilitate smart grid deployment, Brazil is testing new tariff 
structures on more than 40 million customers across the country. 
The European Union has recently established a regulatory sandbox to test 
blockchain applications, Portugal is currently focusing on local energy community 
pilot projects, and Spain has just closed a first tender for projects to inform 
regulatory innovation in support of flexibility. 
City-level sandboxes provide further opportunities to test innovative solutions that 
do not fit into pre-existing regulation and policy landscapes. In Brazil, Rio de 
Janeiro has developed a sandbox to help innovation and the deployment of 
technology, and to understand what changes are needed to create receptive 
regulatory frameworks. All projects will undergo an impact assessment to 
determine what further actions are needed. In Korea, the Smart City Sandbox 
programme has been in place since 2020 under the Smart City Act, allowing the 
testing of new technologies and services.  
To facilitate experimentation options, policy makers can create specific 
co-ordination and information offices at the national level to provide guidance to 
regulators on experimentation across different sectors, such as the Canadian 
Centre for Regulatory Innovation, and create resources for this purpose, as 
Germany has done.   
Toolkits and one-stop shops can also be created to help innovators understand 
regulation and options for experimentation and facilitate participation from smaller 
entities. Examples include Australia’s Energy Innovation Toolkit and Japan’s 
single point of contact for applicants at the Cabinet Secretariat. This need also 
emerged in the United Kingdom, where innovators applied for regulatory 
sandboxes to receive clarification and regulatory advice, finding out that in most 
cases a sandbox was not necessary for them to test innovation. This resulted in 
guidance for innovators and a point of contact to support them.  
 


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Regulatory experimentation in Italy 
Since 2010 the Italian energy regulator, ARERA, has been implementing a variety 
of innovative regulatory approaches for learning purposes and to adapt incentive-
based regulation in support of decarbonisation and power system transformation. 
This has taken place across several distinct phases: 
 
Phase one (2010-2012) focused on testing smart grid technologies, storage 
and dynamic thermal rating in critical portions of the grid, to design appropriate 
incentives for mass adoption.  
 
Phase two (2017-2021) introduced system-level experimentation through pilot 
regulation, adopting new and transitional regulatory schemes.  
Several notable examples of pilot regulation include the following: 
In 2017 demand-side resources began being able to provide flexibility services for 
grid stability through virtual aggregation. Around 1.3 GW of aggregated resources 
have been made available and lessons learned so far are informing new regulation 
on dispatching, with implemented anticipated from 2024. 
In 2020 pilot regulation allowed new tariffs and business models for self-
consumers located within the same building or multi-apartment block, enabled by 
smart meters. Lessons from this transitional phase were reflected in the integrated 
text for self-consumption, adopted in 2023. 
In 2021 pilot regulation was introduced to incentivise private EV charging during 
off-peak hours. In parallel, the Italian committee for electrotechnical standards has 
been working on interoperability in the communication between aggregators and 
smart wallbox EV chargers. 
During this phase, stakeholder engagement and public consultations were also 
strengthened. 
 
Phase three (2022-2025) continues to promote innovation, focusing on the 
opportunities offered by digitalisation to empower consumers and improve 
services, and on the innovative regulation of ancillary services, self-
consumption and energy communities. Further experimentation will assess 
whether the current regulatory model sufficiently allows distribution system 
operators to take greater responsibility for ancillary services and grid 
management. This will take place alongside several pilot projects carried out 
by Italian distributors, testing the use of distributed energy resources in local 
flexibility markets and a range of planning tools (see Chapter 2 for further 
details).  
 


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Developing digital skills and capacity for 
smart urban energy systems 
While digital technologies create far-reaching opportunities for cities and the 
energy sector, there is a risk that the lack of skills, including skills related to data 
and technology and soft skills, will constrain urban power system modernisation 
and may lead to investments in digital technologies being underutilised. Updating 
education programmes and vocational training, designing tailored capacity 
building, widening access to expertise and guidance, and ensuring inclusivity can 
all help address this risk. 
The new foundational skills of the digital economy 
 
Source: Burning Glass Technologies, Center for Innovative Technology, The Business-Higher Education Forum (2019), 
Future Skills, Future Cities, as modified by the IEA. 
 
The demand for the digital skills needed for smart cities is predicted to increase 
twice as fast as the overall national level. Implementation may stall because 
municipalities and critical organisations lack digital as well as traditional skills and 
the necessary human and infrastructure capacity to develop comprehensive smart 
city initiatives. This particularly relates to integrating systemic approaches to urban 
services in municipal administrations, which are frequently structured in siloes. 
Also, as cities evolve they will host increasing numbers of data flows, but many 
local governments do not yet have the skills and the infrastructure for collecting, 
storing and analysing such data. In the energy sector, data science skills will 
become more important, and AI and machine learning understanding will become 
increasingly necessary to fully achieve net zero ambitions. 
 
 


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Key actions to fill the skills and labour gap in urban power system modernisation 
 
IEA. CC BY 4.0. 
 
Some cities and national governments are offering training to city officials. For 
example, in South Africa a skills training programme was provided to 
Johannesburg city officials to support them in effectively implementing national 
and city-level policies in energy efficiency and green energy codes. Egypt has 
trained more than 12 000 government employees to build the digital skills needed 
to move to the New Administrative Capital, with programmes on digital project 
management as well as digital transformation to combat corruption. In 2020 the 
Cities Today Institute, a global collaborative network for cities, launched an 
education and training non-profit, the Urban Leadership Foundation, to support 
chief technology officers, chief information officers and their teams prepare for a 
digitised future. In Colombia the Ministry of Information and Communications 
Technologies launched training to close the digital skills gap  of professionals in 
the ICT industry, where up to 90% of the tuition costs are covered. 
Sharing knowledge and providing guidance and 
technical support drives urban energy transformations 
Several initiatives are underway to develop toolkits and initiatives geared towards 
assisting cities and communities adopt and implement smart city solutions, digital 
transformation and sustainable practices. In Canada, a smart city toolkit has been 
developed to provide guidance on a range of smart city applications and 


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technologies with a focus on how data and technology can be applied to existing 
and new types of municipal services.  
With a view to promoting open-source data sharing, the Digital Cities Toolkit 
developed by UN Habitat is a policy toolkit to help develop people-centred, 
sustainable smart cities. It covers policies, data for the public good and technology 
procurement. Other capacity-building tools look to regions undergoing change. 
The UN entity the International Telecommunication Union has developed the 
Toolkit on Digital Transformation for People-Oriented Cities and Communities to 
provide a comprehensive guide to the digital transformation of cities and 
communities, aimed at local government leaders, urban planners and city officials.  
One proven method of improving collective knowledge is sharing best practice 
advice, highlighting successful projects that have tested new innovative methods, 
and also providing technical assistance in the early stages. Mission Innovation’s 
Urban Transitions Mission works to support cities to scale up innovative people-
centred solutions such as distributed renewables, digital solutions and zero-
emissions mobility, and by collaborating with national governments, international 
organisations, the private sector and financial institutions. There is also benefit in 
learning not just what worked, but also understanding what prevented wider or 
more rapid success. The European Union has set up the Smart Cities 
Marketplace, which provides a map of European smart city projects, including an 
overview of results achieved, barriers encountered and lessons learned. It also 
provides resources and support for implementation, including technical 
assistance. 
To achieve the change that is necessary, and at the pace needed to stay on track 
with a pathway consistent with achieving net zero by 2050, it will be necessary to 
test many new solutions and technologies in many different regions and find what 
works well in diverse locations. The Mission Innovation Green Powered Future 
Mission aims to demonstrate that power systems in different geographies and 
climates can effectively integrate up to 100% renewable energy and maintain a 
cost-efficient, secure and resilient system. The initiative is implementing 80 pilot 
projects across different geographies, with an approach that avoids duplication 
and is focused on scalability and replicability. Other projects such as the 
EUR 345 million EU Horizon 2020-funded project, the Scalable Cities initiative, 
brings together 18 smart cities and communities to identify and promote energy 
solutions and business models that can be scaled up and replicated and lead to 
measurable outcomes. It has implemented more than 550 demonstrations of 
technological and social innovations in the areas of mobility and logistics, 
buildings, urban data and digital infrastructure, people’s engagement and urban 
governance. 


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Inclusive programmes for skills development can break 
down barriers to clean energy opportunities 
Targeted programmes and initiatives can help ensure that underrepresented 
groups benefit from clean and digital energy transition opportunities. The UN 
Development Programme and the Union of Municipalities of Türkiye have 
announced an EUR 8 million four-year digital vocational training initiative targeting 
a first round of 4 000 students and youth in cities across the country, while also 
upskilling municipal employees and working with youth-focused NGOs. In 
South Africa, in a larger-scale project, the city of eThekwini has recently set the 
target to train 1 million young people with IT skills in the next three years. 
Several cities have identified the potential for the new energy economy and are 
developing green jobs programmes to train people, focusing on supporting 
underrepresented, low-income and unemployed people. In Brazil the city of 
Belo Horizonte, in collaboration with the United States, has launched the Coding 
Dreams in Vilas and Favelas initiative to foster digital inclusion by providing 
vocational training to residents of the vilas and favelas. Since 2019 the Coding 
Dreams programme has trained over 1 000 people. In the United Kingdom, the 
Green Skills Academy was launched in 2022 by London City Hall to provide 
training in green jobs to underrepresented groups, and aims to support 3 000 
learners into jobs and 3 700 people into new training and learning. 
Strategies and solutions for financing urban 
energy innovation 
While both cities and electricity utilities face challenges in using their budgets to 
invest in digital technologies and new solutions, they can also face challenges in 
accessing finance and participating in projects and partnerships. Risk perceptions 
and lack of methodologies to quantify the full range of benefits from projects can 
further limit access to finance.  
Public funding can help de-risk projects and attract 
private financing   
Public funds can be used to de-risk and attract private financing. In the 
United States, as a result of the US Infrastructure Investment and Jobs Act, 
funding of more than USD 1.2 trillion will be available to help cities and 
communities build a range of smart city projects, such as the deployment of 
vehicle-to-grid technologies or the development of transport planning tools. In 
Europe, the Next Generation EU recovery plan allocated EUR 5.4 billion to its 
research and innovation Horizon Europe programme, which will contribute to 
 


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funding the Climate-Neutral and Smart Cities Mission. This aims to create 
100 climate-neutral smart cities by 2030, which would serve as pilots to enable all 
European cities to follow suit by 2050. 
Sharing financial knowledge and skills, offering direct financial aid for capacity 
development and facilitating connections between different funding sources can 
help improve access to finance. Robust methodologies to assess the full costs 
and benefits of options can help alleviate risks and facilitate access to finance. 
The International Smart Grid Action Network has developed a smart grid 
evaluation toolkit that helps identify smart grid planning options through a techno-
economic assessment that integrates cost-benefit analysis within a multi-criteria 
framework. Similarly, cities can benefit from tools to better assess the full set of 
costs and benefits.  
To overcome investment barriers and leverage the impact of public resources, an 
increasing number of public green banks and green bank-like entities have 
emerged, offering green financial products to leverage public and private capital 
that unlock access to funding for projects aiming to reduce emissions, improve 
efficiency and provide resilience. There are examples of many successfully funded 
projects in the United States, India, Indonesia and France. 
International and multilateral financial institutions can provide funding and tools to 
support urban-led action. The European Bank for Reconstruction and 
Development launched its Green Cities Framework in 2016 to systematically 
promote sustainable urban development in more than 50 cities in 25 countries, 
with more than EUR 5 billion invested across around 90 projects, saving 
4.6 million tonnes equivalent of CO2, equivalent to removing over 1 million cars 
from the road.  
 
Analysis of G7 investment and priorities reveals trends in government energy 
spending 
Total energy-related government spending, as monitored by the IEA’s Government 
Energy Spending Tracker, has risen significantly since the start of the Covid-19 crisis. 
As of June 2023 governments globally had spent more than USD 2.2 trillion since 
April 2020, with G7 countries accounting for 63% of total investment. Germany and 
Japan spent around 73% of their total energy-related spend on supporting energy 
affordability, followed by France and the United Kingdom at around 60%.  
Energy efficiency-related investment – including spending on efficient buildings and 
industry and low-carbon and efficient transport – accounted on average for around  


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33% of spending, approaching 53% and 75% respectively in Italy and Canada. The 
United States also spent 3%, equivalent to USD 16.3 billion, supporting people-
centred transitions programmes. 
Government energy-related investment support (left) and spending areas in G7 
countries (right), April 2020-June 2023 
 
IEA. CC BY 4.0. 
Source: IEA (2023), Government Energy Spending Tracker: Policy Database, accessed February 2024. 
 
Green, social and sustainable bonds create economies 
of scale 
Some cities, with support from national governments, the private sector and 
international organisations, are addressing barriers and developing new business 
models and approaches to fund sustainable energy projects and implementation. 
Green, social and sustainable bonds are becoming an attractive instrument to 
finance low-carbon projects in cities. By bundling into one investment multiple 
projects that otherwise may have difficulty attracting investors due to low value, or 
uncertain returns, bonds can provide economies of scale and attract new 
investors. According to a recent market update by the World Bank, local 
governments have to date issued USD 21 billion in green bonds. Funds raised are 
being used for many different applications. In Canada, the city of Toronto has 
issued green bonds for investment in renewables, energy efficiency and green 
building projects. The city of Reykjavik, Iceland, has issued a green bond 
framework focusing on the low-carbon economy, such as buildings energy 
efficiency, clean transport and adaptation measures. Navigating financial markets 
can be challenging, but some governments are providing detailed guidance. 
Colombia produced a comprehensive guide for municipalities on co-financing 
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Canada
France Germany
Italy
Japan
United
Kingdom
United
States
Energy affordability
Low-carbon and efficient transport
Energy-efficient buildings and industry
Low-carbon electricity
Fuels and technology innovation
Electricity networks
Other
People-centred transitions
Rest of the world
United States
Germany
Italy
France
Japan
United Kingdom
Canada


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smart cities, which delineates national and local-level financial resources, as well 
as international co-operation and private funding, that can be used according to 
the type of project, including smart grids and renewables in cities.  
Mixing and matching public and private funding creates 
scale  
Private capital can help fill the investment gap, but challenges inherent in smart 
grid and smart city projects may impede private investment, including the risk 
associated with new technologies, difficulty in monetising socio-economic 
benefits, and the lack of a clear path to return on investment. Analysis by the  
European Commission has determined that more than 40% of European smart 
city projects were financed from both combined public and private funds. In Rio de 
Janeiro, Brazil, public–private partnership investment of almost USD 190 million 
was used to replace more than 450 000 public lights with high-efficiency LEDs as 
part of the Smart Luz project. Around 70% included IoT sensors, enabling efficient 
operation through remote monitoring and control, with an additional 
20 000 sensors providing data such as rainfall levels.  
As part of the US Smart Cities Challenge, Columbus, Ohio, received a 
USD 40 million Department of Transportation grant, along with USD 10 million in 
philanthropic support, which enabled the city to attract more than USD 100 million 
of private sector investment. The municipality used the finance to transform the 
city’s transport system, including deploying a digital tool and promoting ride 
sharing to reduce fuel usage and improve mobility for lower-income communities. 
The initiative has reduced traffic congestion, has seen EV adoption above regional 
averages, and has created or induced more than 2 300 jobs. In Spain a model 
was developed in Barcelona to combine clean energy and efficiency with rooftop 
solar PV and building energy retrofits. This pilot project has led to a strong pipeline 
of projects for implementation, with around 1 500 individual participants 
registering their interest in hosting PV installations on their buildings.  
The C40 Cities Finance Facility, funded by the German, UK and US governments, 
facilitates access to finance for climate change mitigation and resilience projects 
in urban areas. Similarly, the City Climate Finance Gap Fund is supporting cities 
in emerging market and developing economies to design urban growth scenarios, 
and prioritise what sort of policies and investment mechanisms can support 
implementation. The EU Smart Cities Marketplace provides support in developing 
projects and matchmaking for the financing of urban projects and intensification of 
partnerships with existing initiatives. Since 2018, this initiative has been able to 
match approximately 130 projects with a value of more than EUR 600 million in 
investment. 


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Chapter 6: New approaches to pilots and experimentation  
 
for large-scale implementation  
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Chapter 6: New approaches to 
pilots and experimentation for 
large-scale implementation 
Key takeaways 
• 
Pilot projects can be useful for testing and de-risking early-stage digital energy 
solutions in emerging markets. They reduce subsequent costs and time while 
providing valuable evidence and insights. The involvement and innovation of non-
traditional actors in regulatory aspects also support successful outcomes. 
• 
Strengthening international collaboration and knowledge sharing is crucial for 
developing common practices and standards. Collaborative projects can 
accelerate urban energy transitions at a lower cost, providing evidence for the 
value of digital solutions. 
• 
The 3DEN/UNEP pilot projects in India, Morocco, Brazil and Colombia showcase 
the benefits of advanced digital technologies. They aim to improve energy 
management, enhance affordability and manage grid flexibility, with quantifiable 
outcomes like energy savings and CO2 emission reductions. 
Accelerating implementation in emerging markets and 
developing economies 
Emerging economies require further investment in early-stage digital energy 
solutions to leverage renewable resources, enhance supply security and increase 
energy access. Pilot projects can help de-risk such initiatives by testing 
technologies in limited areas, reducing implementation costs and time. New 
approaches such as demand response and community initiatives need not only 
new technologies, but also involvement from non-traditional actors and innovation 
in regulatory, institutional and social aspects. Pilots offer real-life evidence and 
adaptability insights, while international collaboration and capacity building 
facilitate best practice sharing and project scaling. 
Strengthening international collaboration and knowledge sharing is vital to 
developing common practices and standards and identifying areas where 
innovation can be leveraged jointly, accelerating progress in urban energy 
transitions at a lower cost. Collaborative demonstration projects can provide 
valuable lessons on how to manage digital technologies on a larger scale and 
create evidence for the value created by digital solutions and technologies, which 
can, in turn, help de-risk future investments. 


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To accelerate action, UNEP and Italy’s Ministry for Ecological Transition are 
teaming up to support the digitalisation and development of flexible and resilient 
energy systems for the urban context and beyond. They have developed a novel 
smart grid pilot programme that is providing insights and evidence for the IEA’s 
Digital Demand-Driven Electricity Networks (3DEN) Initiative, on the policy, 
regulatory, technology and investment context needed to accelerate progress on 
power system modernisation and effective utilisation of demand-side resources. 
Four pilot projects are currently underway, which together aim to test new 
approaches to demand-side and distributed energy resources across a range of 
contexts, revolving around the principles of replicability and scalability.  
Digital twin for enhanced electric distribution grid 
operation and management (India) 
A pilot project, led by Panitek Power, is implementing digital twin technology for 
the first time in a fast-changing low-voltage distribution network in a southern part 
of New Delhi, India. Digital twins can efficiently integrate diverse data sources, 
offering distribution companies valuable insights for effective grid operation and 
management, and strategic planning for optimal asset deployment and upgrades. 
At the same time, the increasing penetration of rooftop PV and EV charging points 
presents additional challenges in grid operations. This initiative aims to provide 
crucial visibility on the network, empowering utilities to make real-time informed 
decisions on the one hand, and on the other to help defer the need for substantial 
investment in grid infrastructure, which is particularly significant considering the 
escalating number of electricity consumers in India. In the 19 months preceding 
January 2024, 29 million new household connections were added to the existing 
residential customer base of 267 million in 2022.  
The distribution sector in India is grappling with financial and operational 
sustainability issues, with significant technical and commercial losses in parts of 
the Indian distribution network. Pinpointing the sources of these losses is crucial 
for remediation efforts.  
The project covers 3 600 residential and commercial consumers, and measures 
various metrics, including implementation, performance, environmental impact 
and cost savings. The goal is to establish the tangible value of digital twin 
technology and provide recommendations for best practices. This comprehensive 
approach generates high-quality evidence that can guide policy makers in 
supporting the widespread implementation of this technology across India and 
beyond.  


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Implementation of advanced digital industrial and energy 
monitoring systems (Morocco) 
Decarbonisation of industry is a strategic priority for Morocco and the country is 
targeting a 20% reduction in energy consumption by 2030. However, current 
energy management systems only display consumption in real time, without 
storing and analysing data for decision making or providing energy performance 
indicators. This hinders the effective identification of opportunities to reduce 
energy usage. The pilot project, implemented by Les Eaux Minérales d'Oulmès 
(LEMO), addresses these issues through digitalisation and the use of AI modules 
at two bottling sites to forecast energy consumption (by location and by production 
line), identify energy losses and predict maintenance actions to reduce energy 
consumption.  
The two lead project bottling sites alone have an electricity consumption of almost 
56 GWh (2021), with a peak capacity of 10.25 MW (Tarmilat) and 7.5 MW 
(Bouskoura). Such high energy consumption, combined with the current state of 
the equipment, requires more advanced and intelligent solutions for measuring 
energy in real time and analysing large amounts of data to produce tangible 
savings. The project should result in energy savings of at least 30%.  
The data generated by the project will be used to develop energy efficiency action 
plans. These will serve as a roadmap for the entire sector. The project is intended 
to contribute to reducing CO2 emissions in line with the LEMO low-carbon strategy, 
which aims to achieve a 50% reduction in greenhouse gas emissions by 2030 
compared to business as usual. This would contribute to the national emissions 
reduction target of 45.5% by 2030. 
The project will also address the sector’s infrastructure gap, specifically smart and 
interconnected energy metering systems, and the limited levels of awareness, 
funding and technical assistance.  
Digital districts for flexible energy services (Brazil)  
An estimated 96 000 new affordable houses will have to be built every day globally 
by 2030 to meet growing housing needs. At the same time, low- and moderate-
income households are less likely to adopt rooftop PV. They may face barriers to 
actively participating in and reaping the benefits of the energy transition. 
The Digital Districts for Flexible Energy Services (D2FX) project, led by Planet 
Smart City, aims to demonstrate how digital solutions can improve housing 
affordability by optimising energy usage and reducing the associated costs. It 
intends to demonstrate how digital solutions can seamlessly integrate distributed 
energy resources with energy storage systems and orchestrate dispatchable 
loads at consumers’ premises to support the grid and avoid disruptions. This can 


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enable consumers to actively participate in the electricity system and benefit from 
remuneration schemes for energy production and for providing ancillary services.  
The project is optimising demand response and load-shifting mechanisms while 
providing seamless services and enhanced comfort for residents in the large-
scale, affordable housing neighbourhoods of Aquiraz and Laguna near Fortaleza, 
Brazil. The project Smart City Laguna is expected to involve 18 000 residents and 
to benefit around 10% of the resident population. More than 60 houses out of 623 
will be equipped with solar PV (1.1 kWp) and home storage system (5 kWh) and 
each house is expected to produce and consume respectively 1 970 kWh and 
1 570 kWh per year. The innovation hub of Smart City Aquiraz will be equipped 
with solar PV with a nominal power of 80 kWp and a storage system of 15 kWh, 
and is expected to produce 140 MWh per year. A digital layer of sensors 
connected to the Energy of Things Platform seamlessly gathers real-time data 
from distributed renewable energy production plants, energy storage systems and 
smart meters at the housing unit level. The platform optimises energy use and 
identifies the best actions the community can implement to maximise the use of 
local renewable sources. It also relays crucial insights to residents through an app. 
This direct communication channel empowers residents to tailor their energy 
consumption to individual needs, reducing waste and curbing expenses.  
By harmonising technological innovation, environmental stewardship and societal 
well-being in energy usage and urban planning, the project aims to provide 
evidence of the profound environmental, social and economic benefits that digital 
technologies can unlock across smart affordable districts globally.   
One of the project’s goals is also to support the scaling-up of these solutions and 
their potential use in affordable housing programmes, such as Brazil's Minha Casa 
Minha Vida, to allow low-income consumers and other stakeholders in the value 
chain to benefit from clean energy transitions. 
Distribution system operator’s grid flexibility project 
(Colombia)  
This pilot project, led by Enel Grids, aims to implement a flexibility scheme 
strategically designed to alleviate grid congestion and guarantee the reliability of 
services in the Sabana Norte region, within Enel’s concession area in Colombia. 
The anticipated impact extends to over 320 000 customers. 
The region is currently grappling with congestion events, resulting in outages, 
exacerbated by the surge in electricity demand resulting from a major expansion 
of the industrial and commercial sectors, with a potential for further future growth. 
To address these circumstances, the project laid out plans to reinforce the affected 
grid, to be completed in the medium term.  


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The project’s digital solutions will facilitate near-real-time dispatching and 
seamless interactions between customers and the distribution system operator. 
Industrial and commercial entities with significant energy consumption will be 
empowered to adapt their consumption through monitoring and control devices 
and an app for bidirectional communication, and they will be remunerated for 
contributing substantial demand response. 
This project leverages available demand-side flexibility and the smart grid 
capabilities of the distribution system operator to maximise the utilisation of 
distributed energy resources and contribute to the overarching goal of digitalising 
both the network and end users, thereby advancing the decarbonisation agenda 
in the energy sector.  
This project will test innovative methods for fault prediction and loss reduction 
within the electricity distribution system. It will provide policy makers with a 
blueprint for potential mechanisms to activate demand-side flexibility in similarly 
congested areas nationally and beyond.  
Approaches to maximising the value of pilots  
These pilot projects have been designed to provide valuable data and insights to 
inform policy making and future projects. Further implementation in different 
locations will enable the development of strategies to adapt to local circumstances 
and demonstrate how projects can be tailored to achieve more successful 
outcomes. An important aspect related to scaling up and replication is that the 
conditions need to be right for projects to realise their ambition, particularly in 
EMDE regions where persistent barriers to finance exist due to the high cost of 
capital. Co-ordinated international support and mechanisms to enable 
international sharing of learning and insights offer the prospect of achieving scale 
and speed, and lower costs. 


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Chapter 7: Conclusions 
National policy makers have an essential role to play in implementing new 
approaches and leveraging human, technological and financial resources to 
achieve net zero energy transitions in cities. This report looks at four priority areas 
for national policy makers when approaching their own climate action plans. These 
key areas place people at the centre of clean energy transitions in cities, support 
data-driven integrated planning, create a supportive environment for 
innovation and change, and foster international co-operation. By paying 
attention to these essentials, national policy makers can craft inclusive policies, 
prioritise efficiency and empower communities.  
Four priority areas for national policy makers 
 
IEA. CC BY 4.0. 
 
Placing people at the centre, building for the 
future 
Social licence, consisting of people’s acceptance, approval and trust, is essential 
for advancing clean and equitable energy transitions at the necessary scale and 
pace to achieve climate and energy goals. Community-centred clean energy 
initiatives play a crucial role in securing this social licence by enabling individuals 
and communities to actively participate in adopting more efficient and sustainable 
practices and investing in clean energy technologies. These initiatives offer 
several benefits, including providing demand-side flexibility, reducing costs, 


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promoting affordability, equity and inclusion, and generating local employment 
opportunities.  
By prioritising a people-centred approach to urban net zero transitions, national 
policy makers empower cities to champion local and community-centred clean 
energy efforts while investing in education and capacity building. 
National policy makers can promote equitable measures through the following 
actions.  
• 
Supporting community-led initiatives for sustainable development: 
• 
Craft policies that provide financial incentives and regulatory support for 
community-driven initiatives such as community procurement, people-led 
renovation, energy communities and positive energy districts. 
• 
Specifically include vulnerable communities to ensure they benefit from these 
initiatives, promoting inclusivity and equity in urban development efforts. 
• 
Promoting integrated urban planning with stakeholder involvement: 
• 
Integrate multi-dimensional analysis, including environmental and social aspects, 
into urban planning frameworks. 
• 
Support stakeholder involvement in decision-making processes to ensure 
comprehensive and inclusive urban development strategies. 
• 
Examine multi-level governance mechanisms to facilitate co-ordination between 
local, regional and national authorities in urban planning efforts. 
• 
Designing benefit-sharing mechanisms for clean energy access: 
• 
Design benefit-sharing mechanisms such as group-buying schemes and 
subscription models to reduce the cost barrier for accessing clean energy 
technologies. 
• 
Provide incentives and support for the implementation of these mechanisms, 
enabling equitable distribution of clean energy benefits, particularly among 
underrepresented and vulnerable groups. 
• 
Foster collaboration between governments, utilities and community organisations 
to implement and scale up benefit-sharing initiatives effectively. 
Supporting data-driven integrated planning 
Data-driven integrated planning is crucial for transitioning to cleaner energy 
systems in urban areas. National policy makers can support sustainable energy 
objectives in all planning phases. City governments can accelerate progress by 
engaging people, prioritising efficiency and renewables, providing regulatory 
oversight and aligning utilities with urban objectives to ensure resilience and 
flexibility in power systems.  


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National policy makers can support strategies for data-driven integrated 
planning by taking the following actions: 
• 
Integrating energy and climate objectives into urban planning: 
• 
Embed energy and climate objectives into zoning and permitting regulations, 
infrastructure development plans and urban land use planning frameworks. 
• 
Ensure that energy and climate considerations are central throughout all stages 
of urban planning and development, promoting sustainability and resilience. 
• 
Aligning grids with urban objectives: 
• 
Encourage electricity utilities to align their planning processes with urban 
objectives, fostering collaboration and engagement with energy users. 
• 
Promote co-ordination between utilities and urban planners to ensure that energy 
infrastructure development supports broader urban development goals. 
• 
Incentivising optimisation of grid infrastructure and demand-side management: 
• 
In addition to investments in grid expansion, create incentives to optimise use of 
current grid infrastructure and leverage demand-side assets to enhance efficiency 
and flexibility. 
• 
Encourage investment in grid modernisation technologies and demand response 
programmes to improve grid reliability and resilience. 
Creating a supportive environment 
Digitalisation empowers data-driven decisions for city-led net zero transitions. 
Real-time data inform target setting and assist in the identification of opportunities 
and monitoring of progress. National policy makers can create a policy 
environment that enables data access, fosters the sharing of best practices and 
promotes open standards. To address financing challenges, they can incentivise 
partnerships and innovative mechanisms, transform regulations and foster 
collaborative financing at the regional level. 
National policy makers can enable data-driven decision making by taking the 
following steps: 
• 
Enhancing data accessibility and utilisation for effective power system 
management: 
• 
Enable city and utility access to relevant data to effectively manage the evolving 
power system, particularly by increasing visibility of distributed energy resources. 
• 
Facilitate data sharing through trust frameworks and open data standards, 
ensuring all stakeholders, including government and utilities, can use data to 
inform decision making and drive innovation in business models. 
• 
Promoting interoperability and digitalisation for informed decision making: 


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• 
Build on open data and interoperability principles to establish a common protocol 
and reference architecture for digitalisation. 
• 
Enable more informed decision making and better integration of new technologies 
and business models into urban energy systems. 
• 
Supporting innovation and financing for sustainable urban development: 
• 
Reshape governance and regulatory frameworks to promote digital-driven 
decarbonisation in urban areas, fostering innovation and sustainability. 
• 
Encourage collaboration and experimentation through city-level sandboxes and 
pilot projects to test innovative business models in electricity grids and other urban 
sectors. 
• 
Improve access to finance by leveraging public funding, fostering collaborative 
financing schemes, and building sustainable finance mechanisms to support net 
zero pathways in urban contexts. 
Fostering international co-operation 
Implementing effective pilot projects and fostering international collaboration on 
grid modernisation are important for advancing sustainable energy solutions. 
Strategies such as knowledge exchange, allocating funding and replicating 
successful pilots could drive widespread adoption of clean energy solutions in 
urban settings.  
Facilitating international co-operation, sharing technical expertise and mobilising 
financial resources are essential for enhancing grid modernisation efforts globally. 
To achieve these goals, it is important to address common challenges. Managing 
climate change and ensuring energy security require collective action through 
collaborative research, innovation and solutions. Strong international partnerships 
will contribute towards establishing resilient and sustainable energy systems that 
will drive global economic growth and development. 
National policy makers can ensure effective pilot project implementation 
through these actions: 
• 
Disseminating knowledge and accelerating innovation: 
• 
Foster knowledge dissemination and learning exchange from urban pilot projects 
to identify areas for further innovation in urban energy transitions. 
• 
Promote collaborative demonstration projects to accelerate progress in urban 
energy transitions at a lower cost, leveraging insights gained from successful 
pilots. 
• 
Supporting financially for scaling up smart energy technologies: 
• 
Allocate supplementary funding for successful pilot initiatives to facilitate the 
scaling-up of smart energy technologies, particularly in urban contexts. 


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• 
Support the expansion of proven solutions to a larger scale, contributing to the 
widespread adoption of clean energy technologies. 
• 
Replicating successful pilot projects for wide adoption: 
• 
Develop strategies for replicating successful pilot projects to drive widespread 
adoption of clean energy solutions across diverse urban settings. 
• 
By replicating successful models, ensure that the benefits of clean energy 
solutions are accessible to a broad spectrum of urban communities. 
Potential international actions spearheaded 
by G7 countries  
G7 countries have an important role to play in incentivising and accelerating smart 
urban clean energy transitions by acting on several different fronts. These 
countries can provide financial incentives, resources and learning opportunities to 
help cities fund and implement their smart city initiatives. They can help create 
common visions for low-emissions transitions, improve co-ordination across 
government levels, and help deploy enabling technologies and infrastructure. 
G7 countries can play an active role in speeding up the global transition by 
enabling developing economies to access the benefits that digitalisation can 
unlock through knowledge exchange, capacity building, technology transfer, and 
projects and programmes aimed at developing and trialling innovative approaches 
and dedicated financing mechanisms.  
Moreover, G7 countries can help set up broad international communities of 
practice, support research and development, and enable cities to take advantage 
of advances in innovation. G7 countries can also provide common resources, 
frameworks and standards and foster collaboration between cities. 
Finally, G7 countries can further strengthen co-operation with EMDEs, 
supporting in particular Africa’s clean energy ambitions and advancing progress 
on inclusive and people-centred clean energy transitions, dovetailing with G20 
efforts, namely the Brazilian G20 Presidency’s key priorities.  
The 3DEN Initiative can play a key role in synergising international collaboration 
on the topic of urban energy transitions and facilitating knowledge exchange, from 
policy guidance to on-the-ground implementation. The IEA and the Italian 
government welcome further countries and organisations joining the 3DEN 
Initiative and actively contributing to the development of analysis, tools, 
engagement and guidance in support of clean energy transitions around the world.