3.5
Impact of electrification on the efficiency of the energy system and on energy security
Energy uses in the overall energy system can be divided into three broad categories: for heat or steam production, for mobility, and for electricity-based technologies that provide other services (e.g. for lighting or appliances). For heat and mobility uses, a variety of energy sources can usually be used, while only electricity can be used for the third category. Energy end users generally think in terms of energy consumed (and hence in terms of bills), although the actual needs are based on the energy services that the energy meets. For example, how much useful energy7 is available for heating an apartment, how many kilometres can be covered per unit of energy by a car or how many lumens can be obtained from a light bulb.
The conversion of energy consumption into useful energy is dependent on the efficiency of the technology utilised for each specific purpose, and they can strongly depend on the conditions and geography where they are used (e.g. extreme temperatures often influence performances). Fossil fuel boilers and heating systems have typical efficiencies of 80-90% and internal combustion engine (ICE) cars around 25%. Electric heaters can approach 100% (as they convert electricity almost entirely into heat), while heat pumps can have efficiencies8 ranging from 250-400% (or higher) and electric vehicles (EVs) average around 75%.
To completely evaluate the impact of the electricity use on the efficiency of the energy system, the efficiency of electricity generation must be also included. Typical efficiencies of fossil fuel- and bioenergy-based power plants reach 35% to 55%, while the efficiency of nuclear and renewables power plants is generally determined through statistical methodologies that can differ among countries.9
Electric technologies are more efficient than fossil fuel-based ones for final uses, making electricity an important energy vector to increase the efficiency of the overall energy system.
Electric technologies are therefore more efficient than fossil fuel-based ones for final uses, making electricity an important energy vector to increase the efficiency of the overall energy system. Their impact on the overall system hinges critically on the share of fossil fuel electricity generation and therefore on the level of decarbonisation of the power mix. In all cases, efficient technologies such as heat pumps or EVs increase the efficiency of the energy system even with low-efficiency fossil fuel power plants,10 with an effect that is greater the more the electricity mix gets decarbonised. Energy bills can therefore be reduced thanks to the adoption of efficient technologies (see section 4.3). Attention must be given to the so-called “rebound effect”, or the tendency for users to consume more given the high efficiency of the technology installed.
Over 2010‑2020, electricity demand in end-use sectors increased by around 4 900 TWh, of which around 3 400 TWh were due to increased electrification, equivalent to the electricity demand of the European Union and Japan combined. While 70% of the increase is attributed to electrification, the remainder is due to surging energy needs. China was responsible for most of the total increase in overall electricity demand, accounting for 60%, while its share of electricity in TFC increased from less than 17% in 2010 to almost 25% in 2020.
The increase of electrification over 2010‑2020 saved an estimated 8 600 PJ11 of fossil fuels, the majority of which stemmed from industry in China, where most of the electrification surge took place (Figure 3.12)12. Oil and gas savings are roughly equivalent to the total annual consumption of these fuels in France, and coal savings to the annual consumption of India and Japan combined. These savings contributed to lower energy dependency for the importing countries and a cumulative saving of 700 million tonnes of CO2 over the decade, equivalent to one year of emissions of France and Australia combined.
The reduction of energy imports has important implications for energy security. Traditionally, energy security concerns have focused on the availability of oil and gas supplies. The deployment of electricity-based technologies, with the resulting electrification of the energy system, and the decarbonisation of power generation are shifting these traditional concerns towards electricity and technology security.
These two latter aspects are not new elements to the overall energy security concept, but they are set to gain a growing importance in the coming years and decades. More and more, it will be essential for policy makers to put in place solid conditions to meet electricity needs at all times and to warrant an optimal quality service on one side and to ensure the availability of critical technologies and components on the other.
The energy infrastructure will play a central and ever-growing role as a key enabler of energy security and of the energy transition at large. Targeted policy action to solve acceptability issues (such as the “nimby” problem) and the co‑ordination of different infrastructures (e.g.‑electricity grids and final uses such as EV charging stations) will be crucial steps to achieve the desired decarbonisation goals in the stringent time frame available.
More and more, it will be essential for policy makers to put in place solid conditions to meet electricity needs at all times and to warrant an optimal quality service on one side and to ensure the availability of critical technologies and components on the other.
7 “Energy service demand” and “useful energy” are here used as synonyms.
8 It is improper to talk of efficiency for a heat pump, while the correct term coefficient of performance (COP) will be used in the rest of the publication. The values are higher than 100% due to the transfer of heat between two adjacent systems (e.g. inside and outside an apartment).9 See the IEA Energy Statistics Manual (IEA, 2004).10 Even with 40% power plants, a heat pump with a COP of 3 would have an overall efficiency of 120%, higher than any other heating system. Similarly, an electric vehicle would result in an overall efficiency of 30% (40% × 75%), higher than its ICE equivalent of 25%.
11 Obtained using the mix of incremental demand each year by sector and country, accounting for 90% efficiency for industry and space heating in buildings and 25% for ICE cars in transport.12 These savings, though, do not consider any increased use of fossil fuels for power generation.