The IEA has just published a new report on electrification, and its central message is worth paying attention to:
Electricity is becoming the foundation of the energy system.
Electricity demand has been growing much faster than overall energy demand. EVs are taking an increasing share of new car sales, heat pumps are replacing some fossil-fuel heating, and electricity is becoming more important in industry and buildings.
But the part I find most interesting isn’t the growth in electricity itself. It’s what happens when electricity starts connecting all these different parts of our lives.
What does this look like for an ordinary household?
Imagine an ordinary home in a city in 2035.
You drive an EV. There is solar on the roof and perhaps a battery in the garage. Your hot water system runs when electricity is cheap or there is plenty of solar generation. Your car charges automatically at times when electricity is cheaper.
Some of this electricity comes from your own roof. Some comes from the grid. The battery can store it and the car might eventually be able to send some of it back.
None of these technologies is particularly remarkable on its own.
The interesting thing is that they are no longer independent.
Your car is part of your transport system, but it is also a battery.
Your solar system generates electricity, but it also reduces how much electricity you need to buy.
Your home consumes electricity, but some of that consumption can be shifted to different times.
The battery can help you use more of your own solar, reduce your exposure to high electricity prices and potentially provide services to the grid.
The consumer starts to become part of the energy system rather than simply sitting at the end of it.
There is a lot of room for this to go further
The IEA estimates that, with today’s technology costs and energy prices, around half of residential fuel consumption and half of oil-based road transport could be electrified competitively.
Globally, electricity currently accounts for around 23% of final energy consumption. In the IEA’s higher-electrification scenario, that rises to around 35% by 2035.
Transport is particularly interesting. Electricity currently provides only around 2% of transport energy, so even the rapid growth of EVs we’ve seen so far represents a relatively early stage of the transition.
The same thing is happening in buildings, industry and other parts of the economy.
The direction is fairly clear: more things that currently burn fuel will instead use electricity.
The house, car and grid start to look like one system
This is where I think the bigger change happens.
For most of the fossil-fuel era, we have treated energy as something we buy when we need it.
You put petrol in the car.
You buy gas to heat the house.
You buy electricity to run the appliances.
Those systems are mostly separate.
An electrified system is different.
The same electricity can power the car, heat the house, charge the battery and run the appliances. Solar can produce some of that electricity. Batteries can move it from one time of day to another. Software can decide when different loads should run.
That creates a much more interconnected system.
It also gives households more options.
If electricity is cheap at lunchtime because there is lots of solar generation, you might charge the battery and EV then.
If electricity prices are high in the evening, you can use some of the energy stored earlier.
If your car supports bidirectional charging, its battery could potentially become another source of energy for your home.
And if millions of households do this, it becomes useful to the grid as well.
But the grid has to keep up
There is an obvious catch.
If we electrify transport, heating and more industrial processes, electricity demand increases substantially.
That means more generation, more transmission and distribution infrastructure, and much more flexibility in the system.
The IEA estimates that global grid capacity needs to increase by at least 30% by 2035 to meet expected electricity demand growth.
And this is where solar, batteries, EVs and flexible demand become much more interesting when considered together.
A battery isn’t just a way of storing your solar.
An EV isn’t just a replacement for a petrol car.
A heat pump isn’t just a replacement for a gas boiler.
They can all become parts of a much larger system that is constantly balancing generation and demand.
There are still plenty of technical, regulatory and economic questions to work out. Not every household will have solar, not every EV will provide power back to the grid, and electricity markets and networks will need to adapt.
But the underlying change is already happening.
What does the city of 2035 look like?
This is the part I find most interesting.
We tend to talk about solar, batteries, EVs, heat pumps and smart electricity tariffs as separate technologies.
Perhaps we should increasingly think of them as parts of the same transition.
A city where most cars are electric will have a very different relationship with its electricity network.
A city where millions of homes have solar and batteries will generate and store energy in a very different way.
A city where heating, transport and many appliances are electric will have much more electricity flowing through it — but potentially much more flexibility as well.
And for households, energy could become something they actively manage rather than simply purchase.
How much electricity do you generate?
How much do you store?
When do you charge the car?
When do you heat the water?
When do you buy electricity from the grid?
And, potentially, when do you sell it back?
We don’t know exactly how this will play out by 2035. The economics, technology and regulation will all continue to change.
But I think the direction is becoming increasingly clear.
Electricity is becoming the platform that connects our homes, cars, energy generation and storage.
The interesting question now is not just how quickly we electrify.
It’s what we do with an energy system that is increasingly built around electricity — and what that means for the way we live in our cities.