The Energy Transition is for Everyone: the Rise of Decentralized Energy for a Cleaner, Smarter Future

January 24, 2025

Imagine a world where you don’t have to rely on the power grid to keep your lights on. What if your home could produce its own energy, sustainably and affordably? Our near-future energy systems could be more local and dependable than what we have today. WIPO’s latest Green Technology Book focuses on energy solutions that are enabling the democratization of the clean energy transition. 

The energy transition is for everyone

A shift is underway from a more centralized, top-down energy system to a distributed, decentralized model where individuals, communities, and businesses can generate, store, and manage their own energy.

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(Image: Kwangmoozaa/iStock/Getty Images Plus)

Technological innovation in decentralized clean energy production is playing a significant role in democratizing the energy transition. This is a key message emerging from the latest edition of WIPO’s Green Technology Book, launched at the 29th Conference of the Parties (COP 29) to the United Nations Framework Convention on Climate Change (UNFCCC) in Baku, Azerbaijan.

Decentralized energy resources (DERs) are small-scale power generation systems, like solar panels, wind or water turbines, or home battery storage, that produce and manage energy right where it is used. Instead of relying on a distant power plant and distribution network, these technologies give individuals, communities, and businesses the power to generate and control their own energy.

Remarkably, the shift to decentralized energy production is occurring across developed and developing countries alike. It also transcends the urban-rural divide. Communities can now collectively invest in renewable energy and enabling technologies, including solar, energy storage systems and smart metering.

Further, government initiatives and subsidies have emerged that can enable the development of energy communities. These efforts also support the transformation of homeowners into “prosumers,” meaning those who produce, use, store, and sell electricity back to the grid. They may also be called active consumers or renewable energy self-consumers.  

Technology democratizes access

Solar home systems (SHSs) are becoming increasingly common to either provide electricity access in underserved areas or to enhance energy security in areas that are increasingly prone to outages and disruptions.

SHSs can either be grid-connected, standalone (or off-grid), or hybrid. They have evolved from second-generation (2G) SHSs to third generation (3G) SHSs meaning that they use more efficient solar panels, LEDs, lithium-ion batteries, flexible plug-and-play models, and incur lower costs.

DERs often rely on smart technologies that enable better energy management through real-time data. Consumers can track energy usage, optimize energy efficiency, and participate in dynamic pricing schemes, improving overall system efficiency. Some DERs, when combined with smart meters and technologies, allow consumers to adjust their energy use based on demand, thereby optimizing energy consumption and reducing inefficiencies.

Mini-grids are small-scale, localized electricity distribution systems that can operate independently or in conjunction with the main power grid. They supply energy to a specific community, village, or group of users, providing them with a reliable source of electricity.

In sub-Saharan Africa, where roughly 60% of Africans reside in rural communities, 5% have access to clean electricity through the 11 million active mini-grid connections. Microgrids and local energy networks are smaller and can operate independently from the main grid during disruptions.

6 benefits of DERs

Ultimately, DERs deliver several overarching benefits to urban and rural communities.

First, reduced energy costs: By producing energy locally, consumers can reduce their energy bills. Surplus energy can be sold back to the grid using systems like net metering or vehicle-to-grid technologies.

Additionally, distributed energy generation can be cheaper over the longer term compared to energy from traditional power plants relying on fossil fuels.

Recent innovations, including peer-to-peer energy trading platforms enabled by blockchain and smart contract technologies, allow for decentralized energy transactions and participation in energy markets. These also render producers the ability to sell excess energy directly to other users, or share within a local network, bypassing traditional utility companies.

Second, promoting energy independence: Renewable energy systems enable homeowners, businesses, and communities to generate their own electricity, which reduces dependence on large utilities.

Microgrids and mini-grids boost energy security and reduce the vulnerability of communities to power outages caused by extreme weather, natural disasters, or grid failures. Energy storage solutions, such as home batteries, enable individuals to store surplus energy produced by their systems and use it when necessary.

Third, adoption of scalable solutions: DERs are flexible and adaptable to different needs. Homeowners can start small and expand as their energy needs grow. These systems can also be integrated with existing energy grids and enhance existing infrastructure without needing to revamp it entirely – a point which is critical to enabling a smooth transition without significant disruptions.

Fourth, fostering local economic development: The deployment and maintenance of DERs create jobs in sectors such as renewable energy technology manufacturing, installation, and maintenance. The growing demand for clean energy solutions also stimulates local economies.

Fifth, decreasing energy poverty: DERs can provide electricity to off-grid or underserved communities, providing a cost-effective solution to expand access to power and socio-economic development to remote areas where extending the traditional grid would be too expensive or impractical.

And sixth, lowering air and noise pollution: DERs reduce local air pollution, especially in urban areas, by lowering reliance on fossil fuels. This leads to better air quality, which can reduce respiratory problems, cardiovascular diseases, and other health problems. Solar panels, for example, produce little to no noise compared to diesel generators or coal-fired power plants.

Advent of swarm electrification

Swarm electrification is another emerging concept that has garnered significant attention as a solution for last-mile electrification. Unlike a traditional microgrid, a swarm grid is built organically, connecting available equipment in an ad-hoc fashion, growing over time as more resources become accessible.

In 2021, Bangladesh achieved 97% nation-wide electricity access; however, a substantial gap remains in achieving Bangladesh's goal of 100% renewable energy by 2050, with only 3.1% of the country's current electricity generation.

While governmental institutions at the centralized level continue to struggle with transitioning from a grid extension approach to a broader energy transformation model, rural Bangladeshi villages are already adopting this model. Today, 100 solar peer-to-peer microgrids, developed using the swarm electrification approach, enable users to power appliances, charge vehicles, and trade renewable energy for income.

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Energy solutions in WIPO’s Green Technology Book

WIPO’s latest edition of the Green Technology Book focuses on energy solutions for climate change. The publication showcases several technologies that are enabling the democratization of the clean energy transition that address diverse challenges in both urban and rural areas. These include solar home systems, solar appliances, micro-hydroelectric systems, home energy storage systems, energy management platforms for microgrids, energy trading platforms, and digital platforms connecting underserved areas with clean energy access, services and utilities. Many more solutions can be found in the WIPO Green Database.