# Review and Categorization of Digital Applications in the Energy Sector
## 4 Categorization of Digital Applications
### System Balance  
Digitalization is mostly based on technology which captures, transmits and analyses data, which can then be made usable. The current German/European energy system is already highly complex. However, with a growing number of decentralized volatile electricity generators, the complexity rises drastically. The number of PV units installed in Germany, for example, almost tripled between 2009-2018, resulting in \(>\)1.7 million grid-connected units [41]. To cope with this complexity and the high ratio of volatile energy generation, either high inefficiencies in grid and generation capacities need to be accepted as safety buffers or the information about actual and predicted demand, generation, and grid capacities is used to actively control the balance of the system. This is where digitalization can bring massive benefits. By applying digital sensors, digital control units (actuators) and network connections to electricity generators, consumers and grid units, and using the availability of information and remote control capabilities, the system can be controlled and kept in balance (i.e., actively manage demand and generation, also considering grid capacity restraints) in a more efficient way. For the grid, for example, temperature sensors are one important aspect for real-time condition monitoring and remotely controllable transformers and switchgear enable load, voltage, and frequency control even on low voltage distribution grid levels. This is often referred to as \"smart grid\" [7; 8; 34; 35; 37; 38; 39; 40]. Besides optimizing the balancing mechanisms between generation, demand, and grid conditions, also the individual steps of the value chain can be optimized based on digital applications. For example, the operating point of power plants can be optimized based on data driven algorithms taking into account e.g., electricity and fuel prices. Safety factors used in the grid can be reduced based on a higher density of condition data points (e.g., digital temperature sensors), and the charge-discharge cycle of batteries can be optimized to, for example, maximize overall battery lifetime. If incentivized correctly the optimization of the individual steps of the value chain overall support the system stability [7; 8; 35; 37; 38]. While in the past, the generation followed the demand, digitalization will enable demand to follow generation (to a certain extent) by providing the necessary information and control infrastructure [7; 34; 35; 38; 39; 40; 41]. These applications are summarized as Demand Side Management. While the flexibility of industrial electricity demand (e.g., heating and cooling processes) is already partly used today, the potential of residential demand (e.g., night storage heating, heat pumps, dishwasher, cleaning robots) relies on one of the major digitalization steps, the \"smart meter\" roll-out. Beside the \"smart meter\" roll-out as the central communication device the household appliances which are used to offer demand flexibility need to be network-connected and remotely controllable. The total potential for flexibility of the German residential electricity demand is estimated to be \(\sim\)7% of the net consumption [38]. However, more demand flexibility can be achieved via batteries or sector coupling, such as with e-mobility or the gas sector via power-to-gas technologies [7; 34; 35; 37; 39; 40]. The required hardware to make use of these flexibilities can be integrated and utilized in the energy sector based on digital data acquisition, transmission, and analysis infrastructure as well as remote control systems. One crucial aspect however, is the definition of universal device communication standards to ensure interoperability between consumers, generators and communication devices. Due to the demand flexibility, the share of renewable energy of the total consumption can be increased while maintaining grid stability [7; 34; 35; 37; 39; 40].