Digital technologies are set to transform the global energy system in the coming decades.

That’s the view of the International Energy Agency (IEA), which suggests those technologies will make the system more connected, reliable and sustainable, having a “profound and lasting impact” on both energy demand and supply.

It forecasts more than one billion households and 11 billion smart appliances, including smart meters, could be part of interconnected electricity systems by 2020.

Demand side response technologies in building, industry and transport could provide 185GW of flexibility and avoid $270 billion (£206bn) of investment in new power infrastructure.

The IEA’s report also finds smart lighting and other digital tools could help reduce the energy use in buildings by 10% as smart thermostats can use real-time data to improve operational efficiency.

It adds digital technologies could help integrate higher shares of variable renewables into the grid by better matching energy demand to solar and wind supplies.

However, the IEA warns digitalisation is raising new security and privacy risks as it increases the range of energy targets for cyber attacks as they are becoming cheaper and easier to organise.

IEA Executive Director Dr Fatih Birol said: “Digitalisation is blurring the lines between supply and demand. The electricity sector and smart grids are at the centre of this transformation but ultimately all sectors across both energy supply and demand – households, transport and industry – will be affected.”