Smart energy for smart cities

IHS Technology analysts Roz Euan-Smith and Jacob Pereira discuss the development of smart cities across the globe.
Published: Tue 01 Nov 2016

It is well-known that one of the major challenges facing cities today is the increase in worldwide urban population and the inevitable strain this puts on city systems and resources.


According to the United Nations, in 2014 54% of the world’s population lived in urban areas, and this figure will increase to 66% by 2050.The need to manage cities more efficiently is driving interest in innovative solutions and as technology hardware costs have dropped and connectivity has become more commonplace, opportunities to collect and analyse real-time data to manage cities better are being realised. This can be thought of as the implementation of the ‘Internet of Things’ (IoT) in the city context. 


Global analyst firm IHS is tracking the progress of approximately 400 smart city projects around the world. All these projects use integrated information and communications technology (ICT) systems to improve efficiency, manage complexity and enhance citizen quality of life, leading to sustainable improvement in city operations. Out of the projects being tracked, approximately 27% are focused on mobility and transport solutions, 26% on physical infrastructure (which includes street lighting and waste management), 25% on energy and resource efficiency, 11% on governance, 8% on safety and security, and 3% on healthcare. 40% of the projects are based in Europe, 31% in Asia Pacific, 25% in the Americas and 4% in the Middle East and Africa. Most projects are either trials or in the early stage of implementation, and could take years before they are fully functioning. Despite this, many governments have unveiled investment schemes to accelerate smart city and IoT development, including the United States, United Kingdom, Singapore, India and China.

Creating a better environment

Energy and resource efficiency is a key area for smart city projects around the world, as cities want to become less dependent on carbon and provide a better environment for their citizens. In Europe, EU energy efficiency targets are driving investment in smart city solutions, and 51 of the region’s 157 smart city projects focus on energy and resource efficiency.


A number of countries in Europe have started trialling smart grid technology as part of smart city developments. One example is the work in Aspern, where a sustainable smart city is being developed on the site of a former airfield just outside Vienna. The Aspern smart city project is backed by a €40 million joint venture between theCity of Vienna, the city’s utility companies (Wien Energie and Wiener Netze), and Siemens. By 2028, the area is scheduled to have around 8,500 apartments, 20,000 jobs, and a commercial campus. The development is being used to test energy efficient technologies, such as smart grid and smart building solutions, which will not only be used in Aspern but also rolled out to other cities.


Similar to Europe, several countries in Asia have either started trialling or have announced investment packages for smart city development where improving energy and resource efficiency is a key goal. Most notable among them are China, Japan and South Korea. Japan and South Korea both lack domestic energy resources so have historically been dependent on energy imports.


Japan had been pursuing a strategy of investing in nuclear power, until the Tohoku earthquakeand nuclear disaster in 2011. Since then Japan has been looking at renewable energy sources and smart grid technology as an alternative. In addition to the need to find a safe and reliable energy supply, Japan is interested in smart grid technology to protect cities from the mass power outages and rolling blackouts that affected Tokyo and many other parts of the country in the aftermath of the 2011 earthquake. Japan has been developing smart city test beds for several years now, with an emphasis on energy management – not only to reduce emissions but also to improve the cities’ ability to respond to catastrophes. 


China has also announced investment packages for smart city development, and is currently involved in a knowledge exchange exercise with the European Union. 15 Chinese cities have been paired with 15 cities in Europe, to share knowledge and technical capabilities in smart city solutions and promote the development of global smart cities. Many of these projects prioritise improving energy efficiency and environmental factors, such as air quality.


In the Americas the United States is leading the way in terms of number of projects.The Envision America programme is set to significantly contribute to growth in the number of smart city projects in the United States. The US$160 million funding package will be used in a broad range of smart city projects, including traffic and mobility, physical infrastructure, safety and security, as well as energy and resource management. As of November 2015, funding recipients are yet to be announced, but corporate partners engaged in the programme include Itron, GE, Landis+Gyr, Qualcomm and Microsoft.


Smart city investment insufficient

However, despite this recent increase in activity, smart city projects face a number of challenges before they can deliver their full value potential. A common stumbling block is the fact that many cities have little flexibility in their annual budgets to allow them to invest in large-scale rollouts of new technology and infrastructure.


Although a number of national governments have made commitments to invest in smart city technology, these are large-scale, long-term projects which will require sustained investment for implementation and maintenance in order to deliver their full potential value. In many cases the sums that governments are committing will not be enough on their own.