What role does the utility fulfil in a smart city?

Lauren Callaway, research analyst at Navigant Research, explores how utilities can support city energy strategies.
Published: Fri 04 Nov 2016

Brought to you by:


Cities and utilities around the world are committing to clean energy objectives as they attempt to shape the development of more sustainable urban communities.

Improving sustainability in urban environments has a positive impact on regional carbon dependency and supports community adaptation to climate change. As the Intergovernmental Panel on Climate Change’s (IPCC) 2014 Mitigation of Climate Change report indicated, cities consume somewhere between two-thirds and three-quarters of total global energy and generate 75% of global carbon emissions. But in terms of energy, power utilities have a big influence on the extent to which cities can reform their energy strategies. [Engerati-In Focus: Smart & Sustainable Cities ]

Collaboration among cities and utilities

Cities can independently support the adoption of clean energy technologies, but without buy-in and support from the utility that powers the electric grid, those resources cannot be used to their full potential. In some cases, clean energy resources (such as distributed solar PV) may even threaten the stability of the grid and universal access to power.

Cities and utilities, therefore, need to develop a cross-agency smart energy/ smart city strategy to enable the optimal use of citizen and city-owned clean energy resources. Such a strategy can harbour a safe and effective means of increasing sustainability of urban energy. It can also improve customer satisfaction by improving reliability and expanding the services offered to residential, public sector, and commercial energy users. However, this is easier said than done.

For smart cities pursuing smart energy or hoping to involve their electric utilities in projects, there are few formal structures in place to incentivise collaboration. City and energy utility interactions are determined by factors such as ownership (if the utility is municipally or investorowned), regulatory models, and historical relationships that are unique to each situation. In some cases, regulatory and ownership models can be fully counterproductive, with many layers of bureaucracy that can slow or inhibit collaboration.

Only a small number of smart cities have successfully collaborated with utilities in a synchronized rollout of smart grid infrastructure and integrated demandside resources and distributed energy resources (DER). An even smaller number of smart cities have engaged in a crosssector planning process where projects are harmonious across other city service areas such as transportation, public information and communications technology (ICT) infrastructure, and water. These select examples stand out as bellwether projects, although their ability to drive meaningful future projects elsewhere is still questionable.

Smart utilities, the energy cloud and the role of IoT

Beyond the hang-ups associated with city and utility collaboration, broader changes in the energy industry are opening doors for more effective, lower cost technologies to bring about change. The movement toward clean energy in cities is part of a broader transition in the energy sector that Navigant identifies as the emergence of the Energy Cloud. The Energy Cloud represents the shift away from centralised power generation and distribution toward a networked and dynamic infrastructure that incorporates demand-side generation technologies and capabilities and renewable energy sources alongside traditional assets. Such a system is characterized by increased complexity and redundancy, allowing for greater choice in the manner in which energy is generated, supplied, and consumed.

Underlying the Energy Cloud concept is a new approach to managing energy networks, specifically through the addition of Internet of Things (IoT) technology. For utilities, IoT describes the interaction of many different connected devices – everything from grid equipment to customer-owned technologies such as smart thermostats and solar inverters – vis-à-vis widespread communications and open standards for interoperability. This is an important enabler of DER technologies, as it allows for subsystems to manage distributed networks of devices locally, providing faster action to maximize the resource and support grid stability. Additionally, it allows for distributed resources (such as microgrids) to function both independently or in concert with the grid. The status quo is that these resources only function independently.

IoT might be the best way to bridge city and utility operating goals. With advanced metering infrastructure (AMI) and other smart grid network deployments, utilities are developing the connectivity required to facilitate IoT. In Chicago, Commonwealth Edison (ComEd) is leveraging its AMI network to develop IoT-related services such as smart street lighting and EV charging infrastructure. Across Europe, a number of projects are exploring similar synergies.

The Arrowhead Project has partnered with cities, universities, utilities, and electric retailers to test and demonstrate smart buildings and infrastructure, electromobility, energy production and end-user services, and virtual energy markets. The purpose of the project is to not only validate the technologies that support these applications, but to also understand how to generate new streams of revenue in the form of services and virtual energy markets.

What next?

There is a growing awareness among leaders within both municipalities and power utilities of the potential benefits of an integrated clean energy strategy that leverages IoT. Despite the existence of a handful of bellwether projects that are testing out new strategies, city and utility organisational issues stand in the way of many more. Usually organized in silos, utilities and cities individually struggle to coordinate internal development efforts – an issue that needs to be tackled before the two types of organizations can effectively work together. But, if the effort is expanded to cut across multiple departments within both the local utility, local government, and other regional stakeholders, then the effort necessary for coordinated clean energy projects increases exponentially.

From a utility’s perspective, tying smart grid and AMI network deployments into a broader smart city IoT project may enable it to engage with consumers and businesses in new ways. Smart city projects are also becoming valuable pilot sites for testing issues across a range of smart grid upgrades, including the integration of distributed renewable energy, support for EV charging, and the introduction of demand management programmes, among many others.

Thus, the combination of smart grid deployments and a broader city programme for sustainability and service improvements has many advantages. The utility that claims the role of network provider within its territory and plans accordingly in terms of network capacity for the long term will be uniquely capable of leveraging that network for a multitude of opportunities in a changing operational environment, both at the city level and within its primary energy operating domain.

Despite these clear benefits, utility involvement in smart city efforts remains limited to date, due not only to the coordination challenges described above, but also, in many cases, to regulatory and financial constraints. Many utilities can find it difficult to justify participation in progressive or R&D-oriented smart city projects, given benefits that may not, on the surface, pass initial investment vetting when weighed against other operational needs. However, utilities that proactively manoeuvre to help city managers and other stakeholders coordinate these efforts – and encourage regulators to see the benefits of such coordinated deployments – will be best positioned to benefit as smart energy and smart city applications evolve.

This article appeared in Metering & Smart Energy International Issue 4 2016.

Related Webinar