Navigant Research estimates that the market for smart energy technology for smart cities will be worth almost $21 billion by 2024. Early smart city and smart grid projects focused on the city as a site for technology and market pilots, with utilities taking the lead role. As documented in the Smart Energy for Smart Cities report, cities are now taking a more proactive role in the evolution of local energy provision. Cities are becoming active players in their energy markets, collaborating with their existing utilities where it makes sense but also becoming increasingly willing to challenge and even compete with those traditional providers. This is becoming particularly evident in the United Kingdom.
In February, Bristol became the latest U.K. city to launch its own community energy company. Bristol Energy is owned by the city council and run for the benefit of the whole community. As well as offering competitive energy deals, the company’s objective is to reinvest any profits to fight fuel poverty and support locally generated renewables. It also aims to increase low-carbon energy generation in the city and to eventually manage a new district energy network for the city.
Bristol is part of a wave of initiatives to form new city-owned energy companies in the country. In September 2015, the Nottingham City Council established Robin Hood Energy, the first non-profit city-owned energy company in the United Kingdom since the nationalization of the industry in 1948. The country nationalized and centralized its energy grid and market after World War II and since then has had no equivalent to the myriad of municipally owned utilities found, for example, in the United States or Germany. The process of deregulation and privatization in the 1980s created a clear split between the transmission, distribution, and retail markets, with the retail market led by the Big 6 energy suppliers. The new city energy companies have been established within this market structure and in response to some of its perceived weaknesses, not least of all a lack of local influence on the market.
Other major cities in the United Kingdom are considering setting up their own energy company alongside other initiatives such as the establishment of new energy service companies and increased investment in district energy networks. The Greater London Authority, for example, is in the process of establishing itself as a junior energy supplier, which will enable the city to support renewable energy generation and provide energy to local public bodies at an attractive rate. Some advocates are calling for London to go even further and follow the same path as Bristol and Nottingham.
A Worldwide Trend
Beyond the United Kingdom, this trend echoes broader moves by cities worldwide to be more active players in defining their energy future. In some cases, this is leading to a move toward remunicipalization (as in Hamburg, Germany), but this is not the only path for cities looking to accelerate their energy transition. Many are working in close partnership with their local utilities to drive the adoption of renewables and to introduce energy efficiency schemes.
Utilities cannot be complacent. The continued interest in smart city ideas reflects a new confidence and impatience among city leaders as to the pace of improvement on a range of issues including energy policy. If existing energy markets and utility models are not helping them achieve those goals, then we can expect to see more cities challenging the status quo.
Tags: Building Innovations, Municipally Owned Utilities, Smart Cities, United Kingdom
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