Navigant Research Blog

Smart Cites Are Shifting the Focus from Technology to Outcomes

— August 19, 2016

SmartCityNavigant Research’s latest Smart Cities report highlights how the smart cities market is entering a critical phase. The drive toward connectivity, real-time data, and embedded intelligence is expected to accelerate the availability of smart solutions for core city services and operations over the next 2 years. However, many cities still need to be convinced that such solutions can deliver real benefits against their key priorities. One of the biggest challenges therefore is to make a link between successful technology pilots and large-scale deployments of solutions that benefit a broad spectrum of city service users. Pilot projects that focus on the viability of specific technologies have their benefits, but the real requirement is to show how specific solutions can deliver real outcomes for cities within a realistic payback period.

One challenge is that the relatively small scale of most pilots makes it difficult to build a substantial business case to support wider deployments. For this reason, leading cities are now shifting their interest to demonstration projects that show a strong emphasis on both measurable outcomes and supporting business cases rather than technical viability. However, as we highlight in the report, there is often a funding gap between smaller demonstration projects and larger scale programs that can provide real evidence of scalable benefits.

A Focus on City Outcomes

It will be interesting in this regard to watch the progress of Columbus, Ohio as it implements its program funded by the US Department of Transportation’s Smart City Challenge. The award was worth $50 million, but the addition of an extra $90 million from a group of local businesses puts Columbus in an enviable position and makes the project a particularly interesting experiment for other cities. The combination in Columbus of a strong focus on city outcomes around social inclusion and inequality and sufficient funding to make a real difference precisely meets the bill for the next generation of smart city initiatives.

An encouraging development generally is that both cities and suppliers understand the importance of this shift to a focus on outcomes in smart city projects. Navigant Research’s white paper on smart city progress in the United Kingdom, for example, found a strong emphasis on developing outcome-focused programs in leading cities. Similar thinking also underpins the latest European Union-funded large-scale smart city demonstration programs that are using the concept of lighthouse cities to develop replicable solutions that can be tested in associated follower cities.

Innovation and New Approaches

Examples of supply-side innovation include AT&T’s work with partners and selected cities to demonstrate the concrete value of multi-application programs to cities. Another interesting approach is Cisco’s work with a number of national governments on Country Digitization Acceleration programs that aim to address the barriers to the adoption of digital technologies in key sectors of the economy, including cities.

Smart Cities Week in Washington, DC in September comes at a timely moment to discuss these developments and review progress on smart cities across North America and globally. I will be attending and look forward to discussions with city leaders and suppliers on how cities can further accelerate innovation and realize the benefits of smart technology on city services. Let me know if you would like to meet up at the event.


Cities Seek a Bigger Say in the Energy Market

— February 26, 2016

Bangkok SkylineNavigant 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.

Increasing Initiatives

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.


Australia Picks Up the Smart City Challenge

— October 26, 2015

Recent U.S. government support for smart cities research and the announcement of the selected cities for the Indian smart city program are just two signs of the continuing momentum behind urban innovation across the globe. Such developments only increase the pressure on other national governments and city leaders to clarify their own programs and ambitions around urban development. Australia is a good example of how that pressure is hard to avoid.

Despite being one of the most urbanized countries in the world, with around 90% of the population living in urban areas, Australian cities have played a relatively subdued role in the development of smart city ideas. However, there have been a few high spots. The Smart Grid, Smart City project in Newcastle is one notable smart grid pilot attracting global attention, but despite positive results, the follow-up has been limited. Sydney and Melbourne have also been leaders in promoting building energy reporting and energy efficiency, and a number of cities also have sustainability goals, such as the Sustainable Sydney 2030 program. However, there has been little in the way of a significant focus on the issues of urban innovation and sustainability. A recent report from the Australian Council of Learned Academies, for example, highlights the need for Australian cities to put much greater emphasis on clean and efficient mobility solutions if they are to sustain their growth and citizen expectations.

Waking Up to the Challenges

That report is among a number of signs that Australian cities and the Australian federal government are waking up to the challenges presented by globalization and climate change, as well as the opportunities offered by new forms of urban innovation. Adelaide, for example, has launched a number of initiatives including the creation of an Internet of Things (IoT) hub in association with Cisco. Melbourne has recently created a new post of Chief Digital Officer to lead its Smart City Office and has also presented its plans to become a smart city to a committee of the Australian parliament. The federal government is also taking cities more seriously. The new prime minister appointed the first Minister for Cities and the Built Environment in September, reversing the lack of focus on urban development issues shown by the current government so far.

Despite the environmental goals set by some Australian cities, the country’s record on emissions reductions remains poor compared to other developed economies.  Australia has one of the worst records for per capita climate emissions, on a par with the United States. However, whereas the United States has been making reductions in recent years, Australia has done little to mitigate its emissions. The rejection of a number of clean and efficient energy programs by the previous prime minister has not improved the situation. Australian cities have the opportunity to pick up the baton and show there is a better way forward.


Slower Networks May Be the Answer for Cities, Utilities, and Buildings

— May 29, 2015

A communications technology that promises lower bandwidth and higher latency seems an unlikely proposition in an age when the demands for speed and capacity are rising inexorably. However, low-power wide area networks (LPWANs) are set to play an important role in expanding the possibilities for the Internet of Things (IoT) in cities, buildings, and utility networks. LPWANs are targeted at applications that have low or infrequent data throughputs but which benefit from low-cost modems (less than $5), cheap connectivity (a service cost of a few dollars per year), long-range access, deep penetration, and an extended battery life for devices (around 10 years on a standard battery).

LPWANs come in a number of flavors. In February of this year, the LoRa Alliance was launched by a group of technology suppliers and telecoms operators that support the LoRaWAN specification by developed semiconductor company, Semtech. Initial supporters of the Alliance include Cisco, IBM, Sagemcom, and Semtech, alongside telecoms such as Bouygues Telecom, KPN, SingTel, and Swisscom. One of the first project announcements is partnership between French IoT supplier Actility and Swisscom to deploy a LPWAN around the cities of Geneva and Zurich.

Other players in the LPWAN space are focusing on the evolution of 4G LTE standards that will enable low-cost, low-power communications to support machine-to-machine applications. Several telecoms and equipment providers have announced what is referred to as LTE-M projects, including Nokia and Korea Telcom. Vodafone has also announced its own low-power IoT service, dubbed the Cellular Internet of Things, which it has developed in partnership with Huawei.

Another significant LWPAN initiative comes from French communications company SIGFOX, which is working globally with network system operators to deploy LWPANs using its ultra-narrowband technology. In the United Kingdom, for example, Arqiva is rolling out a SIGFOX-compatible network to 10 cities initially.

Do the Pros Outweigh the Cons?

LWPANs offer the prospect of sensors and other intelligent devices being able to connect instantly into a communications network at a cost of a few dollars a year. LPWANs are suitable for applications where high bandwidth and low latency are less important. LPWANs are not suited, for example, to applications requiring high bandwidth (such as video streaming), low latency, or the continuous tracking of moving objects. LPWANs are largely complementary to existing network technologies, but may present competition to radio frequency (RF) mesh technologies for applications such as smart street lighting and smart parking, and even some forms of smart metering.

LPWANs allow for low-cost piloting and easy scaling of innovative applications. A supplier developing a smart city solution, for example, could quickly demonstrate the benefits of an application for air quality monitoring. Similarly, a utility could use a sensor connected to a LPWAN to monitor assets that lack local power (such as gas and water pipelines) or where the business case does not justify a more expensive solution. A facility manager could use LPWANs to fill gaps in their existing building management system or to retrofit sensors to older buildings.

The LPWAN market is in the innovation phase, where an explosion of different approaches is to be expected and indeed welcomed. However, multiple versions and standards are likely to confuse potential adopters, and industry players need to push ahead on the development of open standards and interoperability models. Over the longer term we will see a growing focus on the so-called HetNet environments in cities, which will allow seamless integration across network protocols depending on location and requirement. In the meantime, low-power networks can be an important accelerator for smart cities and other IoT markets.


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