Cleantech Market Intelligence
Cities Are Making the Energy Cloud a Reality
The possibilities for procuring and distributing clean, low-cost electricity offer challenges to cities and utilities – but also opportunities to forge new relationships and lay the foundations for cities that are clean and efficient in their energy use.
I’ve written previously about the close relationship between smart cities and smart grids. Early projects have largely been driven by utility programs for the piloting and demonstration of smart grid technologies and to gather intelligence on consumer and business responses to energy management programs.
The challenge is to integrate the lessons learned from these projects into broader smart city programs. Cities have played a role in these pilots but have largely been supporters of utility-driven technology programs. This is changing as cities develop more extensive energy management strategies of their own. Boston, for example, is working closely with its local utilities (National Grid and NSTAR) to reduce its $50 million-plus energy costs and meet the goal set in 2007 to reduce greenhouse gas (GHG) emissions 25% by 2020 and 80% by 2050. The city is targeting energy consumption across residential and commercial properties. Other initiatives include the introduction of an energy management system for Boston’s public buildings and the deployment of LED street lighting.
Minneapolis is going further. The city is using the renegotiation of its franchise relationship with its utilities (which governs their access and use of city resources such as roadways and buildings) to establish a new form of collaboration that it believes can be a model for the rest of the United States. The proposed Clean Energy Partnership between Minneapolis and its electricity and gas suppliers, Xcel Energy and CenterPoint Energy, will create a new body focused on helping the city meets its climate action goals of reducing GHG emissions 15% by 2015 and 30% by 2025 based on a 2006 baseline.
The increasing focus of city leaders on energy efficiency, reduced GHG emissions, and the development of a more resilient infrastructure requires close partnership with utilities. Cities like Boston and Minneapolis are pushing their utilities to help them meet their commitments, but the cities themselves are also taking a more active role. The Greater London Authority (GLA), for example, has become the first local government authority in the United Kingdom to be licensed as a “junior” energy supplier. This enables London to buy power from small generators and sell it to other public bodies at an attractive rate. The city expects to be buying and selling power by early 2015, and it hopes to reduce energy costs for London while also boosting the local renewable energy industry.
A Vision Emerges
The emerging energy vision for smart cities integrates large- and small-scale energy initiatives: from improvements in national infrastructure through citywide increases in efficiency to expanded local energy generation. Cities will thus become clusters of smart energy communities that can exploit the benefits of the new energy systems, such as distributed generation, dynamic load management, and active market participation.
This synergy presents an excellent example of the opportunities and challenges presented to utilities by the emergence of the energy cloud. Utilities need to see cities as more than demonstration sites for technology. Cities are ideal partners for developing the new relationships and the new services core to that energy cloud vision.
These issues are explored further in a new Navigant Research white paper, Smart Cities and the Energy Cloud. I will also be discussing these developments in my presentation on Smart Cities at Korea Smart Grid Week in October and at European Utility Week in November.