Navigant Research Blog

Urban Population Growth Drives the Need for Smart Cities

— July 15, 2014

The latest update from the United Nations on global urbanization trends is a powerful reminder of the most important of all drivers for smart city development: population growth.  World Urbanization Prospects, the 2014 revision reaffirms the core findings of previous studies but also further highlights the dramatic changes that will occur over the next 3 decades.

Today, the world’s urban population is close to 3.9 billion.  It will reach 6.3 billion in 2050, by which time two-thirds of the world’s population will be living in cities.   Nearly 90% of the increase in urban population will occur in Africa and Asia, and three countries alone – China, India, and Nigeria – will account for 37% of the 2.5 billion new urban dwellers.  Although more than half of the world’s urban citizens live in Asia today, the continent is only 48% urbanized and only 40% of Africans live in cities.  By 2050, Africa will be 54% urbanized and Asia will have reached 64%.

Percentage of Population in Urban Areas: 1950-2050

(Source: United Nations)

China and India Focus on Urban Infrastructure

China’s response to these pressures has been well-publicized.  The central government plans to invest up to $1 trillion in urban infrastructure during the 12th Five-Year Plan.  China’s Ministry of Housing and Urban and Rural Development (MOHURD) is currently assessing plans from 193 cities that are competing for up to $70 billion in investment to smart city development programs. In March 2014, the Ministry of Finance released details about the National New-type Urbanization Plan (2014-2020).  The government has stated a desire to develop a more inclusive path to urbanization that will benefit more citizens, improve the quality of life, and reduce the environmental impact of new developments.

India has taken longer than China to embrace urbanization as part of national policy.  As a result, despite the rapid growth of cities, like Mumbai and Delhi, and the global role of Indian technology suppliers, investment in the urban infrastructure has lagged economic development.  After decades of attempts to hold back the tide in favor of the traditional role of rural communities, there is a now a greater focus on the needs of the expanding urban population.

100 New Cities

India’s main smart city initiative to date has been the Delhi Mumbai Industrial Corridor (DMIC).  The development is intended to spur manufacturing and urbanization across a broad swath of northern India, with seven new cities planned and a total investment of $90 billion.  The new Indian government elected in May 2014 has put urban development at the core of its program and declared a target of building 100 new cities by 2022.  It has allocated around $1 billion for the program in its first budget.   According to M. Venkaiah Naidu, the new urban development minister, the planned cities will employ the latest technology and infrastructure, including advanced waste management and transportation systems.

The vast expansion in the urban population and growing expectations among city dwellers for better quality services and infrastructure will drive demand for smart city solutions across Asia Pacific over the next decade.  Navigant Research’s latest Smart Cities report estimates that a total of $63 billion will be invested in smart city technologies in Asia Pacific between 2014 and 2013, more than one-third of a global investment of almost $175 billion.


Smart Water Making Gains beyond the United States

— November 20, 2013

While much attention has been paid to smart water technology deployments in the United States, there’s evidence that smart water technology is gaining traction in other parts of the world.  The need is certainly acute: Unaccounted for water amounts to more than $14 billion annually around the globe, according to The World Bank.  In response, innovative water projects in various stages have emerged in Europe, the Middle East, and Asia.

In Europe, the SmartWater4Europe project involves 21 different entities, including water utilities, technology vendors, research centers, and universities.  With a budget of more than €10 million ($13.5 million), the leading players are: Acciona Agua of Spain, Vitens of the Netherlands, and Thames Water from the United Kingdom.  The overall goal is to apply new technologies for better management of drinking water networks.

The first project will be deployed by Acciona Agua in the Spanish city of Cáceres.  Acciona will install advanced technologies in the town’s city center and historic district.  The company will utilize a single software platform that integrates remote meter reading, water quality sensors, a geographic information system (GIS), and mathematical modeling that can detect faults, jams, or leaks.  Vitens will lead a similar project in the Dutch province of Friesland and Thames Water will conduct its project in London.  Working with the University of Lille, the companies will also manage a project in the French town of Villeneuve d´Ascq.  Results from the four projects will be collected over the next 4 years.

In the Desert

In the Middle East, Saudi Arabia is making major investments in water supply technology.  The water-stressed country has allocated up to $53 billion for a variety of projects to be completed by 2022, with much of the money going to desalination and wastewater treatment projects.  Desalination is the country’s main source of water, and though it requires large amounts of energy to transform seawater into potable water, this process is seen as the most viable solution given Saudi Arabia’s ample supply of oil and gas.

Also in the Middle East, the United Arab Emirates’ SembCorp Water & Power Company is expanding its Fujairah 1 desalination plant using technology from Energy Recovery, a California-based company that specializes in harnessing reusable energy from industrial fluid flows and pressure cycles.  Energy Recovery’s devices will be used at Fujairah 1, with the expectation the new gear will cut 83,000 metric tons of CO₂ per year, amounting to 140 million kWh of energy savings and more than $14 million in annual cost savings.


In Asia, several water utilities in India are moving ahead on projects to upgrade their water systems.  The Bangalore Water & Sewerage Board (BWSSB) has awarded a contract to French company Suez Environnement to improve its distribution system and reduce unaccounted for water (UFW), which is due to leakage, theft, or under-registered meters; UFW is also known as non-revenue water.  The goal of the 8-year project is to reduce UFW from the current level of 42% to 16% in the state of Karnataka, which includes more than 400 000 consumers.  Similarly, Suez has a new contract with Pimpri-Chinchwad Municipal Corp. (PCMC) to upgrade its water system and reduce UFW.  The two contracts for Suez are valued at $27.5 million.  And in Delhi, the Delhi Jal Board (DJB), the main water supplier in the capital, is deploying new gear from Itron, which includes 120,000 advanced meters, 40,000 standard meters, mobile collection equipment, and software.  Upon completion in March 2014, this project will be India’s largest mobile advanced metering system.

These projects demonstrate a growing global awareness of the need for modernizing water production, distribution, and treatment systems.  The problem lies in making these projects budget priorities amidst competing capital projects.  Clearly, oil-rich countries like Saudi Arabia and the UAE have more flexibility to direct funds to water projects, while other countries like India struggle to make the case among competing infrastructure needs.  Eventually, investments in water systems will have to be made in order to avoid looming water supply catastrophes.


Indian EV Market Falling Short

— June 26, 2013

On paper, India has many of the characteristics that would indicate a market where electric vehicles should thrive.  With 1.2 billion inhabitants, the country has several of the world’s most congested and polluted cities (Bangalore, New Delhi, Mumbai, etc.)  as well as a low cost of manufacturing labor and many highly educated engineers.

Reality, however, is falling far short of the potential, as fewer light duty plug-in electric vehicles (PEVs) will be sold in 2013 in all of India (less than 2,000) than in the state of Oregon.  Only one domestic PEV, the Mahnidra e20, is currently on sale in India, and international companies have not pursued the Indian market due to the many challenges facing PEVs in the country.

Annual Electrified Vehicle Sales by Vehicle Type, India: 2013-2018


(Source: Navigant Research)

The e2o is the first Indian-made electric car in nearly a decade, and Mahindra plans on adding a second model, an electric version of the Verito sedan, in 2014.  But even if there were more PEVs to choose from, demand would likely be minimal due to the higher cost and lack of EV infrastructure.  The power grid in India is notoriously unstable, with many regions suffering daily power outages, which could potentially strand PEV owners needing to recharge their batteries.

As described in Navigant Research’s new report, Electric Vehicles in India, the supply of PEVs in India could be ignited if the Indian government establishes a multiyear subsidy for electric vehicles to get the cost of PEVs closer to conventional vehicles.  While the government’s National Electric Mobility Mission Plan 2020 promises support for PEVs and charging infrastructure, the government has had a pattern of giving and taking away incentives within the same year, which has made auto manufacturers wary of entering the market.

It’s somewhat understandable that PEVs are not a top spending priority for the Indian government as it is dealing with an economy that is on the verge of slipping into crisis.  However, the weakness of the grid in India could actually be turned into a selling point for PEVs.  Vehicle-to-grid (V2G) technology could enable PEVs to be used to address grid instability, as a car’s battery pack could keep a house running when the power is out. That, however, would require purchasing additional equipment.

The market for hybrids (HEVs) in India isn’t much better, with fewer than 1,800 expected to be sold in India in 2013, also partially due to a lack of available models.  In the short term, selling two-wheeled electric vehicles is clearly the larger opportunity.  As the Navigant report shows, more than 500,000 electric bicycles, scooters and motorcycles will be sold this year in India ‑ a figure that will rise to more than 1.1 million by 2018.


Cutting Power, Cutting Progress

— March 6, 2013

Source: The HinduI recently spent three weeks in India, and like most Americans traveling the subcontinent, I was struck by the deep differences between our two societies.  Waste disposal is a highly visible one – in the United States, we like to bury our trash and forget about it.  In India, trash is thrown on the ground and forgotten, or rather, ignored.

One of the sharpest differences between the United States and India, though, is the power system.  Citizens of developed countries are used to 24/7 access to power.  Sure, sometimes that power may be more expensive (thanks to utility attempts to balance demand throughout the day and night).  But when we flip a light switch, we take it for granted that the light will indeed turn on.  What if it didn’t?  What if we had regular power cuts, either scheduled or for emergency purposes?

In India, power cuts are a part of life.  The infrastructure was not built to handle such a huge population and, while construction is rampant throughout India, progress is slow and expensive.  Thus, utilities simply shut off the power when it becomes too difficult or expensive to run.  In Chennai, the capital of Tamil Nadu, power cuts are scheduled for 2 hours a day, staggered across different parts of the city.  In the house where I was staying, the power went off from 4 p.m. to 6 p.m. daily.  In remote villages, access to electricity is the exception: power cuts can last as long as 16 hours, every day.

Geographic Inequality

This may seem backward to those of us used to constantly running air conditioners.  But if American utilities practiced routine load shedding, even for 5 minutes a day, huge amounts of energy could be saved.  This is the principle behind smart appliances, which don’t consume electricity when it’s not needed.  In India, where smart appliances are still essentially unknown, load shedding is an effort to prevent emergency power cuts and blackouts, such as the massive blackout that gripped 20 states in north India last July.  Demand often outstrips supply, especially with inefficiencies and theft common across the Indian power grid, which accounts for between 20% and 50% of all power generated in the country.

Officials tend to blame coal shortages, although it is really a matter of geographic inequality.  India’s grid is fragmented.  Even when there’s a surplus of electricity in one part of the country, it’s impossible to transport it without losing most of the energy along the way.  Clearly, the Indian grid needs revamped massive upgrades.  On the website, citizens can report electricity outages via mobile web, SMS, Twitter, and other smartphone applications.  This website takes the information and makes it publicly available.  This is only effective in major cities, though, where cell phone reception is reliable and consistent.  The full extent of load shedding is hard to quantify.

In India, one of the most rapidly developing economies in the world, major inefficiencies in the grid cause many people to be without electricity on a daily basis, slowing development and costing billions of rupees in lost productivity, especially in villages.  The situation could be improved by integrating localized renewables, which is already happening, as well as better mapping of electricity use nationwide, which could reduce theft and inefficiencies.

It’s difficult to imagine, as an American, the effects of such widespread blackouts.  But with the growing frequency of major natural disasters and our own grid aging, they may soon become more familiar.


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