Navigant Research Blog

The Smart City – From Vision to Reality

— January 9, 2012

The news that the 2012 TED Prize has been awarded for the first time to an idea, The City 2.0, is further evidence of the importance of cities in addressing global issues of sustainability, economic development and technology innovation.  The TED Prize is linked to the acclaimed TED conferences and video series promoting ground-breaking technical, scientific and cultural ideas.  According to the prize director, the idea behind the award is to challenge the TED Community “to embrace radical collaboration on one of the most pressing issues we face: how to build sustainable, vibrant, working cities.”

The TED announcement is just one of series of new studies, events and initiatives all focused on taking sustainable urban development programs to the next level.  Eric Bloom has already covered the recent IBM-sponsored smart city gathering in Rio de Janeiro.  He highlighted the innovative projects in Rio that are addressing systemic challenges and preparing the city for the arrival of the World Cup and the Olympic games.  The UN has provided another useful example of how major events can propel new thinking about city design and development.  It has pulled together lessons for sustainable cities drawn from the Shanghai World Expo in 2010, which had  the theme of Better City, Better Life.  The Shanghai Manual, A Guide for Sustainable Urban Development, provides a 300 page overview of the opportunities for cities to take new approach to issues such as economic development, transport, building, waste management and the use of ICT.  The manual is part of the UN’s attempt to educate and train city authorities around the world on how they can make their cities a positive force for economic development and environmental sustainability.

The core themes of the UN study were also the common topics of conversation at the Intelligent City Expo, which I attended in November.  Over three days in Hamburg – European Green Capital 2011 – city managers and political leaders, not-for-profit organizations and suppliers debated the way forward for cities.  There was general agreement that a smart city is one that combines a commitment to sustainability with continued economic and social development supported by the innovative use of technology.  Much of the discussion focused on the practical challenges of developing the political leadership, citizen engagement, and new operating models that enable the transformation to a smart city.

One of the biggest challenges is how to provide the financial underpinning for that transformation.  In fact, the first question asked at the conference to the opening panel was “Who pays?”  I chaired the panel that addressed this topic on the second day of the conference, comprising representatives from European investment bodies, including the European Investment Bank, and also from the private equity sector.  In Europe at least, investment funds are available for trials and pilots, but taking projects to large-scale deployment is still uncharted territory in most cases.  It’s also clear that the private sector is eager to find new ways to work with city authorities but they need to find the right service and right business models.

One area of growing interest is the value of information and data assets in helping to reimagine the way the city operates.  This issue has been taken up by The Climate Group, in a new report on smart city economics, Information Marketplaces: the New Economics of CitiesThe report, produced with the help of Accenture, Arup and the University of Nottingham, examines the potential for cities to use untapped data and information assets to improve decision making, make better use of city infrastructure and develop new forms of  cooperation with the private sector and with citizens.  It’s a useful contribution to the growing debate as to how city data and information assets can provide a technical and financial basis for smart city transformation.   The challenge for cities is to understand what data they should make available, in what form and above all what partnerships they need to forge to ensure that that hidden value is realized.


Canada Looks to the Grid for Emission Reductions

— January 4, 2012

Last month, as the international climate change talks in Durban, South Africa wound up, Canada invoked the country’s legal right to leave the Kyoto Protocol.  Canadian officials cited several reasons for their departure from the accord; the main reason is that Canada is seeking to avoid the financial penalties from its failure to comply with its stated targets for reductions of carbon emissions.  Canada’s representatives have also indicated that Kyoto is irrelevant without the participation of two of the largest polluters: China and the United States.

That argument aside, as oil prices continue to rise over time and the opportunity cost of domestic consumption increases, Canada may decide to maximize the country’s oil exports at the expense of domestic use.  According to the U.S. Energy Information Agency, the country’s 175.2 billion barrels of proven reserves of oil put Canada behind only Saudi Arabia and Venezuela, and it is the only non-OPEC member in the top five.  That means that the global market for oil exports may give Canada an economic reason to reduce the use of fossil fuels, and thus emissions, within its own borders.  Canada, along with other petroleum-exporting countries will simply export a larger proportion of oil along with the emissions they produce.

In terms of electricity generation, Canada’s vast hydroelectricity generation capacity and pumped storage reserves are often cited as the reason why further improvements in emissions are not economically viable.  Cheap, low-carbon hydro prices many other cleantech options out of the market.  For that reason, one opportunity for Canada lies in ensuring the stability of the electrical grid as a system.  The provinces of British Columbia and Ontario have been especially aggressive in introducing the types of market drivers that encourage distributed storage, although without any obvious overall intent.  These drivers include dynamic pricing, distributed solar PV incentives, and plug-in vehicle programs.

For example, in Ontario (a partially deregulated market), there are three different time-of-use prices: 6.2¢ per kilowatt-hour (kWh) for off-peak, 9.2¢/kWh for mid-peak, 10.8¢/kWh for on-peak – and these prices are reviewed every May 1 and November 1 by the Ontario Energy Board (OEB).  British Columbia, and more specifically BC Hydro, is testing smart meters, dynamic pricing schemes, and demand response schemes (hot water heaters and thermostats) in an effort to understand how consumers use and respond to these peak-shaving measures.

Because of Canada’s position as a net energy exporter, and the country’s diverse energy resources (including hydro), any improvements to emissions on the grid side will be limited to incremental improvements in the grid.  Distributed storage is a good option for optimizing an existing system – such as the Canadian grid – bit by bit, and kilowatt-hour by kilowatt-hour.


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