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.

 

Two and Four-Wheel EV Sharing Programs Growing Rapidly

— August 8, 2016

E-BikeConsumers around the world are increasingly searching for new products and services that will enable improved mobility in and around city centers. A key challenge for cities in the 21st century is how larger numbers of people can be incentivized to move away from personal cars for motorized transportation and toward cleaner mobility devices and services.

Shared EV programs reduce vehicle emissions and noise while simultaneously improving mobility in cities—something personal EV ownership cannot achieve on its own. As the EV industry continues to evolve and help address some of these concerns, vendors are experimenting with shared EV programs that utilize an array of vehicle types.

Increasing Interest from Automakers

In early August, BMW announced that it will be expanding its ReachNow carsharing program to cover Portland, Oregon after successfully deploying the service in Seattle, Washington in early 2016. The service attracted more than 13,000 members within its first month of operation. BMW temporarily matched Car2Go’s per-minute prices and eliminated its membership fee for increased competitiveness. The automaker uses a mix of vehicles for the program that includes MINI Coopers and the all-electric BMW i3.

Additionally, Nissan is collaborating with San Francisco-based electric scooter-share company Scoot Networks to deploy a fleet of 10 mobility concept cars (the Renault Twizy) in the Bay Area. Beginning August 2, new market entrant Green Commuter is launching a carshare and vanpool fleet in Los Angeles using entirely all-electric Tesla Model X SUVs.

E-PTWs Continue Broad Implementation

In the electric power two-wheel vehicle (e-PTW) market, Bosch is launching an electric scooter (e-scooter) sharing program in Berlin, Germany. The company is using 200 e-scooters from Taiwanese-based company Gogoro, which implemented a battery swapping network business model for its e-scooter deployment in Taipei. The battery swapping model from Gogoro is being adapted to be more of a traditional carshare model in Germany. E-scooter sharing services are expanding quickly across Europe, with iconic cities such as Paris, France and Barcelona, Spain having already implemented similar programs.

Globally, an increasing number of bicycle sharing programs have also been turning toward electric-powered technology as of late. Most recently, it was announced that the largest electric bicycle (e-bike) share program in North America (roughly 200 e-bikes) will be implemented in Baltimore, Maryland in the fall of 2016.

Whether it’s on two wheels or four, the plethora of new on-demand mobility programs sprouting up across the globe indicates that transportation is moving toward a future that is both shared and electric. Vendors looking to capitalize on this rapidly evolving business will need to offer high levels of vehicle accessibility, affordable hourly usage rates, and differentiating product options. For more information on electric mobility devices and their impact on cities, look out for Navigant Research’s upcoming Electric Mobility in Smart Cities report.

 

Realistic Goals, Measurable Outcomes Lead to Columbus Smart City Challenge Win

— July 21, 2016

Bangkok SkylineOhio won its first major victory of the year when LeBron James led the Cleveland Cavaliers to the state’s first major sports title in over 50 years. Soon after, the City of Columbus, Ohio was officially announced as the winner of the U.S. Department of Transportation’s (DOT) Smart City Challenge. The city is set to receive a total of $140 million, with combined contributions from the DOT ($40 million), Seattle-based company Vulcan ($10 million), and a group of local businesses called the Columbus Partnership ($90 million).

One of the keys to Columbus winning the competition and beating out the better-known technology centers of San Francisco, Austin, and Denver was the city’s ability to demonstrate that its plan would result in increasing poor residents’ access to new transportation options. The city has proposed numerous solutions in this area. A few of the key proposals were:

  • An autonomous vehicle program that would transport residents from the Linden neighborhood—which has 3 times more unemployment compared to the city average—to a nearby employment center.
  • The creation of transit cards for low-income populations to use for ride-hailing or carsharing services, with or without having smartphones or bank accounts.
  • The building of smart corridors through wireless technology, which enables a new bus rapid transit (BRT) system that is more safe and efficient for high numbers of users (it’s important note that Columbus is also the largest city in the United States to not offer rail service).

Several of these transport initiatives are also expected to be integrated with improved access to healthcare services to help address the high infant mortality rates in many of Columbus’ poorer neighborhoods.

Other components of Columbus’ transport plan include an increase in electric vehicle (EV) charging stations throughout the city, enhancing smart grid technology by using EVs as distributed energy storage devices, expanding the municipal EV fleet, and securing 50 of the city’s CEOs to personally commit to buying and driving EVs, as well as installing charging stations for their employees.

Additional Funding Sources Also Crucial

While a focus on increasing poor neighborhood access to reliable and affordable transportation options was vital to the final awarding of the Smart City Challenge competition to Columbus, the $90 million pledged by the Columbus Partnership (if the city was to be selected) also played a major role. Financing the development of smart city projects continues to be the most significant challenge in the market, as outlined in Navigant Research’s recently published Smart Cities report. The guaranteed added investment by the Columbus Partnership made the city a highly realistic option for successful implementation and more likely to achieve the outcomes that were highlighted in its final proposal.

 

City and Regional Governments Ramp Up Fight Against Climate Change

— June 20, 2016

BiofuelGlobally, climate action and greenhouse gas (GHG) reduction programs are becoming increasingly prevalent as electricity costs and climate change become larger areas of concern for residents. In North America alone, cities such as Boston, Los Angeles, Portland, San Francisco, Minneapolis, Vancouver, and Toronto have defined ambitious targets for improving sustainability and reducing GHG emissions and energy consumption.

While national aspirations were largely aligned during the United Nations Framework Convention on Climate Change COP21 Paris conference, the global partnership lacks meaningful implementation and enforcement mechanisms. In the United States in particular, climate change is heavily politicized, and little action is being taken on a national legislative basis to combat the problem.

Climate Action Plans of Selected Cities

Climate Action PLans of Selected Smart Cities_RC blog

(Source: Navigant Research)

To fill the gap from strong city action and low levels of national alignment, several state and provincial governments have recently taken bold action to combat climate change. The province of Ontario unveiled its new sweeping Climate Change Action Plan in June 2016. The initiative is expected to spend up to $8.3 billion on a range of clean technology programs, largely funded from the provinces’ cap-and-trade program. The Climate Change Action plan aims to quickly transition the province toward more energy efficient heating systems, electric and hybrid cars (via a rebate of up to $14,000), promote the conversion of diesel-powered trucks to natural gas, and help the industrial and agricultural sectors adopt low-carbon technologies.

State and Provincial Collaboration

The state of California, well-known for its clean energy leadership, has a cap-and-trade program that is linked to three Canadian provinces: Quebec, Manitoba, and Ontario. Cap-and-trade programs now cover 61.8 million people across North America—38.8 million in California, 13.6 million in Ontario, 8.2 million in Quebec, and 1.2 million in Manitoba. Each of these programs are designed to drive down emissions and set aggressive GHG reduction targets. Over 17% of the combined North American population (354.1 million people, with 318.9 million from the United States and 35.2 million from Canada) is now participating—knowingly or unknowingly—in a cap-and-trade program without any national or regional framework in place. This figure is anticipated to grow significantly as more states and provinces look to fill the void left by national governments by creating enforceable programs that reduce overall GHG emissions levels.

 

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