Navigant Research Blog

South Korea Draws an Ambitious Roadmap for Smart Grids and Smart Cities

— November 12, 2014

South Korea has ambitions to be a world leader in smart grid technology.  The smart grid test bed on Jeju Island has been the proving ground for the technologies, partnerships, and business models required to achieve this goal.  Led by Korea Electric Power Corporation (KEPCO), South Korea’s national power company, the Jeju Island demonstration project involved a wide range of South Korean and international partners.  The project ran from December 2009 until May 2013, had a total budget of around $240 million, and included two substations, four distribution lines, and 6,000 households.  The sub-projects included power grid upgrades, demand response, electric vehicles (EVs), renewable power integration, and new energy market models.

In this regard, Jeju Island mirrors many other smart grid pilots around the world looking at the integration of multiple technologies and new business models, particularly island community smart grid projects such those in Hawaii and Bornholm.

From Islands to Cities

South Korea is different in that the government has now laid out plans to move beyond its initial demonstration project into a wider series of trials and eventually a national rollout of smart grid technologies.  The next phase will involve a series of eight smart grid/smart community projects, to be run between 2015 and 2017.  More impressively, KEPCO has laid out plans to extend these projects into a series of municipal-scale smart grids by 2020.  The final stage of this grand scheme will see smart grid technologies deployed across the whole country by 2030.

The total budget for the pilot projects is $876 million, around $400 million of which will come from central and local governments and the rest from the private sector.  KEPCO alone is investing $155 million.  The government expects the private sector to take the lead in further development from 2018 onward.  As well as smart meters, an EV charging infrastructure, and energy storage, KEPCO is piloting a smart grid station that will provide sophisticated energy management and grid integration for commercial buildings, beginning with up to 220 KEPCO buildings.  It sees these smart grid stations as building blocks for community energy management systems and city-scale energy management.

Big City Vision

These are ambitious plans, and some of the Korean experts I spoke at Korea Smart Grid Week were skeptical about the ability of the government, KEPCO, and other stakeholders to meet the proposed timescales.  However, even if those timescales prove challenging, the vision and the roadmap are impressive.  I don’t know of any other country that has laid out a plan of this magnitude that would see smart grid technologies deployed across all of its major cities by 2020.  Such an achievement really would mark South Korea out as a world leader in both smart grid and smart city infrastructure.

 

Cities Are Making the Energy Cloud a Reality

— October 12, 2014

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.

New Collaborations

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.

 

Smoggy Skies Drive City Innovation

— September 16, 2014

The air pollution caused by rising vehicle numbers and coal-fired power plants in Chinese cities has been well documented.  But these issues are not limited to cities of the developing world.  In March, smog levels in Paris reached levels that forced the city government to limit vehicle access to the city and make public transportation free.  Subsequent analysis suggests that this drastic measure had a notable impact on air quality, if only temporarily.

Paris is not alone among European cities in suffering from deteriorating air quality.  London and other U.K. cities, for example, have been under the spotlight for failing to meet European Union (EU) standards on air quality.  A report in July suggested that Oxford Street in London was one of the most polluted roads in the word with regard to nitrogen dioxide (largely produced by diesel buses and cars), with levels 3 times the EU-recommended amount – and higher than Beijing.  London and some other U.K. cities are not expected to meet EU targets for air pollution reduction until 2030.

Fewer Vehicles, Cleaner Air

The World Health Organization estimates that outdoor air pollution causes 3.7 million premature deaths worldwide each year; this mortality rate is due to exposure to small particulate matter of 10 microns or less in diameter, which cause cardiovascular and respiratory diseases and cancers.  Of particular concern in cities are fine particulate matter below 2.5 microns, referred to as PM2.5, which can lodge deep within the lungs.  This life-threatening type of smog is created by burning vehicle fuel as well as other fuels such as coal and wood.

The need to address air pollution is becoming a significant driver for the adoption of electric vehicles in cities, restrictions on the worst polluting vehicles, and the introduction of technologies that can monitor and improve air quality.  Madrid, for example, is using parking fees to target the worst polluting vehicles, while also introducing an electric bike rental scheme.  Boston is piloting high-tech city benches that can collect information on air quality and provide solar-powered charging for electronic devices.  Other high-tech attempts to improve air quality have been less than successful: a project supported by the Mayor of London that used a form of glue to collect contaminants proved to be largely ineffective in capturing vehicle pollution.  More recently, the Mayor has suggested that diesel vehicles, responsible for much of London’s damaging air pollution, may face additional charges for driving in the capital under the city’s congestion charging scheme.

Looking East

In the future, western cities may look to China as a leader in air quality improvement.  In 2013, the Chinese government launched its Airborne Pollution Prevention and Control Action Plan, which will see it invest $277 billion in an attempt to reduce air pollution by up to 25% in selected provinces and cities (including the municipality of Beijing) by 2017 compared to 2012 levels.  Beijing alone is expected to invest around $160 billion.  Beijing is also working with IBM on a 10-year project called Green Horizon that will employ sensor technologies, big data analytics, weather modelling, and other advanced techniques to help the city monitor and address air pollution.  The project will also integrate renewable energy forecasting and industrial energy management.

In North America and Europe, air pollution is often associated with a previous age of industrialization, but the growing public awareness of the continuing threat to public health is accelerating policy and technology innovation.  Ultimately, air pollution in our cities needs to be addressed through a combination of transportation and energy policies and the general adoption of clean fuel vehicles and other clean technologies.

 

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.

 

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