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What makes a city “smart”?

What makes a city “smart”? It depends on who you ask. Responses covered a full range of opinions at a recent gathering of the Smart Cities Council (SCC), of which DNV GL is a sponsor. The SCC is an international organization of large companies doing business with the cities of the future. It’s a diverse mix of major global corporations each with its own take on what the Smart City of the future will look like.  Here are a few perspectives from SCC participants:

Smart Cities as centers of digital commerce

MasterCard Global, which hosted the meeting, views the Smart City as a center of digital commerce, and is involved in helping cities transform a range of fee-based services and payment transactions in the U.S. and abroad. These efforts are realizing significant reductions in costs to cities, as well as some unexpected benefits.  For example, in developing countries, MasterCard Global’s work has focused on improved delivery of electronic payments directly to households, which has resulted in significant reductions in crime.

Smart Cities as a combination of “software” and technology

An expert in developing country urban environments, Dr. Pedro Ortiz notes that Smart Cities are not just about technology, but will require the people and “systems of values” – i.e., what he terms “software” – to integrate technology in a successful and humane manner.

Another view: Smart Cities as an operating platform for innovation.

Smart Cities as networks

“The power of networks comes from their density” and cities are inherently about density, says one financial expert. Cities face many challenges in upgrading their infrastructure into digitally-based systems, and it’s essential that they develop along a common platform so that data flows and citizen services can be optimized. The clustering of services in a single network is the essential beauty of an urban system, if the silos that are inherent in most city operations can be broken down, or at least taught to coordinate their digital strategies.

From an energy standpoint, of course, DNV GL views Smart Cities as being built upon a strong foundation of a Smart Grid. Participants in the SCC agree that this appears to be more easily achieved with cities that operate a municipal electric utility.  A representative from Italy noted the corollary for Europe is when a high degree of cooperation exists between electric utilities and local government associations and mayors.

The challenge remains, then, how can investor-owned utilities (IOUs) in the U.S. best capture the business case to work with cities, and vice versa? Two key areas of common ground appear to exist, according to SCC participants:

  • The need for both cities and utilities to do a better job of connecting their services with customers/citizens in the digital era
  • The need for both cities and utilities to achieve drastic improvements in the efficiency with which they deliver services in order to maintain adequate revenue streams

A third issue may be emerging, as was touched upon at the SCC meetings: Perhaps cities can help IOUs in influencing the regulatory community to allow for more innovation in something all three groups share—the need to address public policy concerns while facing the reality of an increasingly digital society.  Utilities will indeed require more flexibility to make investments and try out programs that meet customers’ demands for energy-related services, while simultaneously protecting the interests of the disadvantaged in society.  Cities care about this too, as do regulators.  Perhaps considering the potential for mutual benefit of Smart Grids and Smart Cities, working together will provide a winning combination.

Some Statistics

  • The next decade will see 300,000 people per day – or 2 million per week –moving from rural environments to cities in the developing world.
  • Three billion people are digitally connected today, but that’s only 40%, so there is room for growth.
  • Cities consume 75% of the world’s energy, with 40% by buildings, at a wide range of efficiencies.
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