$350 Trillion Investment In New Urban Development By 2040. Even More Spent On Regeneration and Retrofitting Existing Cities.
Never before have the world’s cities faced such a daunting combination of challenges, or required such technological creativity to solve them. Cities are at a crossroads. While 50 percent of the world currently lives in cities, by 2050 that figure will be nearly 70 percent.
Unless radically different ways of living emerge quickly, many cities will be environmental disasters, plagued by over-crowding, squalor, and disease. As it is, cities currently consume 75 percent of the world’s resources and account for a similar percentage of all CO2 emissions.
Avoiding ecological disasters and their impact on society is why the smart city movement has sprung up over the past decade. Though there is variation in how the phrase “smart city” is interpreted, broadly speaking it is about harnessing technology to transform urban infrastructure. The goal is to make better use of energy and resources and in doing so to improve the lives of citizens. A whole ecosystem of information technologists, social biologists, economists, engineers, urban planners, and many other experts from medical, manufacturing, and architectural disciplines have coalesced around a smart city vision that offers a radical new approach to urban living. Governments and city officers everywhere are keen to see what this approach can do for them, not only in terms of the environment but also to help them better compete in the global battle to attract and create new businesses. In other words, this huge challenge is creating a business bonanza.
Examples of smart city projects around the world are plentiful:
• Amsterdam and San Francisco are using Urban EcoMap.org, an interactive Web service created by network equipment supplier Cisco that displays environmental footprints, broken down by postal code, in order to raise awareness and build community activity around emission reduction.
• In Cambridge, UK, the city council is looking at smart city applications for rubbish bin collection. The bins will send signals when full, and the collecting carts can plan the most fuel-efficient routes.
• Again in England, the Birmingham city council is working with IBM to develop a strategic decision-making tool to support citywide planning on future investment decisions. The city is one of a hundred Smart City Money Makers municipalities to which IBM is awarding a total of $50 million worth of technology and services in its Smarter Cities Challenge program. Says IBM: “The cities have been selected because of the strong personal commitment by each city’s leadership to put in place the changes needed to help the city make smarter decisions.”
• San Francisco has adopted one approach that might be followed by other budding smart cities: Its mayor has appointed a chief innovation officer, whose job is to make sure technology is a driver of change in city government. Numerous electorates in other areas are displaying much greater interest in what their local governments are doing to embrace smartness.
• In Rio de Janeiro, IBM has been working with city officials on a flood and landslide forecasting system, which includes a command center that integrates more than 20 city departments to improve emergency response management. IBM is working with 2,000 cities worldwide on similar systems.
• In Ethiopia, Siemens is helping create a sustainable urban locale called Masdar City, about 6 kilometers from downtown Abu Dhabi. By implementing a power grid combined with advanced building technologies, Siemens, along with MIT, GE, BASF, and other partners, aims to create the cleanest city in the world. These projects typify the smart cities trend. Andrew Comer, director of environment and infrastructure at consulting engineering firm Buro Happold, says: “A key aim is to develop cities that are able to exploit technology and create infrastructure networks that are linked together. This integrated approach will enable greater increases in efficiency and reduce demands on natural resources.”
But as Volker Buscher, director, smart cities, at global consultancy Arup, points out: “Every city has its own context, and no single approach will transform each one into a smart city.”
The Technological Basis of Smart Cities Smart cities deploy advanced information technologies to monitor and respond to every aspect of city life in ways that minimize carbon emissions and maximize quality of life.
Cashing In On Smart Cities
Built on a smart infrastructure grid that senses and responds to the environment in a continuous feedback loop without human intervention, these cities offer the potential to regulate and optimize our energy usage, our traffic movements, our communications, and our ways of doing business. If, for example, a building is generating more heat than it requires or is using more water than its cooler system provides, sensors detect the resource overflow and automatically divert it to other buildings via the urban grid.
Utility suppliers will play a central role in smart cities, with smart metering of water and energy consumption used to gather data that can automatically trigger more efficient usage. Transport systems will also be in the vanguard, with, for example, traffic sensors reacting to temperature changes, directing sand trucks to icy areas or ambulances and police to crash zones.
Currently, a smart city infrastructure is based in part on readily available and relatively low-cost technologies – smartphones, broadband wireless Internet, netbooks and tablets, and smart meters – that improve sharing of data and information. But we are heading toward much greater interconnectivity among many different systems. The goal is an urban nervous system that exploits advanced sensor technologies to feed information to a central “brain,” which then controls fundamental aspects of the city’s behavior and energy usage.
Smart City Technology Innovators
There isn’t a major information technology, engineering, or architectural company in the world that isn’t involved at some level with smart cities. Companies like IBM, Accenture, Siemens, Cisco, Foster, Arup, Gehry, Oracle, O2, Ericsson, Arup, Buro Happold, and many other global names – all have dedicated departments involved with multiple national and local government agencies.
Says Andrew Comer of Buro Happold: “It’s been estimated by Booz & Company that $350 trillion will be spent on new urban development over the next 30 years – and then there’s the regeneration and retrofitting of existing cities as well. If only a small percentage of it is spent on technology the market is huge, hence the interest from the big IT firms.”
ABI Research believes the global market for technologies that support and enable smart cities will grow to more than $39 billion in 2016 – nearly quadrupling the level of $8.1 billion in 2010.
In the Municipality of Paredes in northern Portugal, Living PlanIT, a firm specializing in software solutions for smart cities, plans to build a city of the future by 2015. The company’s Website states: PlanIT Valley will combine intelligent buildings with connected vehicles, while providing its citizens with a higher level of information about their built environment than has been possible previously. Its efficiency will extend into the optimum control of peak electricity demand, adapted traffic management for enhanced mobility, assisted parking, and providing emergency services with the capacity to have priority when needed in the flow of traffic.
Once completed, PlanIT Valley will serve as a “living laboratory” and showcase for the solutions created by Living PlanIT and its partners. Steve Lewis, founder and CEO of Living PlanIT, became involved with property development in 2004 and was shocked by the inefficiencies of real estate and construction. He studied engineering and manufacturing processes in the aviation and automotive industries, and came up with insights that underpin his company’s approach to building smart cities. The Living PlanIT platform is the Urban Operating System (UOS), which supports middleware, networked sensors, and applications created by Living PlanIT and its partners for city environments. Lewis, who’s worked at IBM and Microsoft, believes he can use this technology to build office blocks for 35 percent less than the present rates. He sells the smart city concept to real estate developers by highlighting the increased property values that will follow. He estimates that $15 trillion will be spent on IT in retrofitting existing cities over the next 15 to 20 years.
Lewis explains that this growth is being accelerated by machine-to-machine, or M2M, networking. Far more robust than the current Internet, this kind of smart-city infrastructure can be relied upon to transfer highly sensitive and complex data without the risk of losing connectivity. Lewis compares the move to M2M to the transport transition from horses to steam engines. Living PlanIT’s business model is partly predicated on licensing apps to developers and corporations, which then incorporate them into their own operations. After six years in business, Living PlanIT claims annual sales exceeding £1.5 billion (more than US$2 billion).
Obstacles to Smart City Deployment
According to Volker Buscher of Arup, on a scale of 1 to 10, we are probably only at level 3 or 4 down the smart city route. There’s a whole host of issues and barriers to be overcome, including a lack of political impetus and leadership; difficulty getting machines to talk to each other; and the central issue of funding. Many of the trial projects that prove that smarter cities can deliver improved outcomes have included substantial funding from research. The financial and commercial models that would justify investment from government and other sources are still largely missing.
While new smart cities understandably attract much of the media limelight, states Martin Powell, head of urban development at Siemens: “The real challenge is looking at the existing big cities and retrofitting them. This is much trickier.”
The infrastructure of established cities, of course, complicates the processes involved in laying down smart grids. Many more groups and individuals are party to the development, and not all of them wish to cooperate, for a variety of reasons. Politicians may listen to the objectors more than to the advocates. And as Powell says: “The thinking in creating smart cities has to be long term, but politicians often have more short-term priorities.”
Dave Fitch, a smart cities consultant at Dere-Street Research, who has worked on some of the major smart city projects in the UK, says that it’s essential that politicians have a vision of where they want cities to go: Technological leadership will not develop a smart city – we need a vision of what we want from our future cities, which means clear policies on issues such as cars versus public transport. Too often, infrastructure and change management are dirty terms… And sometimes people at the top aren’t equipped to take these decisions, or they fear their decision-making will be challenged by the radical changes that smart cities deliver to their citizens.
Another major challenge to be overcome is data privacy. Andrew Comer at Buro Happold says there are serious questions to be asked about governance of smart cities: Who owns the data generated and gathered through the smart grids? Who can use it? What security and safety measures are put in place? And who benefits – is it the private investors who fund the infrastructure, or the citizens or the municipality? Ideally, all should benefit, and those benefits will be significant if we can get it right. The potential for systemic privacy infringement is a concern that smart city planners are addressing. Steve Lewis at Living PlanIT, for instance, claims his company has found a way to electronically “cloak” users of smart-city networks. Some might fear that techniques like these could mean putting cities at the mercy of proprietary systems. But spokespeople from Siemens, IBM, and other vendors say that succeeding in the smart cities field will require cooperation.
“Open architecture is the direction of travel,” says Rick Robinson, an IBM executive architect. He compares the integration required for smart city technology to integrating Websites in the early days of the Internet.
Steve Lewis shares a similar view: The old way of “screw you, this is the system” can’t be the way forward. It’s got to be an open-data format. Of course we have trade secrets – it’s how we earn. But trying to stuff one system down other people’s throats does not allow inclusivity or future integration, and that’s essential to the interoperability smart cities rely upon.
Advocates of smart cities also point to the problem of fusing infrastructure with technology – where infrastructure has 100-year life spans and technology only a few years. Comer says it will be necessary to design smart-city infrastructure in a modular fashion: It requires an approach that allows cities or developers to “unplug and replace” systems – a capability for “unhooking” whole parts of networks or systems and replacing them with new models that are more efficient.
Smart Cities Need Smart Money
The biggest challenge to smart city deployments may be funding. Some analysts have questioned the smart city business model, claiming that several developments to date are vanity projects with no visible return on investment. Planet Valley in Portugal is at least a year behind schedule because of the collapse of the bond market in 2007/8; and Masdar has also experienced funding problems. Both projects, however, have put these stumbles behind them, and Lewis and Powell both detect a strong appetite from lenders, despite the global recession. “Banks like risk, and smart cities offer a range of different risk levels,” says Lewis.
But Comer points to the creation of value in hard monetary terms as still a major obstacle: There is no evidence yet of return on investment. If we cannot answer the ROI question, we are expecting investors to take risks in a climate when risk is still not a particularly attractive option. Smart Cities should be able to operate on reduced operational costs, and there should also be other benefits, such as spinoff industries on the back of access to large data sets, asset value-protection through greater resilience and future-proofing, etc. All those things should generate value – but we need the evidence, and, as a consultant, it is our role to provide that evidence – but at the moment it’s a step-by-step process.
Smart cities are gathering momentum, but it may be awhile before that propels the many projects now underway into a general move toward more innovative and future-focused urbanization.
— By Denise Chevin, with additional reporting by Andrew Pring