Smart cities in Germany

The latest installment of the blog series based on our smart cities in Europe, enabling innovation report takes a look at the findings on smart cities in Germany. With its abundance of renewable energy and
high levels of recycling, one might expect
Germany to be ahead of other European
countries in the development of smart
cities. This is not the case.

The European
Parliament places Germany in its third tier
of countries ranked by their development
of smart cities, meaning only 25-50% of
German cities with a population of over
100,000 have at least one smart initiative.*

One area where Germany is particularly
behind is smart meters. A cost-benefit
analysis of the merits of rolling out smart
meters in July 2013 found that smart meters
are only justifiable for certain consumers.
The Government has, therefore, ignored EU
recommendations to install smart meters
for 80% of electricity consumers by 2020.
This decision has undoubtedly influenced
our German cohort of survey respondents –
only 18% of respondents based in Germany
believe that energy consumers generally
understand and are convinced by the
benefits of installing smart meters, compared
with a European average of 31%. As a result
almost half of survey respondents located
in Germany (47%) believe the country’s
decision to ignore EU recommendations
relating to smart meters will significantly
hinder the development of smart cities. 

Smart meters aside, Germany is taking
steps to improve the reliability of its grid to
accommodate the increase in renewable
energy production during the past five years.
Some 35.7 GW of solar PV capacity was
operational at the end of 2013, compared
with just over 6 GW at the end of 2008.** Survey respondents confirm that the influx of
renewable energy on the grid is driving grid
Germany
investments – 35% of respondents strongly
‘agree’ that the expansion of renewable
energy on the grid is the main driver for
much-needed investment in energy storage
and smart grids, the highest proportion in our
surveyed European countries. 

One reason why Germany has been slow
to develop smart cities is the relatively
low proportion of its population living in
urban areas. Statistics on the proportion of
Germans that live in cities vary considerably
due to differences in how cities are defined.
However, Germany is consistently ranked
lower than the UK, Italy, Belgium and
the Netherlands by the percentage of its
population living in urban areas. It, therefore,
might be expected that Germany has
prioritised smart ways of travelling between
cities, such as electric vehicles. However, as
Thomas Funke, Partner at Osborne Clarke,
explains, innovation in this area has also
been slow to materialise.

“The German Government recently
launched an initiative that will allow
owners of electric vehicles to use
lanes normally reserved for buses
or taxis,” he said. “This is intended
to incentivise the purchase and use
of electric vehicles, as existing tax
breaks have shown little effect.
There is also an initiative to fund
research and to enhance the
availability of electric vehicle charging
infrastructure, but more could be
done. So far the initiatives the
German Government has undertaken
are not as far reaching as those that
exist in other European countries
such as the Netherlands, where
electric vehicles or plug-in hybrids
are heavily subsidised. As consumer
interest is growing, subsidies in the
form of cash-back rebates or more
substantial tax breaks would speed
up developments.”

More smart cities information 

Download the full smart cities in Europe report here. 

*European Parliament Policy Department (January 2014), “Mapping Smart Cities in the EU” 

**European Photovoltaic Industry Association (June 2014), “Global Market Outlook for Photovoltaics 2014-2018”