Smart cities: the view from Silicon Valley

Continuing on from Osborne Clarke’s smart cities event series, on 17 March at a round table event held in OC’s Silicon Valley office, a group of industry experts gathered to discuss some of the barriers facing technology businesses as they attempt to deliver innovative applications, to transform cities through smart technology. The group debated the drivers for change that will lead to scaling of these applications and how, through effective collaboration, fragmented and sometimes independent propositions can be connected, building momentum through shared platforms, knowledge and data sharing, to produce benefits that are clearly understood by the general public.

Citizen engagement

A common theme recognised by all involved in the discussion is the need for wider education and communication of the positive impact that can be achieved by using technology to drive change in making cities smarter. Change can be uncomfortable so it is important that the hearts and minds of the general public are brought along before governments or city authorities mandate the use of new technology, making claims of greater control and efficiency. There must be compelling and sustainable advantages, otherwise consumers cannot be expected to see the benefits and may be naturally suspicious.

Trilliant, a contributor to this round table, has been involved in smart metering trials in the UK. One observation based on Trilliant’s experience was the setback caused through public concerns about the purpose of the usage of smart meters. Although, in this case, the UK Government had mandated the roll-out of smart meters, it had failed to anticipate some of the public concerns. Failing to educate the general public in the cost benefits, alongside broader environmental benefits, has resulted in limited success and a slower roll-out of the programme than desired.

Silver Spring Networks, who also contributed to the round table discussion, has been making significant in-roads into shaping smart cities through projects in collaboration with various European cities, including the adoption of its street lighting management technology. Silver Spring has a smart street lighting pilot underway in Glasgow and, in conjunction with the City Council, has created a value proposition that shares a vision for innovation with the local community. Smart street lighting is responsive to traffic flows and human interaction during hours of darkness with a clear environmental and cost saving benefit. But, what if a central platform was created to share knowledge and data gathered from traffic management and human behaviour to spur innovation? This is the approach being taken by Glasgow City Council as it actively encourages application developers to use data captured through intelligent street lighting technology in conjunction with census data. The aim is to encourage communication and collaboration to create an environment that stimulates innovation and economic development. Glasgow is not unique in this approach – other pilots are underway in Bristol, Copenhagen and Paris. 

“Industry players need to focus less on the technology and more on the operational, citizen and environmental benefits that these technologies deliver.” 

Doug Wolfe, Vice President of Business Development, Trilliant

Collaboration and interoperability

Technology businesses from the US are actively investigating smart city opportunities across Europe – Europe has momentum which is attracting interest from US technology businesses. However, one of the challenges for businesses serving the European market is one of scale. Sticking with the street lighting example, the European market suffers from fragmentation when it comes to managing these types of assets. Management of street lighting in most European cities lies with city authorities which, therefore, necessitates new technology providers to separately contract with multiple cities in order to create scale. In the US, 75% of street lighting is controlled and managed by the utility companies so creating scaled projects is easier to achieve. It was agreed by the round table participants that a fragmented market is a distinct barrier to smart city development and collaboration between cities should be encouraged to create the necessary scale. Aligned with scale is the need for interoperability. If collaboration is to succeed through shared networks then interoperability of technology and applications is essential.

“Honeywell’s smart grid efforts have extended across North America, Europe, Asia and Australia. The exciting part is when we take business models and technology such as Automated Demand Response that work in one part of the world and apply them in a completely different market.”

Paul Carp, Senior Account Manager for Honeywell Smart Grid Solutions.

Collaborative business models have been successful in delivering infrastructure innovation in the US. Paul Carp, of Honeywell’s Smart Grid Solutions division, commented on the application of US models, such as Honeywell’s Virtual Power Plant projects, adapted for the European market, connecting the opportunities for retrofitting commercial buildings with the benefits that can be experienced by the distribution network operators. The key is to reconnect the investment to the benefits, with the apparent disconnect between cost and benefit otherwise operating as a blocker on the adoption of such technology. Without such creativity in the business model, that disconnect is otherwise driving the need for governments to provide subsidy incentives for such technology investment, but, as the impact of fluctuations in renewable energy subsidies in Europe has shown, a market solution will create better, long term stability than state aid for such investment.
Paul Carp commented on the highly collaborative approach he is seeing between parties in relation to network and platform connectivity and interoperability. As they develop such business models, levels of collaboration are being achieved not historically always seen when looking at innovation in other markets.

It may be, though, that certain innovations for the improvement of our urban living/working environment cannot be measured/valued and so will need funding that is controlled, if not provided, by the cities themselves.

Investment in building efficiency innovation

Turning to the real estate market, what is the role of building investors, developers and managers in contributing to smart and sustainable buildings, both in terms of new build and, most applicable for European cities, retrofit models? The disconnect between the cost of retrofitting smart technologies and the benefits is something long held as a factor in the slow adoption of efficient building advancements. However, California is seeing a change in this area.

“To attract the best talent, employers need to provide smart and sustainable working environments.”

Lisa Stalteri, Carr McClellan

Lisa Stalteri of Carr McClellan, a specialist legal advisor in relation to sustainable buildings in California, described how, in addition to the cost savings achieved by investment in building efficiency innovation, landlords in Silicon Valley are increasingly experiencing pressure from their premium tenants for smart, sustainable buildings. This, explained Lisa, is in part to comply with their corporate responsibility obligations but, more importantly, to address the demands of their employees. Whilst this may be reflective of attitudes of employees in California, it is likely to spread as an objective for people in their employment decisions, building upon lifestyle factors that are already playing a key part in the decisions of the new generations of workers.

Conclusion

“There are plenty of challenges ahead in the development of smart cities and the pace of evolution is heavily dependent on the right business model and the right regulatory framework. Getting this right will provide the solid grounding for businesses to invest, to collaborate and to educate.” 

David Ferris, Partner, Osborne Clarke. 

“We believe that cities like Bristol, Glasgow, Copenhagen, and Paris are leading the market and engaging their citizens and local businesses to define how smart city investments can make them more competitive, innovative, sustainable and a better place to live.” 

Brandon Davito, Vice President of Smart Cities and Streetlights at Silver Spring Networks

Our attendees were clear on the role played by the cities in which their smart projects will be based – the need for cities to take a lead role in the early stages, sharing the long-term vision and supporting the development of the network/platform and sharing culture that will facilitate further applications. Many European cities are showing such vision and, given increasing autonomy for cities in the areas of transport, communications and energy infrastructure, such support is anticipated to be forthcoming, growing and continuing.

Scaling up innovation is always a challenge but a crucial element for smart cities when scaling will be to connect with other cities so that they do not become islands of innovation – true innovation in transport systems must apply between and across cities and countries with consistent regulation and standards, not ending at boundaries in a way that has plagued the Australian rail industry for more than 150 years.

“Connecting with our Silicon Valley network added another dimension to our smart cities campaign, providing a deeper understanding of the challenges and opportunities perceived by West Coast innovators in delivering their technologies to European smart cities.”

Steve Wilson, Head of Osborne Clarke’s Silicon Valley office.

For further information on the issues raised above and Osborne Clarke’s involvement in the development of smart cities, please contact Steve Wilson or David Ferris and/or visit ocsmartcities.com.

Full quotes from Round table participants

Trilliant

“Having helped leading utilities and cities around the world who collectively serve more than 85 million customers, Trilliant truly understands that there is no one size fits all when it comes to smart grid and smart cities. While each city’s particular situation may be unique, the overall goal is always to deliver benefits to its citizens in the forms of improved efficiencies, reliability, customer satisfaction, safety and a smarter, cleaner, better way of living. Industry players need to focus less on the technology, but more on the operational, citizen and environmental benefits that these technologies deliver. After all, it is in our collective goal and purpose to deliver benefits to our citizens, our society and the environment.”

Doug Wolfe, Vice President of Business Development, Trilliant.

Silver Spring Networks

“We believe that leading cities like Bristol, Glasgow, Copenhagen, and Paris are leading the market and engaging their citizens and local businesses to define how smart city investments can make them more competitive, innovative, sustainable and a better place to live. City leadership has a major role to play in communicating how investments in technology will improve their lives, make city government more efficient, and create opportunities for new services. We think that it is critical that the anchor tenants for smart city networks have clear benefits and demonstrable value to citizens and city operations alike, and are excited about the ability to start with smart streetlights and expand to other applications like traffic, public safety, parking, and environmental sensors.”

Brandon Davito, Vice President of Smart Cities and Streetlights at Silver Spring Networks.

Honeywell

“As a global leader in building controls and energy efficiency, Honeywell works closely with residential, large commercial and industrial customers and their local electric utility companies and network operators to connect them to the grid with advanced technologies. Honeywell’s smart grid efforts have extended across North America, Europe, Asia and Australia. The exciting part is when we take business models and technology such as Automated Demand Response that work in one part of the world and apply them in a completely different market.”

Paul Carp, Senior Account Manager for Honeywell Smart Grid Solutions.

Carr McClellan

Lisa Stalteri of Carr McClellan is a specialist legal advisor in relation to sustainable buildings in California. Lisa explained that, “in addition to the cost savings achieved by investment in building efficiency innovation, landlords in Silicon Valley are increasingly experiencing pressure from their premium tenants for smart, sustainable buildings, to comply with their corporate responsibility obligations but, more importantly, to address the demands of their employees”. Lisa summarised that “to attract the best talent, employers need to provide smart and sustainable working environments.”

Lisa Stalteri, Specialist Legal Advisor for Carr McClellan.

Edge3 Technologies

“It’s our view that vision analytics technology will play an important role in a diverse number of smart city initiatives. Knowing who is present in a particular environment or what their needs might be can have enormous impacts on how smart cities respond and adapt to ever changing environments. Whether improving driver safety, lessening bottlenecks in public transportation, or enabling occupancy awareness to improve building security and environmental control, the smart camera will be used to enhance the intelligence of the smart city.”

Jon Barad, SVP Business Development and Operations, Edge3 Technologies.