What is a smart city?

The first in a series of blog posts based on the findings of Osborne Clarke’s pioneering report Smart Cities in Europe, Enabling Innovation offers a definition of a smart city and explores its four main components: smart grids, energy storage, intelligent transport systems and building efficiency.

What is a smart city? 

Ask a hundred government officials, senior corporate executives or investors what a smart city is and you will probably get a different answer each time. For some, a smart city is one that adopts innovative technologies capable of improving the life of its citizens. This technology might include energy efficient systems that reduce energy use and reliance on fossil fuels, intelligent transport systems that enable citizens to travel more efficiently, be that in private vehicles or using public transport, or new communication technologies that improve public safety and emergency response services. 

For others, the concept of a smart city means empowering citizens to improve their lives through better access to data and public services. This might include easier access to job vacancies or travel information, or a more efficient way to book doctors’ appointments. The possibilities are endless. 

The reality is that smart cities encompass all these things and more – broadly speaking, smart cities are those that: adopt and promote innovative technology, processes and business models; use data with the intention of being more efficient and transparent; and increase citizen engagement to improve the prosperity and sustainability of cities. 

Cities need to become smarter. The United Nations estimates that 54% of the world’s population currently live in urban areas. By 2050 this figure will rise to 66%. In Europe the proportion is even higher – according to the United Nations, 73% of Europe’s population currently live in urban areas, a figure that is expected to rise to 80% by 2050.* It is, therefore, more important than ever to ensure that cities are sustainable and are structured to accommodate ever larger numbers of people.

Four major components of smart cities 

This report focuses on four major
components of smart cities – smart grids,
energy storage, building efficiency and intelligent transport systems. However, only 6% of survey respondents believe intelligent transport systems are the component of smart cities most likely to reduce energy consumption. Instead, the majority of survey respondents (61%) believes building efficiency and control systems are the component of smart cities most likely to deliver reduced energy consumption. Meanwhile, survey respondents believe that all four components of smart cities we are exploring are likely to contribute in almost equal measure to economic growth. In short, the survey data shows that it is very important for city planners to have clear objectives about what they want smart cities to deliver before selecting which smart city initiatives to pursue and prioritise.

Smart grids 

A smart grid uses advanced technology and software to obtain, analyse and act on information relating to energy generation, transmission, distribution and consumption, to improve the reliability, efficiency and sustainability of the entire network. Discussion about smart grids is often dominated by smart meters, which monitor energy usage of individual homes or any building that consumes energy in real time. However, smart grids also involve the use of intelligent software to collect, analyse, visualise and then control components of the grid and appliances (such as fridges and lighting) connected to the grid to, in effect, create a virtual power plant. 

Smart grids offer multiple benefits. Customers can benefit from more accurate and timely billing, as well as new time-of-use tariff options. Electricity retailers can save significant costs by undertaking meter readings automatically, rather than getting them checked manually. Most importantly, smart grids enable transmission and distribution network operators to perform more accurate load forecasting and obtain better insights into potential faults on the grid, enabling them to prioritise investment. 

EU legislation requires smart meters to reach an 80% market penetration by 2020 in all EU Member States, subject to a positive outcome of a cost-benefit analysis. The European Commission estimates that around 72% of European electricity consumers will have electricity smart meters by 2020.** (Click to tweet)

Energy storage 

Energy storage includes a wide range of electrical, chemical, mechanical and thermal technologies that store electricity for multiple applications. These include frequency and voltage control, peak shaving and continuity of energy supply. Due to its intermittency, energy storage is also an essential enabler for the greater adoption of renewable energy on the grid, as well as distributed generation. 

Energy storage is an important component of smart cities because it enables local generation to supply local buildings directly, thereby bypassing the national grid. John O’Donohue, CEO of PowerOasis, explains the advantages of this approach. “Matching local generation with local demand using storage is very beneficial,” he said. “Consumers should see a 30-40% saving on their electricity bills. At a macro level, there is around 10-15% of losses during the transmission and distribution of electricity. This capability, which we hope to demonstrate at our project in Swindon powering 4,000 homes, will be applicable in lots of different cities.”

Intelligent transport systems 

Intelligent transport systems include a range of technology, software and physical infrastructure that makes travelling around cities more efficient. Intelligent transport systems can include new methods of travel, such as electric vehicles, new electronic payment systems and new business models, such as car-sharing. 

Intelligent transport systems are important given the increasing economic impact of congestion. A report released in October 2014 by INRIX and the Centre for Economics and Business Research concluded that traffic congestion will cost the UK economy US$33 billion annually by 2030, a 63% increase on the cost in 2013. The cost to the German economy is estimated to reach US$44 billion by 2030, a 31% increase on 2013.5 A wide range of intelligent transport systems has been implemented across Europe, from the central London congestion charging zone and Oyster cards in the UK, to smart parking networks in Barcelona and smart cycling networks in Copenhagen. However, a lack of funding and technology standards have hindered the more widespread roll-out of intelligent transport systems throughout Europe.

Building efficiency 

Building efficiency involves the integration of a broad set of technologies, software and materials into the built environment to improve buildings’ energy efficiency. The EU has set a target to reduce energy demand by 20% by 2020. (Click to Tweet). Much of this reduction will be achieved by reducing energy consumption by buildings. Building efficiency does not just save costs. Through initiatives such as demand response, it also enables building owners to generate revenues intelligently from their assets. For example, by installing monitoring and control technologies, building owners can generate revenues by turning energy consuming equipment off or down during times of peak demand.

More Smart Cities Information

Download the full smart cities in Europe report here. 

*United Nations (July 2014), “World Urbanization Prospects”

**European Commission (June 2014), “Benchmarking smart metering deployment in the EU-27 with a focus on electricity”