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SPOTLIGHT: SMART CITIES
Smart Cities and the Energy Revolution
Eric Woods
Research Director
Navigant Research
Cities are a focal point for some of the most profound their operational costs and thus protect vital services (such
economic, environmental, social, and technological as public safety and education) from budget cuts. Smart
issues facing the world today. Not least of these is the energy programs can also improve quality of life by making
need to move to cleaner and more efficient energy resources to comfortable homes affordable (by lowering heating bills) or
meet the demands of urban populations that will expand by 2.4 improving services while reducing costs (as with smart street
billion people over the next 35 years. Energy networks underpin lighting).
the smart city, but cities are also examining the sources of that • Economic development: Cities need to be centers of
energy and how efficiently it is being used, as they look to reduce innovation that can provide jobs for citizens and attract new
both greenhouse gas emissions and energy costs. businesses and new talent. In addition, providing an energy
infrastructure to meet the needs of industrial and commer-
Navigant Research expects the global smart city technology cial organizations while meeting sustainability goals is a
market to be worth more than $27.5 billion annually by 2023 growing challenge for cities, particularly in the developing
(Figure 1). A smart city can be defined as one that seeks to use world.
The Energy Cloud and the Future of Energy Provision
Like the smart city concept, the energy cloud is a label for a
complex combination of radical transformations. The energy
cloud represents the wide range of technical, commercial,
environmental, and regulatory developments that are
transforming the traditional utility model for energy provision
(Figure 2). The growth in renewable generation and new
technology to meet its strategic goals for sustainability, citizen technologies, such as smart grids and energy storage, are
well-being, and economic development. An integrated energy changing the way energy is produced and distributed.
strategy is a crucial factor in delivering improvements in each of Meanwhile, the relationship between energy suppliers and
these three areas: consumers is being redefined through the growth in local
energy production, demand response programs, the use of
• Sustainability: Cities represent only 2% of global land use electric vehicles, and a range of smart home and smart building
but are responsible for around 80% of global gross domestic innovations.
product (GDP). They are also responsible for around 70% of
the world’s energy use and roughly the same percentage of The energy cloud represents the shift away from centralized
greenhouse gas (GHG) emissions. City leaders are now taking energy generation and distribution toward a networked and dy-
the lead in developing ambitious energy efficiency and car- namic infrastructure that incorporates demand-side generation
bon reduction programs, working in close partnership with technologies and capabilities and renewable energy sources
local utilities, building owners, and other partners. alongside traditional assets. Such a system is characterized by
increased complexity and redundancy, allowing for greater
• Citizen well-being: City leaders are only able to deliv- choice in the manner in which energy is generated, supplied,
er change programs if they can assure citizens that the
programs will lead to an overall improvement in their
quality of life through improvements in public services.
Energy efficiency is providing a means for cities to reduce
6 Realcomm
