This document discusses the development of smart cities. It notes that urban populations are growing rapidly and will account for over two-thirds of the world's population by 2050. Smart cities aim to address this growth through greater efficiency, sustainability, and inclusion. Key points discussed include the need for collaboration between different stakeholders, the role of standards in ensuring interoperability, challenges around financing smart city projects, and ensuring citizens are involved as both users and producers within smart cities. The document examines different approaches to planning, governance, and financing that can help facilitate the transition to smarter urban environments.

1. Jorge Núñez Ferrer
CEU, 4/3/2014

2.  The what and why of Smart Cities
 Balancing objectives of cities
 Transition to a Smart City
 The role of (right kind of) standards
 The city planning revolution
 The challenges of efficient integration
 Creating value
 The need for new Financial models
 EU strategy for Smart Cities, now and …later?
 The clash of systems

3.  Is smart synonymous with unnecessarily
complex and expensive?
 Are there stupid cities too?
 Is this a corporate invention to sell gadgets?
 Do we need them?
 Are we smart enough to live in a smart city?
 Is a smart city a controlling-restrictive city?
 Is it worth the cost?

4. In the last 40 years urbanisation has expanded
as much as the previous 4000 years.To double
now in the next 40 years.
 Urban population grows now by 150.000 people a
day!!!
2011
3.6 billion
52% of
world
population
2050
6.3 billion
67% of world
population
72%

6. Source: Global City Indicators Facility, Cities and Ageing, University of Toronto, GCIF Policy Snapshots No. 2, September 2013.

7.  In Europe Cities….
 Generate 85% of GDP
 Consume 70% of energy
 Emit 70% of greenhouse gases
 Without addressing city inefficiencies
global or European growth, energy, climate
and environmental objectives will simply
fail

8. • Economic & Financial Sustainability
– Wealth Generation, attractiveness to businesses and
citizens, economic resilience
– Ability to cover investments, new financing models, strong
link with economic sustainability
• Social Sustainability (Inclusive city)
– Equity, stakeholder involvement, understanding behavior
• Environmental Sustainability
– Resource efficiency, emissions, environmental quality, risk
management

9.  Developing smart cities is NOT about city authorities
procuring technologies
 It is not only on supporting technology innovation
 It is about:
 Developing the right environment for smart solutions to be
effectively adopted and used.
 Being inclusive: Citizens are not only inhabitants, but shapers of
the smart city as prosumers of city services
 Partnering with industry, financiers and end users…this is
sometimes a non-traditional partnership.
 Reforming and adapting the administrative, finance and
procurement mechanisms to take into account the lifecycle of
new infrastructures

10.  Cities are in general run rather inefficiently
 Utilities and services need to collaborate and
infrastructures need to integrate.
 For this it is important that companies and
authorities collaborate
 Key is open data – in standardised formats

11. Source: IEC (2014, P.26)

12.  To allow planning, benchmarking and technology
compatibility standards are taking a central role
 Standards ensure collaboration, allow
replicability, enable the creation of new markets
 International bodies ISO, IEC
 European CEN CENELEC, ETSI
 National BSI, etc.

13.  Standards enable smart cities: an aligned
approach for design, development and operation
of the system of systems
 Standards increase the number of solutions,
increase competition and benefit customers (cities
and citizens)
 Standards guarantee:
 Specified performance levels;
 Compatibility & Interoperability
 Increase competition
Standards allow for smart opportunities

14. a) Planning requires:
1. understanding the OBJECTIVES of the city
2. a holistic approach – INTEGRATION
3. Knowledge of the cities needs today and good projections
– INDICATORS
4. Know the stakeholders and their role
5. TECHNICAL KNOWLEDGE
6. CAPACITYTO ADAPT in time. Investments risk locking
the city for a long time into a specific infrastructure.
Technologies need to be compatible, interoperable.
b) There will be a need for REGULATORY AND PUBLIC
PROCUREMENT REFORM

15.  Traditional procurement is generally:
 Anti-innovation
 Seeks the lowest investment cost
 There is a need of further reform:
 Include the lifecycle costs of projects
 Encourage innovative procurement
 Focus has to move away from CAPEX to OPEX
 Administrations need to learn to partner with
private sector - PPPs

16.  Citizens are key
 Not only as users, but as prosumers
 They will be important providers of services
 Planning needs to take into account the market
opportunities of smarter systems, enhancing
entrepreneurial possibilities
 Improving opportunities and living standards

17.  We are facing a financial crisis
 Municipal budgets weak
 Municipal finance providers are in trouble
 Banking regulations affect long term investments
 We need new business models – new ways to
address the challenges ahead
 New cooperation mechanisms
 New administrative structures
 New financial instruments
 New regulatory frameworks

18.  The monoline insurance companies that provided
bonds and guarantees got severely hit by the
crisis
 The banking sector regulations (Basel III) make
infrastructure lending less interesting: higher
capital reserves and additional financial save-
guards in line with loan size and duration
 Taxation avenues are limited

19.  Green bonds
 Guarantees
 In EU:
 Innovation - EIP:
▪ Horizon 2020
▪ Risk Sharing facilities
 Deployment:
▪ EEEF, etc.
▪ Project bonds
▪ Juncker’s investment initiative

20.  DEPLOYMENT
 EU does not manage to bring innovations to the
market.
 Lack of scaling up and deployment
 Low risk appetite in the market
 EU market is inflexible and fragmented
 EU funding focused on innovation
 National restricted due to economy and state aid
rules
 Some funding available through structural funds,
Cohesion Funds and CEF
 External Industrial Competition

22.  Guarantees for green bonds – EU level for
Energy and for Smart Cities (to cover the
receding investments from banks and other
financiers)
 Equity and guarantees for innovation.
 Risk: Uptake of projects that would be done
anyway due to political pressure – 315 bn in 2
years.

23. Two models:
 Mainly large but decentralised producers with
interconnectors
 Decentralised energy Islands
 Large producers are tending to prefer 1 despite
competition
 Second option linked with storage can change the
landscape of energy radically
 Emerging concern: Stranded assets

24. + Interconnectors
Source: http://www.eu-ecogrid.net/images/Pictures-and-photos/Bornholm.jpg

26.  www.ceps.eu
 Cities:The Juncker Commission should not miss this key to growth, jobs and the
environment
http://www.ceps.eu/book/cities-juncker-commission-should-not-miss-key-growth-jobs-and-environment
 www.iec.ch
 White paper – Orchestrating Smart Cities
http://www.iec.ch/whitepaper/smartcities/?ref=extfooter