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2018 Strategic Directions:

Smart Cities & Utilities Report

Are Smart Cities Real?

Is the smart city hype cycle over? Have concerns about cost, security and public skepticism finally won out over the benefits of efficiency, sustainability and public safety? It is fair to consider whether the futuristic visions of hyper- connectivity and advanced livability, enabled by accessibility to vast streams of data, can withstand the very real concerns that municipalities cannot afford the technologies behind smart city projects. 

It is fair to consider whether the futuristic visions of hyper- connectivity and advanced livability, enabled by accessibility to vast streams of data, can withstand the very real concerns that municipalities cannot afford the technologies behind smart city projects. A close look at survey responses contained within the Black & Veatch 2018 Smart Cities & Utilities Report reveals some unsettling retrenchment tied to cost and stakeholder engagement: 

  • Rising numbers of respondents say smart cities are a passing fad, and if they happen at all, they are likely far off in the future.

  • Perhaps the most influential of smart city stakeholders — the electric utility — are sometimes being left out of new initiatives, or taking support roles instead of leadership. 

  • Possibly the biggest worry of all is cost. City leaders continue to cite affordability and tight budgets as a critical inhibitor to smart city initiatives. Some very high-profile smart city projects in places like San Diego, Seattle and Kansas City prove that each of these obstacles can be overcome; however, it is also true that leaders of successful projects faced these questions before making the hard choice to push forward. What do they see that others may miss?


Smart City Staying Power

Among the most interesting findings from this year’s survey is the rising sentiment among those who view smart cities as lacking substance. While it’s true that an overwhelming 85 percent of respondents say smart city projects are transformational with long-lasting impacts on cities, the number of respondents who see the trend as a fad more than doubled from the previous year (Figure 1).


Figure 1. Listed below are several opposing statements related to “smart city” initiatives. Please select the statement you agree with most.

Smart Cities Chart Figure 23

Cost Drives the Conversation

Budget impacts carry the most primacy in any smart city project discussion. Nearly two-thirds of survey respondents (from governmental or municipal circles) cited budget constraints as their top hurdle to implementing smarter systems. There were also interesting increases in the numbers of respondents who cited time constraints and short-term mindsets as barriers within their organizations (Figure 2).


Figure 2. What are the top three hurdles that your city/utility has had to address to enable utility, city/community or campus systems to be managed in a smarter, more integrated way? (Select three choices.)


Smart Cities Chart Figure 24


Electric Utility Blackout

With power being one of the fundamental elements of any city, lessons learned in the generation and delivery sectors have put electric utilities in a prime position to lead successful smart city projects. Their experience in innovating on the grid, adopting new business models and deploying technology to drive efficiency meshes well with the smart city movement.

Yet, responses in this year’s survey showed nearly 35 percent of utilities are playing support roles in smart city initiatives, with more than 28 percent playing no role. These utilities are too frequently left to supporting roles, or no part at all, when projects get underway. 

Electric utilities are facing a need and opportunity to transform their business because of the bidirectional nature of distributed generation and energy storage. We see a time, perhaps in the next five to 10 years, when distributed generation will outgrow conventional utility plant generation in certain regions. The amount of data and information needed from these systems is only going to become more and more relevant. Connectivity between systems will be critical in harmonizing how electric vehicles, distributed generation, energy storage and conventional generation all work together to match energy supply to demand, and provide needed system resiliency.

Energy innovation is at the heart of the smart city. Utilities are modernizing their grids, empowering customers and integrating new market participants, business models and technologies. It is imperative that utilities have a seat at the table, driving the smart city forward.


The Questions are Real, but so are the Answers

The future of connected communities relies on strategic urban infrastructure that arises from the critical smart city layers of infrastructure, data and telecommunications. But how can we help cities, utilities and telecommunications providers better understand and take advantage of these critical components?

Perhaps we should start by moving away from the hype when validating the real cost concerns for cities. We can then begin the dialogue to develop an understanding of the broad benefits data and connected systems bring to citizens. From that understanding, visionary leaders will lead the way to make the benefits come to life.

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