Eric Woods Research Director Smart Cities and the Energy Cloud Reshaping the Energy Landscape

Eric Woods Research Director Mackinnon Lawrence Research Director

Smart Cities and the Energy Cloud Reshaping the Energy Landscape Published 4Q 2014

RESEARCH REPORT

Smart Cities and the Energy Cloud

Section 1 CITIES AND THE NEW ENERGY AGENDA

1.1 Smart Cities and Smart Energy

The smart city concept has developed in response to the rapid changes happening in cities around the world. Cities are a focal point for some of the most profound economic, environmental, social, and technological issues facing the world today. Not least of these is the need to move to cleaner and more efficient energy resources to meet the demands of an urban population that will expand by 2.4 billion people over the next 35 years. This Navigant Research white paper examines some of the critical issues facing cities and utilities as they develop the energy policies needed in the century of the city.

Navigant Research defines a smart city as the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development. An integrated energy strategy is a crucial factor in delivering improvements such as the following in each of these three areas:

» Sustainability: Cities represent only 2% of global land use but are responsible for around 80% of global gross domestic product (GDP). They are also responsible for around 70% of the world’s energy use and roughly the same percentage of greenhouse gas (GHG) emissions. City leaders have recognized this and have taken a lead in developing ambitious energy efficiency and carbon reduction programs, often working in close partnership with local utilities. Utilities are also helping cities deliver ambitious energy efficiency programs through innovations in smart grid technology, demand management, renewable generation, and the adoption of electric vehicles (EVs).

» Citizen well-being: City leaders are only able to deliver 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 their operational costs and thus protect vital services (such as public safety and education) from budget cuts. Smart energy programs can also improve quality of life through making comfortable homes affordable (by lowering heating bills) or improving services while reducing costs (as with smart street lighting). These issues are even more critical for developing countries that need to provide efficient and affordable energy to rapidly growing city populations and to integrate semi-formal developments and communities into city infrastructures.

» Economic development: A defining characteristics of the smart city movement is the focus on economic development within cities. Cities need to be centers of innovation that can provide jobs for citizens and attract new businesses and new talent. Affordable and reliable energy is one of the basic features of an economically robust city. Providing an energy infrastructure to meet the needs of industrial and commercial organizations while meeting sustainability goals is a growing challenge for cities, particularly in the developing

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world. Energy infrastructure is also a critical element of a city’s resilience to catastrophic events and its ability to bounce back with limited impact on its economy and social structures.

The notion of the city is itself a fuzzy concept. In this white paper, the idea of the city is taken to include a wide range of urban communities and governance models spanning from megacity regions to small towns and from historic urban centers to greenfield developments. There is also an important overlap with developments in integrated island projects such as those in Hawaii and in Bjornholm, Denmark. These communities, like cities, see energy policy as closely integrated with other core services, including housing, transportation, water, waste management, and public health.

1.2 The Energy Cloud and the Future of Energy Provision

The smart city concept is a label for the dramatic changes occurring at both the local and global level in the nature of urbanization; the energy cloud performs a similar function for the radical changes happening in the energy market. As a concept, the energy cloud represents a wide range of technical, commercial, environmental, and regulatory changes that are transforming the traditional utility model for energy provision.

In the IT world, the cloud represents the game-changing move from the localized provision of IT power (on the desktop, in a department or division, or in a single enterprise) to the use of centralized networked services that have the flexibility and capacity to meet growing requirements for IT services in an on-demand and cost efficient manner. Similarly, the energy cloud represents the shift away from a centralized energy generation and distribution architecture – consisting primarily of large fossil fuel generation plants connected to customers by extensive transmission and distribution infrastructure – toward a networked and dynamic infrastructure that incorporates demand-side generation technologies and capabilities and renewable energy sources alongside traditional assets. This nonlinear ecosystem involves multiple inputs and users relying on a high degree of digitalization to support two-way energy flows. Such a system is characterized by increased complexity and redundancy, allowing for greater choice in the manner in which energy is generated, supplied, and consumed.


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The energy cloud represents the impact of diverse disruptive innovations in technology and business models. These innovations are, in turn, driving utilities to forge a complex set of new relationships with diverse stakeholders. The principal innovations and disruptions that characterize the energy cloud are highlighted in Figure 1.1. Among the most important innovations are:

» Distributed renewable generation

» Microgrids and virtual power plants

» Smart grid technologies, including smart meters and distribution automation technologies

» Energy storage

» Automated demand response (ADR)

» Other demand-side innovations – including EVs, smart appliances, smart homes, and smart buildings

Figure 1.1 The Emerging Energy Cloud

(Source: Navigant Consulting)

There are multiple elements to the energy cloud concept, and the relative maturity and importance of these elements vary from context to context. All will eventually have a role in the energy grids of the future and, therefore, in critical infrastructure for cities. Technical details on each of these elements are covered in relevant Navigant Research reports (see Section 3.3). The next section looks at how these elements will shape the nature of energy use in cities.


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Section 2 HOW CITIES ARE HELPING TO SHAPE THE ENERGY REVOLUTION

2.1 The City and the Energy Cloud

Cities are recognizing the importance – and the opportunity – offered by changes in energy infrastructure and energy markets:

» Cities are becoming increasingly proactive in terms of the targets they are setting for their utilities to shift from fossil fuel to renewable energy provision to help meet carbon emissions targets. Cities are encouraging local generation on both residential and commercial scales through the adoption of solar PV and small wind generation as well as the encouragement of combined heat and power and other community energy schemes.

» Cities are the focus of extensive smart grid pilots that are demonstrating the increased control, flexibility, and integration that are enabled by a digital infrastructure for grid monitoring and management.

» Cities are supporting and even driving the adoption of many demand-side innovations, including smart meters, automated demand response (ADR), electric vehicles (EVs), and new platforms for market integration.

In addition, cities are a prime example of the complex interdependencies across supply and demand-side issues and other disruptive innovations such as EVs and improved demand management.

While cities and utilities have a leadership role to play in the creation of new urban energy systems, they are not the only stakeholders. Commercial, industrial, and residential energy consumers are also becoming more actively engaged in energy management and energy generation. As with so many developments associated with the smart city, the new energy landscape will be created by both top-down and bottom-up innovation.

2.2 The Renewable City

Many cities have set ambitious carbon reduction goals, often in advance of national programs. They are meeting these targets through a diversity of messages including energy efficiency programs, transportation policies, and building and planning regulations. In addition, a number of cities have set explicit targets for the amount of city energy consumption that is provided by renewable generation, of which local distributed generation is expected to be significant element.


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Among cities that have set renewable targets, Munich stands out as having one of the most ambitious programs. It is aiming to move to 100% renewable electricity consumption by 2025. The city is working with local utility SWM, which is investing in a variety of projects to ensure that it can produce enough renewable energy from its own plants to meet the needs of the Munich municipality (around 7 billion kWh per year). San Francisco is another city that has set a 100% renewable energy target, while London has a target to generate 25% of its energy locally by 2025.

Going even further, Stockholm has set a target of being a completely fossil fuel-free city by 2050, including the use of energy in its transportation system. Stockholm’s approach also highlights the need of cities to see energy consumption within a broader perspective that includes land use policy and urban mobility strategies.

2.3 Smart Cities and Smart Grids

Support for renewable generation by city authorities increases the pressure on utilities to deliver an infrastructure that can integrate these new resources in a manageable way and is a driver for other changes in a city’s energy infrastructure. Grid reinforcement is often required to support the integration of large amounts of renewable energy, but this can be offset by the wider use of smart technologies – smart grids – for network management and for demand management initiatives such as ADR.

This is one of the reasons that many smart grid projects have been closely associated with smart city programs around the world. Table 2.1 lists some notable smart city and smart grid projects, some of which are referenced elsewhere in this report. Navigant Research estimates that more than $43 billion will be invested in smart energy infrastructure to support smart city programs between 2014 and 2023.1

Table 2.1 Example Smart City, Smart Grid Projects City and Country Project Project Summary

Amsterdam, The Netherlands

Amsterdam Smart City

Numerous energy and smart grid related projects, including City-zen, which spans smart distribution networks, smart homes, building efficiency programs, waste management, and demand management.

Charlotte, North Carolina, United States

Envision Charlotte

As part of a cross-sector collaboration aiming to make Charlotte the most sustainable city in the United States, Duke Energy, Verizon, and other partners are working on the Smart Energy Now project, which aims to reduce energy consumption in Charlotte's uptown office buildings using smart grid technologies.

1 Smart Cities, Navigant Research, 2Q 2014.


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City and Country Project Project Summary

Dubai, United Arab Emirates

Dubai Smart City

As part of the broader smart city program, Dubai Electricity and Water Authority is deploying rooftop PV, smart meters, and smart grid technologies as well as EV charging infrastructure.

Groningen, The Netherlands

PowerMatching City

A pilot to create a smart energy system and a total concept smart grid deployment that also involves automatic aggregated control of end-user systems.

Issy-les-Moulineaux, France IssyGrid

An extensive smart grid development project to enable energy optimization at the neighborhood level. Project partners include EDF, ERDF, Alstom, Schneider Electric, Bouygues Telecom, and Microsoft.

London, United Kingdom

Low Carbon London

A £30 million ($48 million) smart grid and energy efficiency project led by local distribution operator UK Power Networks. The project is looking at a range of issues, including the role of smart meters, EV charging, smart distribution networks, and renewable energy integration.

Lyon, France Smart Electric Lyon

A consortium of 20 partners led by EDF is delivering smart energy solutions to around 25,000 households in the Greater Lyon region.

Malaga, Spain Smartcity Malaga

A 5-year smart grid demonstration project led by Endesa that launched in 2008 and was completed in 2013. The project included smart meter, smart grid, energy storage, and EV charging deployments as well street lighting improvements.

Sydney, Australia Smart Grid, Smart City

A $100 million demonstration project that deployed smart electric meters and other energy monitoring and management technologies to around 17,000 homes and tested a variety of smart grid programs in the Newcastle and Sydney area of New South Wales from 2010 to 2014.

Vienna, Austria Aspern Smart City

A €40 million ($55 million) smart city/smart grid project launched in October 2013; collaboration between Siemens and the utility Wiener Stadtwerke that plans to support a community of up to 20,000 people by 2030, including living and working environments.

Worcester, Massachusetts, United States

Smart Energy Solutions

A program led by National Grid in cooperation with the city of Worcester and the state of Massachusetts to deploy 15,000 smart meters in the city as part of an energy management program alongside smart grid upgrades to the distribution network.

Yokohama, Japan Yokohama Smart City Project (YSCP)

A large-scale pilot project focused on energy management at the household, district, and city level from 2010 through 2014.

(Source: Navigant Research)


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There are significant synergies between the technical drivers behind smart cities and the developments grouped together under the smart grid label. Smart cities and smart grids are being shaped by the impact of ubiquitous communications, new sensor technologies, real-time data analytics, and other innovations that are changing operational possibilities and the relationships between diverse stakeholders in the city and energy community. Smart city and smart grid projects share:

» A desire for a more holistic view of the operations of the city or the energy network – extending beyond traditional core services into energy, buildings, transportation, and other new industries.

» Recognition of the role of technology, in particular the impact of ubiquitous communications and the potential for data analysis to inform strategy and improve operations.

» A need to embrace an extended set of stakeholders. For the city, this means collaboration with regional and national governments, other cities, non-governmental organizations, and the private sector, as well as the development of new relationships with citizens. Similarly, energy providers are learning to operate in a much more complex ecosystem with changing roles for energy companies, consumers, businesses, and regulators.

The smart grid innovation that has the most visible impact on energy consumption in cities is the introduction of smart meters. Smart meters enable consumers to participate in a range of energy efficiency programs and new market arrangements. Above and beyond the immediate benefits for utilities and consumers, a citywide or communitywide deployment provides the basis for a series of innovations in the way energy is consumed and managed. For this reason, smart meters are the basic building block of many city-focused smart grid programs.

Smart grid investments have other advantages for cities. Distribution automation, for example, enables the grid to support new services such as demand management, EV charging, and distributed energy. An intelligent grid infrastructure can also link into other services. For example, Barcelona, Spain and Nice, France have piloted systems that integrate utility networks and other city services, including street lighting controls, smart parking systems, and environmental monitoring.

The relationship between smart city and smart grid projects is now reaching an important stage in its evolution. City leaders are taking a more active role in the development of energy programs that will deliver the energy needs of their communities and support their smart city strategies. The first phase in developing a relationship between smart cities and smart grid programs was largely driven by utilities; the second phase is much more of a joint venture.

2.4 Managing Energy Demand

Collaboration between city departments and local energy utilities to improve energy efficiency is one of the simplest and most effective measures for reducing the energy footprint of a city. Coordinating programs for energy efficiency improvements is an obvious step and enables cities and utilities to target the most appropriate residents, businesses, and communities for


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retrofit and rebate programs. Boston, for example, is working closely with local utilities (National Grid and NSTAR) to reduce its $50 million plus energy costs and to meet the goal set in 2007 to reduce greenhouse gas (GHG) emissions 25% by 2020 and 80% by 2050. The city is targeting energy consumption across residential and commercial properties. Other initiatives include the introduction of an energy management system (EMS) for the city’s public buildings and the deployment of light-emitting diode (LED) street lighting.

The next step beyond energy efficiency programs is the intelligent management of energy demand that can balance the increasingly dynamic and unpredictable loads placed on city energy systems. These developments move cities into the world of the energy cloud. Notably, cities are home to some of the most ambitious programs for advanced automated demand management. Such programs typically include smart meters and smart appliances as well as EVs and sophisticated demand response (DR) programs. They also assess the requirements for energy aggregation within the community and the technical and commercial mechanisms needed to manage the dynamic two-way flow of energy in these complex networks. Early pilots – for example, the German E-Energy pilots – have shown the challenges that exist in delivering these systems include consumer acceptance, the complexities of the market mechanisms involved, and technical integration requirements. However, more ambitious projects continue to be launched with the goal of finding technical and market models that can scale to larger communities.

The PowerMatching City pilot in the Netherlands, for example, is looking at how a dynamic, local energy network might work in practice. The project involves 25 interconnected houses that are equipped with high-efficiency boilers, hybrid heat pumps, smart meters, PV panels, EV charging stations, and smart appliances to create a smart energy system and smart grid deployment project. The pilot involves automatic aggregated control of end-user systems for energy efficiency and DR.

One well-established program is IssyGrid, a collection of smart grid demonstration projects in the Seine Ouest business district in Issy-les-Moulineaux, France. The program is testing the feasibility of energy optimization systems at the neighborhood level. Project partners include EDF, ERDF, Alstom, Schneider Electric, Bouygues Telecom, and Microsoft. Around 100 homes and commercial buildings have been connected in a program that also includes solar generation, EV, and DR integration. Schneider Electric, for example, has developed a dynamic EMS that integrates DR within commercial buildings with the broader smart grid network developed for the neighborhood.

Another significant project is the Aspern Smart City Research program, which is a collaboration between Siemens, Austrian utility Wiener Stadtwerke, and other stakeholders. This smart city/smart grid project outside of Vienna was launched in October 2013. The €40 million ($55 million) project is planned to support a community of up to 20,000 people by 2030, including living and working environments. It will involve a host of smart grid, smart city, and smart building technologies alongside an integrated approach to spatial design, energy strategy, and mobility planning.


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2.5 Cities and Energy Markets

The role played by city authorities in the energy market varies considerably, even within countries, as do energy market models. Energy providers may be municipally or cooperatively owned, investor-owned, or nationalized. They may be integrated utilities or there may be a split between generation, distribution, and retail operators depending on the level of deregulation. How a city engages with its energy providers is therefore determined by the larger energy market in which it is situated, which in turn determines the options open for intervention or collaboration.

Similarly, a utility will have different perspective on its relationship to the community depending on whether it is tightly bound in terms of ownership and regulation or has looser ties that are largely determined by market or national structures. Whether municipal ownership is an overall benefit for cities looking to have a greater say in their energy future is an issue of debate in several countries and may prove a break on the recent trends to privatization and consolidation in the industry. However, national and investor-owned utilities have also been active supporters of smart city projects and their greater size and capital resources offer advantages that can offset more limited local accountability.

Cities and utilities can find new ways to collaborate irrespective of ownership models. Minneapolis, Minnesota, for example, is using the renegotiation of its franchise relationship with its utilities (which governs their access and use of city resources such as roadways and buildings) to establish a new form of collaboration that it believes can be a model for the rest of the United States. The proposed Clean Energy Partnership between the city and its electricity and gas suppliers, XCEL Energy and CenterPoint Energy, will create a new body focused on helping the city meets its climate action goal of reducing GHG emissions 15% by 2015 and 30% by 2025, based on a 2006 baseline.

There are also possibilities for cities to be more active players in the energy cloud market. The Greater London Authority, for example, has become the first local government authority in the United Kingdom to be licensed as a junior energy supplier. This enables the city to buy power from small generators at a higher price and sell it on to other public bodies at an attractive rate. The city expects to be buying and selling power by early 2015. The aim is to reduce energy costs for local agencies and promote the uptake of distributed renewable energy generation in the city.

2.6 The Resilient City

Resilience has long been part of the debate about the nature of smart cities, but it is becoming a much more central part of the discussion. The Intergovernmental Panel on Climate Change’s most recent report on the impact of global climate change highlights the particular vulnerability


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of urban infrastructures.2 Approximately 360 million urban residents live in coastal areas less than 10 meters above sea level. The top 20 cities identified for both population and asset exposure to coastal flooding now and over the next 50 years include: Mumbai, Guangzhou, Shanghai, Miami, Ho Chi Minh City, Kolkata, New York, Osaka-Kobe, Tokyo, Bangkok, and Dhaka.

Resilience can be characterized as the ability of cities and communities to bounce back from catastrophic events, as well as more gradual changes that threaten the well-being or economic stability of a community. Resilience is not just a question of identifying and acting on specific climate change impacts. It also requires an assessment of each city’s complex and interconnected infrastructure and institutional systems that span the physical, economic, institutional, and sociopolitical environment.

Electricity networks are at the heart of this complex web of infrastructure interdependencies. For example, a failure in the electricity network can have a dramatic impact on water, sewerage, health, communication, and transportation systems. Smart grid investments are already helping utilities better cope with severe weather events and other outages.

Automatic self-healing of the grid and ADR, for example, can mitigate the impact of such events on the network, while more accurate prediction of an event and its likely consequences enables crews to be dispatched to vulnerable areas earlier.

Distributed generation will also play a growing role in the ability of cities to deal with events like Hurricane Sandy, which devastated the northeastern United States in 2012. New York, for example, is looking to increase use of distributed generation alongside other grid innovations that will provide an energy infrastructure better able to cope with future events of that scale. In general, cities are now becoming much more involved in resilience planning and need to work with utilities to develop integrated plans for emergency response with other agencies.

2.7 Toward Smart Energy Communities

The overarching goal for smart city/smart grid projects is to test the feasibility of new forms of energy management within the city environment. The vision projected is of a new form of integrated energy management that spans all aspects of city operations. Some of the most advanced examples of this thinking are being developed in Japan. The county’s interest in more sustainable and resilient energy systems has been accelerated by the energy crisis resulting from the 2011 Great East Japan earthquake and tsunami.

The Yokohama Smart City Project (YSCP) is a good example of the vision being developed by the Japanese government, city authorities, and major suppliers. YSCP is a large-scale pilot project focused on energy management at the household, district, and city level from 2010

2 Climate Change 2014: Impacts, Adaptation, and Vulnerability, Intergovernmental Panel on Climate Change, March 2014.


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through 2014. Participants, including 4,000 households of a variety of housing types, as well as four office buildings, two commercial buildings, and a large factory, are receiving EMSs. In addition to providing new infrastructure, the project is testing demand management policies for residential and commercial customers to reduce peak power demand. Project partners include the city of Yokohama; local power, water, and gas utilities; major telecom NTT; innovative real estate developer Mitsui Fudosan; and Nissan Motor. Among smart city providers, a constellation of Japanese and international smart grid device and service providers are contributing, including Accenture, Hitachi, NEC, Panasonic, Sharp, Sony, and Toshiba.

The Yokohama approach will not be feasible for all cities, but many aspects of the project will become common elements of city infrastructures over the next decade. The emerging vision is of smart cities that integrate large- and small-scale energy initiatives, from improvements in national infrastructure through citywide improvements in efficiency to local energy generation. In the process, cities will become clusters of smart energy communities that can exploit the benefits of the new energy systems from local generation to dynamic load management and active market participation. Cities will become fully immersed in the complexities and dynamism of the energy cloud.


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Section 3 CONCLUSIONS AND RECOMMENDATIONS

3.1 The Opportunities

The development of the energy cloud offers many advantages to cities as they seek to improve the sustainability and resilience of their energy supplies. Smart city, smart grid, and other energy cloud investments can help:

» Create an extended network of intelligent energy devices that present a more detailed view of the patterns of energy consumption across a city

» Support integrated demand management services that can reduce energy costs and help integrate renewable energy sources and new demands such as EV charging

» Enable new community-based programs for energy monitoring via portals that show local energy use or the performance of public sector buildings

» Improve the energy efficiency of both residential and commercial buildings

» Link initiatives to other parts of the city infrastructure, including electrified transportation systems, building management systems, and health and social care systems

From the utilities’ perspective, tying smart meter and smart grid deployments into a broader smart city project has several advantages, including:

» Enabling a closer engagement with communities, individual consumers, and businesses

» Providing unique possibilities for testing issues across a range of smart grid innovations, including the integration of distributed renewable energy, support for EV charging, and the introduction of demand management programs

» Opening up opportunities to offer new energy services to the city and its residents and businesses; smart street lighting systems and EV charging networks are just some of the areas where utilities are well-positioned to help cities meet ambitious energy goals


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Innovations in city energy provision and energy management also present significant opportunities for technology and service suppliers. Investments in smart grids, smart meters, and new EMSs continue to be central to many initial smart city projects. Navigant Research expects the global smart city technology market to be worth more than $27.5 billion annually by 2023, compared to $8.8 billion in 2014. This represents a compound annual growth rate (CAGR) during that period of 13.5%. Cumulative global investment in smart city technologies over the decade is expected to be $174.4 billion.

Chart 3.1 Smart City Technology Annual Revenue by Region, World Markets: 2014-2023

(Source: Navigant Research)

3.2 The Challenges

The drive for change in the fundamentals of how cities operate can also help drive the transformation occurring in the energy domain and help direct it for the greater benefit of local communities. However, there is also the danger that the interaction of these two innovation waves will create more interference than reinforcement.

Aligning change programs of this scale is a difficult task and the difference in priorities, investment models, governance, and operation models makes it far from easy to mesh different initiatives. City-focused smart meter deployments often begin as trials in a limited area, and the move from pilot to citywide deployment is far from simple. Large-scale deployments need to be tied in with utilities’ deployment plans, which in turn are often determined by industry regulators and national government policies. This means that the interests of the city can become a secondary consideration.

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Many large-scale smart meter deployments are still being considered in parallel with smart city projects, with little integration of strategy or alignment of objectives. For example, there is a logical connection between the investment being made by utilities in local and wide area networks for smart meter deployments and the opportunity to roll out additional networked services for the city (such as smart street lighting systems). A few cities and utilities are exploring this potential but examples are still relatively rare.

City authorities and utilities need to work closely together to ensure that they do not lose the benefits of an integrated approach. In order to build on foundations laid by smart city/smart grid pilots and demonstration programs, they need to look at the overlaps in their strategic objectives, energy efficiency programs, and infrastructure investments. Failure to coordinate in this way could leave a legacy of isolated pilot projects and an inadequate energy infrastructure for the needs of the 21st century city.

3.3 Additional Reading

Further information on the markets and technologies discussed in this white paper can be found in the following Navigant Research reports:

» Smart Cities

» Smart Street Lighting

» Smart Grid Technologies

» Smart Meters

» Residential Energy Innovations

» Automated Demand Response

» Microgrids


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Section 4 ACRONYM AND ABBREVIATION LIST

Automated Demand Response ................................................................................................................. ADR

Compound Annual Growth Rate ............................................................................................................. CAGR

Demand Response .................................................................................................................................... DR

Electric Vehicle .......................................................................................................................................... EV

Électricité de France ............................................................................................................................... EDF

Électricité Réseau Distribution France.................................................................................................... EDRF

Energy Management System ................................................................................................................... EMS

Greenhouse Gas ..................................................................................................................................... GHG

Gross Domestic Product .......................................................................................................................... GDP

Information Technology ............................................................................................................................... IT

Light-Emitting Diode ................................................................................................................................. LED

Photovoltaic ............................................................................................................................................... PV

Yokohama Smart City Project ................................................................................................................ YSCP


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Section 5 TABLE OF CONTENTS

Section 1 ........................................................................................................................................................... 1

Cities and the New Energy Agenda ................................................................................................................... 1

1.1 Smart Cities and Smart Energy ........................................................................................................... 1

1.2 The Energy Cloud and the Future of Energy Provision .......................................................................... 2

Section 2 ........................................................................................................................................................... 4

How Cities Are Helping to Shape the Energy Revolution .................................................................................. 4

2.1 The City and the Energy Cloud ............................................................................................................ 4

2.2 The Renewable City ............................................................................................................................ 4

2.3 Smart Cities and Smart Grids .............................................................................................................. 5

2.4 Managing Energy Demand .................................................................................................................. 7

2.5 Cities and Energy Markets .................................................................................................................. 9

2.6 The Resilient City ............................................................................................................................... 9

2.7 Toward Smart Energy Communities .................................................................................................... 10

Section 3 .......................................................................................................................................................... 12

Conclusions and Recommendations ................................................................................................................ 12

3.1 The Opportunities .............................................................................................................................. 12

3.2 The Challenges ................................................................................................................................. 13

3.3 Additional Reading ............................................................................................................................ 14

Section 4 .......................................................................................................................................................... 15

Acronym and Abbreviation List ....................................................................................................................... 15

Section 5 .......................................................................................................................................................... 16

Table of Contents ............................................................................................................................................. 16

Section 6 .......................................................................................................................................................... 18


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Table of Charts and Figures ............................................................................................................................. 18

Section 7 .......................................................................................................................................................... 19

Scope of Study ................................................................................................................................................. 19

Sources and Methodology ............................................................................................................................... 19

Notes ................................................................................................................................................................ 20


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Section 6 TABLE OF CHARTS AND FIGURES

Figure 1.1 The Emerging Energy Cloud .......................................................................................................... 3

Table 2.1 Example Smart City, Smart Grid Projects ....................................................................................... 5

Chart 3.1 Smart City Technology Annual Revenue by Region, World Markets: 2014-2023 .............................. 13


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Section 7 SCOPE OF STUDY

Navigant Research has prepared this white paper to provide current and interested stakeholders at all levels of the smart city and smart energy sectors, including city leaders and managers, utilities, technology suppliers, investors, and policymakers, with an overview of the opportunities and challenge offered by the changing energy needs of cities. Its objective is to provide an understanding of some of the significant market developments and movements happening in smart cities that are having an impact on the energy landscape. Note that this white paper does not aim to offer an exhaustive assessment of these specific developments or technologies. Much of this insight is provided in Navigant Research’s in-depth market and technology reports, some of which are referenced within this white paper.

SOURCES AND METHODOLOGY

Navigant Research’s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Research’s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community.

Additional analysis includes secondary research conducted by Navigant Research’s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report.

These primary and secondary research sources, combined with the analyst’s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Research’s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients.

Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets.


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NOTES CAGR refers to compound average annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2014 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.


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Published 4Q 2014

©2014 Navigant Consulting, Inc. 1320 Pearl Street, Suite 300 Boulder, CO 80302 USA Tel: +1.303.997.7609 http://www.navigantresearch.com

Navigant Research has provided the information in this publication for informational purposes only. The information has been obtained from sources believed to be reliable; however, Navigant Research does not make any express or implied warranty or representation concerning such information. Any market forecasts or predictions contained in the publication reflect Navigant Research’s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in the publication. Navigant, and its subsidiaries and affiliates hereby disclaim liability for any loss or damage caused by errors or omissions in this publication.

Any reference to a specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply an endorsement, recommendation, or favoring by Navigant Research.

This publication is intended for the sole and exclusive use of the original purchaser. No part of this publication may be reproduced, stored in a retrieval system, distributed or transmitted in any form or by any means, electronic or otherwise, including use in any public or private offering, without the prior written permission of Navigant Consulting, Inc., Chicago, Illinois, USA.

Note: Government data and other data obtained from public sources found in this report are not protected by copyright or intellectual property claims.


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Eric Woods Research Director Smart Cities and the Energy Cloud Reshaping the Energy Landscape

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