At the beginning of April, INTA was invited to participate to the seminar of the CEN CENELEC Sector Forum Energy Management in Brussels. The seminar that gathered hundred of professionals discussed the tools needed by the Member States and Industry in support of the implementation of the Energy Efficiency Directive of the European Union.
The technical debate revealed the complex interactions between urban development and energy transition policy and the central place that Smart Cities can have in the process. The text below is a personal reflection of Michel Sudarskis who represented INTA in Brussels.
The issue of energy transition is vital to a smart city as the energy transition is based on several major innovations: the massive wave of renewable energy sources, conservation of energy through greater efficiency, and energy savings through reduction of the demand. Compatibility and standards are critical in those three areas. Cities have anticipated these issues for several years. The challenge is to show that it works, as well as what services it can offer citizens and businesses.
A quick return on the dynamic of Smart City movement, a fashionable concept that today overshadows other modes of urban development and transformation. The Smart City movement went through several phases.
At the beginning the priority was to push the stakeholders, in particular the private sector, from talking about what "smart city" means to understanding how to implement it. The evidence of the shift was in the increasing maturity of the demand side (local authorities and industry alike), the development of standards, and the arrival of investment in the form of incentive funding from government. That was the age of experimentation.
Smart Cities moved then into the mainstream as governments (including the European Union) commit sizeable funding and policy to smart city development, through deployments of smart city protocols and operating platforms and acceptance of smart technologies as the norm in transport, energy, development, assisted living and security. This is the age of demonstration.
The third phase is to define both the urban development plans and the working business models that are creating future Cities successes; fully integrated, strategically designed development programs with measurable results. In addition, we look at new or other actors (citizens as producers and consumers of data) to enter the future city (smart city) arena. This is the age of "massification".
Intelligent grids with their various components have been an important theme throughout recent EU energy legislation and reference to management is being made. Tools to assist the implementation of, for example, GIS and simulation technologies clearly play an important supporting role in the planning process, leading to practical implementation of these technologies. Intense research and various field tests are going on across Europe concerning smart meters, energy storage and supply and demand management.
Within the technical scope of energy efficiency measures, there is a strong trend to more complex systems, bringing different sectors and city development and management policy together. With systems becoming more complex, there is an increasing need for greater user assistance. Solutions will have a market, if they manage to integrate more “intelligence” into the ICT product and keep the interface to the different stakeholders simple and intuitive. As system borders expand, or are even dissolved, standardisation and interfaces will become necessary.
Normative (norms) and informative (standards) solutions are being worked out to enable platforms and technologies to make customer interaction more efficient, and city operations more cost effective and valuable. Standardisation provides confidence in the ability to build and deploy smart city applications and infrastructures cost-effectively and within planned timescales. It is easier for industry to develop the right portfolio of products and services, compliant with these standards, and thus enable greater competition and drive down costs. Standards also allow applications accessed by citizens (e.g. on smart phones) to be used across cities and to allow progress to be compared, for example, for quality of life and sustainability indicators. Finally, standard provides a reliable basis for people to share the same expectations against a product or service.
Those standards should be developed and maintained through an open and transparent process; this means a collaborative, consensus-driven process open to participation by all relevant parties and not dominated by a single organization or group of organizations. A system as complex and as quickly evolving as a smart city requires fast, agile and modern standardisation practices.
Standardisation bridges the gap between the social dimensions implied by the smart city policy and the technology pressure imposed by the European or national energy efficiency policy and regulations.
New markets for IT solutions and systems are evolving quickly and several EU funded projects have been a “test ground” for many of these solutions. Based on the outcome of demonstration sites, a financial model is to be constructed and also a governance process to support the energy transition. By means of this approach, a number of challenges are identified, allowing it to bring together the energy stakeholders around the sharing of data and a common culture and to test strategic planning tools at district level, with a view to a future master energy plan for the agglomeration.
If the EU Energy Efficiency Directive in 2012, remains the main instruments of any new energy or climate policy objectives many obstacles stand on the way:
- the lack of public funding instruments (due to current and future fiscal constraints),
- the lack of interest of market actors (due to the long payback periods and low returns on investment),
- the difficulty of aggregating different funding opportunities linked to different policies (for instance the Structural Funds and Energy Efficiency Directive) combined with the difficulty of measuring real energy savings after renovation works;
- the lack of synchronization of actors (architects, housing managers, building or renovation companies) when projects are tendered for, thus increasing the costs of construction/renovation;
- the lack of consideration of the wide built environment and transport modes, and therefore the overall district level energy performance when proposing housing renovation programmes;
- the lack of consideration of local specificities (local energy needs and local energy resources).
To overcome those obstacles a series of interrelated instruments seem necessary in particular the recognition of the trade-offs between the different policy objectives i.e. balancing efficiency and equity of the energy transition. Energy efficiency has a cost that is always borne in one way or another by the end-users, and energy policy mechanisms alone are most probably not sufficient to compensate for this cost.
Despite some renewable energy and energy efficiency technologies verging on maturity, financing remains a major issue in the energy transition. Many energy technologies are still not sufficiently economically viable, due to their high up-front costs and low profits or low savings achieved. Others are only viable if looking at a long time period.
Current projects demonstrate that it is necessary both provide financial support for renewable energy and energy efficiency projects and to mobilise private contributions – often that of private households. Current business models that hold the potential to overcome the barrier of up-front capital cost are been explored as well as collaborating mechanisms with local and municipal energy companies.
Smart Cities Financing Guide, Center for Urban Innovation at Arizona State University, 2013
Smart Cities: Best of the Best, Smart City Council, 2013
Réussir la transition energetique dans les territoires, Résumé du rapport préparé par Serge Salat, Loeiz Bourdic et Françoise Labbe pour la Caisse des Dépôts, Novembre 2013, Institut des Morphologies urbaines
Promesses de la Smart City, Gazette des Communes, Mars 2014
Energy Solutions for Smart Cities and Communities, Recommendations for Policy Makers, Sustainable Energy Solutions for communities, CONCERTO Initiative, The Institute for Technology Assessment and Systems Analysis (ITAS) Karlsruhe Institute of Technology, European Union 2014
Mapping Smart City in the European Union, Directorate General for Internal Policies, European Parliament, 2014
Source picture: http://www.prismtech.com