World Reimagined: The Potential of Smart Cities
The past few years have been a bit more challenging, to put it mildly. Local organizations have been amongst the most disrupted as managing the various aspects of the pandemic like the accelerated need for digital transformation often occurred at the local level. As it turns out, around 45% of government organizations were ill-prepared for the challenges of the pandemic. This has resulted in an increased push towards improving local infrastructure and with it, the evolution of smart cities that can better manage challenging conditions and be more attractive to potential residents as more employers offer remote work options and flexibility.
What is a smart city?
Smart cities (also referred to as eco-cities or sustainable cities) use technology to improve efficiency and sustainability and to provide a better quality of life for their residents. This means improved traffic management, waste removal, resource management and security. A smart city uses information and communication technologies to improve its livability, workability and sustainability. If this is the kind of thing that really floats your boat and you are into rankings (or are considering moving), check out the Smart Cities Index (2021 Full Report), which rates cities around the world. Spoiler alert: London won again.
Dublin, Ireland is as an example of just what a smart city can offer. In 2015, Dublin City Council implemented the Mayflower Central Management System to integrate city-wide smart sensors and applications. The system monitors the noise level of cars on the streets, CO2 emissions, the energy consumption of street lighting, weather conditions, and even groundwater levels as the city is vulnerable to flooding. In 2016, the Smart Dublin initiative was created to explore new technology and working practices to improve the quality of life for the citizens of Dublin and future-proof the city. The result is a city where people are safer walking at night, cars consume less fuel which reduces pollution levels and optimal locations are created for new schools, hospitals and homes.
Do we need smart cities?
In 1800, less than 10% of people lived in urban areas but according to the UN World Urbanization Prospects, urban populations overtook the total in rural areas by 2007, and today, over half of the world’s population (around 55%) live in urban areas. By 2050 that proportion is expected to increase to 68%, adding another 2.5 billion to urban areas. By 2030, the world is expected to have 43 megacities with over 10 million inhabitants, most of them in developing regions.
With the human population becoming increasingly urbanized, economic and environmental success will largely depend on what happens within cities and how they manage resource constraints. We also don’t want billions of people going bonkers from the stresses of city life. As Jesse Berst, founder of the Smart Cities Council put it, “If cities are our best hope for a better future, smart technologies are the path to that better future."
Aside from the environmental and livability concerns, the pandemic acutely and painfully highlighted the dangers of working in silos, leading experts at the World Economic Forum to suggest that global data governance and data exchanges be at the core of smart city ecosystems, another tailwind for technology infrastructure spend. In addition, with fertility rates plummeting in the developed world, the competition for talent will intensify. Already, the U.K. announced last month that it will grant visas to graduates and their families from top universities around the world.
Why is this an investment opportunity?
The Internet of Things (IoT) is today growing at an accelerating pace within smart cities. While estimates vary depending on the organization, the growth in smart city spending is expected to be profound.
- According to the SmartAmerica Challenge, city governments in the United States alone will invest around $41 trillion over the next 20 years to upgrade their infrastructure and take advantage of IoT solutions.
- A recent report from Research and Markets indicates that globally, the smart cities market is likely to grow at a CAGR of over 20%, reaching 2.5% trillion by 2025. This growth is driven by increasing urbanization worldwide and rising technology spending on smart city programs as well as infrastructure development.
- Markets & Markets predicts a CAGR of around 19% as the global IoT in smart cities grows from $130.6 billion in 2021 to $312.2 billion by 2026.
- International Data Corporation expects direct digital transformation (DX) investments to total $6.8 trillion between 2020 and 2023.
- Grandview Research predicts that by 2030, the global smart cities market will reach nearly $7 trillion, which translates into a CAGR of around 24%.
Companies investing in smart city technology
Given the level of public debt around the world, funding smart city development is a challenge. Many cities are developing public-private partnerships, such as Siemens’ (SIEGY) $600 million investment in Berlin. The Siemensstadt “Siemens City” is Siemens’ largest investment in its history, covers 70 hectares (about 173 acres), and is expected to “transform a large industrial area into a modern, urban district of the future for a diverse range of purposes.” Siemens smart city offerings range from MindSphere Application Centers implemented in Hong Kong, Singapore, and Dubai to resilient resource management to infrastructure financing.
OneMind Technologies, a subsidiary of Affluence Corporation (AFFU), is partnering with Dell Technologies (DELL) and Orange Business Services to deliver comprehensive data to city decision-makers. Click here for an interview with James Honan, CEO of Affluence, discussing IoT and smart city technology.
Digging more into the details of just what is being done and how, smart city devices are being used to make everyday tasks easier and more efficient while at the same time reducing the pain points around public safety, traffic congestion and environmental impact.
As the world looks to get a lot smarter about energy generation and consumption, “smart meter” IoT devices are being used by utility companies to better manage energy flow and to allow users to monitor their own consumption. According to Insider Intelligence, utility companies will save $157 billion by 2035 from the implementation of smart meters. Companies such as Cisco Systems (CSCO), General Electric (GE), IBM (IBM), Microsoft (MSFT) and Schneider Electric (SBGSY) offer various “smart grid” solutions.
One of the biggest problems with power grids around the world is just how highly centralized they are. To increase capacity and resiliency, smart grid technology is shifting towards a more distributed model wherein customers generate some of their own power through the use of solar panels and sell any excess back to the grid. The distributed grids also include household/business storage units that are connected to the city’s grid. These batteries can reduce demand during peak hours by storing energy during low usage hours. Companies such as Tesla (TSLA), Generac (GNRC) and Panasonic (PCRFF) offer residential and business battery solutions.
No natural resource is quite as precious as water and with nearly one-fifth of the world’s population living in areas of physical scarcity, this is yet another area with considerable innovation, from rainwater management to water reclamation and even rapid leak detection. Companies like IBM, Microsoft, Evoqua Water Technologies Corp (AQUA), Xylem (XYL), and Ecolab (ECL) provide a range of water management solutions.
Anyone who has been caught behind a trash truck can attest that the odiferous vehicular behemoths can cause serious traffic congestion, along with a desire to shove an air freshener up one’s nose. Smart solutions monitor bin levels which can be used by waste management companies, in conjunction with traffic monitoring tech, to identify the least disruptive and most efficient pick-up routes and prevent overflow from contaminating surrounding areas.
Smart bins, such as those from Bin-e, can take human error out of the initial sorting process using AI-based recognition system, lowering waste management costs by as much as 80%. The Evo bin by EvoEco educates and “motivates” users to properly dispose of their trash in the correct bin. Others like the Bigbelly system from MassTrans use solar power to send out an alert when it is full and compacts waste internally to reduce pickup frequency. Rubicon Technologies, which is expected to go public through a merger with Founder SPAC (FOUN), is using technology to end waste by using AI to improve waste management and increase recycling. Then there is the route South Korea took when constructing the city of Songdo. All the city’s trash is transported via an underground pneumatic pipe system to a plant where it is separated and either recycled or burned for energy.
In 2014, Westminster, London implemented SmartPark from Smart Parking Limited (ASX:SPZ), which allows drivers to quickly locate open parking spaces, rather than driving around endlessly, adding to congestion and infuriating fellow drivers.
To reduce congestion and emissions, Pittsburgh implemented Rapid Flow Technologies Scalable Urban Traffic Control (Surtrac). Surtrac is an AI/robotic system that treats the intersection control challenge in a whole new way - as a single machine scheduling problem. According to Rapid Flow, Surtrac’s implementation has gotten people to their destination 25% faster, with 40% fewer stops, resulting in an overall reduction in emission of 20%. What’s not to like? Rapid Flow reportedly plans to release a platform called Routecast that will be fully deployed in the fall of 2022 that can save drivers as much as 10-12 seconds per intersection, up from the 4 to 6 with its current product.
The bottom line is that more and more of us are going to be living in urban environments that are likely to be increasingly dense, and without smart-tech, congested and polluted. Economic and environmental success and frankly, our collective sanity, will require these urban areas to get a whole lot smarter and that is a world worth reimagining.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.