A city doesn’t need to have a huge budget to become ‘smarter’. Gary Thompson, UK sales director for Siemens Industries and Markets, Siemens Financial Services (UK), examines examples of smart city initiatives that can pay for themselves.
There are a number of obstacles to implementing smart technologies in a city environment. One of the biggest is funding. More specifically, the challenge for cities is to match the right financing tool with the right smart city initiative.
While the implementation of some technologies requires a certain amount of risk, others have very clear, calculable benefits.
For these initiatives, smart financing can make investments affordable because the return on investment (ROI) generated can be used to partially or wholly fund their deployment.
With limited public funds, accessing private sector finance for technology projects is becoming commonplace and local authorities are, more than ever, seeking creative solutions to bridge the funding gap between current budgets and tomorrow’s smart potential.
As budgets are being constantly squeezed, an increasing number of cities are now approaching smart transformation though a series of smaller, low-risk smart projects, which could be funded through some form of private sector asset finance arrangement.
Fixed visual surveillance, advanced public transit, and smart outdoor lighting are the three largest use cases, collectively accounting for nearly one quarter of global smart cities spending in 2018.
Here are a few of the smart initiatives that produce clear ROI and can be funded through smart finance from a private financier:
Improving air quality is a high priority for many councils across the UK. Road traffic is responsible for around 40% of emissions of nitrogen oxides in the EU and around four fifths of nitrogen oxides which come from traffic emanate from diesel-powered vehicles. Upgrading bus fleets has the potential to greatly impact a city’s air quality.
Electric vehicles, for example, produce no pollutants at street level and up to 40% less CO2 emissions as a whole, compared to similar-sized petrol or diesel vehicles.
In addition, electric, hybrid and hydrogen vehicles not only help generate substantial fuel savings, but also enable lower operating costs, both of which can be factored into paying for the deployment of the technology.
This summer, the largest double-decker electric bus fleet in Europe is due to be deployed by Transport for London - 68 new electric double-deckers will join the city’s bus fleet, increasing the number of electric buses by more than tenfold.
LEDs are brighter than conventional light sources and so provide more safety and security in public spaces. They also have longer lifetimes and require less maintenance.
North Yorkshire County Council anticipates it will reduce the running costs of its lights by 40%, following installation of 5-7000 of the County Council’s lamps during 2017 and 2018.
As well as being more environmentally-friendly than standard lights, and therefore helping to reduce carbon emissions, the new, more efficient LED equipment is anticipated to an annual saving of about £1.285m.
Smart Building Controls
Smart controls give buildings a 'central nervous system' that balances and reconciles competing interests such as energy minimisation, occupant comfort and grid stability.
Today, things like fire protection, climate control, ventilation lighting and video surveillance are usually still controlled separately. Modern, sophisticated management stations, on the other hand, allow all building systems to be integrated into a single platform.
Use of smart control systems has the potential to reduce energy use, support carbon reductions and reduce running costs.
John Keats Primary School in London has implemented smart building controls that handle water and air heating, as well as internal and external lighting.
Room sensors and passive-infrared sensors detect occupancy in rooms and corridors and adapt the conditions accordingly.
With automated building controls and features like daylight harvesting, the system can reduce lighting and heating levels in areas where they are not needed, reducing energy costs by up to 30% compared to manually controlled systems.
Pupils at the school will also benefit from an enhanced learning environment, with the control systems monitoring conditions to provide optimum lighting, temperature, humidity and CO2 levels, all of which have been shown to improve concentration and alertness.
Smart Workforce Enablement
A wide range of public sector professionals are already mobile, such as city surveyors, parks maintenance, inspectors, engineers, outreach health and social services. As a result of mobile working devices and new workflow management software, these professionals can greatly improve their efficiency.
ROI is evidenced by mobile workflow management (often also incorporating smart routing and scheduling), with typical efficiency savings of more than 10% being reported..
For example, Ashford Borough Council in Kent made significant efficiency gains by deploying a mobile working solution for its housing officers.
The council’s 415 staff provide services to 4,500 homes in Ashford and a large network of surrounding villages. A mobile solution instantly provides housing officers with up to date information such as tenancy and rent data.
Delivering all information in real-time, the digital solution also includes search facilities, customisable watch lists, a calendar and reminder alerts to ensure deadlines are met and engagements are kept on time.
Financing Smart Cities
These are just a few examples of smart city initiatives that deliver clear ROI and can therefore self-finance.
Tailored asset financing packages make it easy for financial managers to understand total lifetime costs and therefore calculate a dependable ROI – a significant advantage for transparent financial planning and managing the good opinion of city stakeholders.
UK councils are realising that in order to benefit from smart city technologies they need to implement small scale initiatives rather than wholesale change. Nevertheless, even small initiatives require investment.
There are a number of funding sources and techniques available and the challenge is to pair the right financing model with the right technology.