NewEnergyNews: TODAY’S STUDY: Smart Cities Adding New Energy


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    Monday, March 18, 2019

    TODAY’S STUDY: Smart Cities Adding New Energy

    Renewables (em)power smart cities; Wind and solar energy best enable the goals of people-centered smart cities

    March 6, 2019 (Deloitte Insight)


    Cities small geographical footprint belies their significance. They cover 2 percent of the world’s landmass,1 but account for most of the world’s population, economic activity, and energy use. Here, we focus on the third aspect— energy use—as cities and renewable electricity have, respectively, become the habitat and energy of choice globally. The two are increasingly inseparable. As cities vie to attract growing businesses, talent, and innovation in an increasingly global competition, solar and wind power have become key for many in achieving their smart city goals.

    This report discusses how renewables can empower smart cities. We will start by exploring the urbanization and electrification trends that have turned cities and the grid into leading platforms for human activity. Technology can help make these platforms smarter by providing actionable data, but technology’s greatest value lies in its people-centered deployment—that is, to the benefit of all citizens/customers. The goals of a people-centered smart city are economic growth, sustainability, and quality of life, while the goals of a utility are to provide reliable, affordable, and environmentally responsible energy. Solar and wind power are the linchpins to aligning and achieving both sets of goals. To better describe cities that recognize this and harness wind and solar energy, we developed the concept of smart renewable cities (SRCs). SRCs are already powered by solar and wind and envision the further deployment of these sources as integral to their smart city plans.

    We will discuss each of the aforementioned smart city goals from an SRC perspective, with an emphasis on utilities’ role. First, SRCs can foster economic growth because renewables are competitive with conventional sources and conducive to job creation and innovation. Second, SRCs can promote sustainability through renewable-powered buildings and electric mobility. Third, SRCs tend to offer a higher quality of life by being inclusive, healthier, and empowering places to live. Finally, we will show how SRCs implement their initiatives through an ecosystem of stakeholders, chief among which are utilities.

    The intersecting platforms of cities and utilities…From data-driven insights to people-focused strategies…

    Renewables: The linchpin of smart city and utility goals

    Smart cities and utilities share an interest in deploying two energy sources that align with their goals: solar and wind. Utilities are embracing wind and solar power as they reach price and performance parity with conventional energy sources across the world, help to cost-effectively balance the grid, and become more valuable assets thanks to increasingly costeffective storage and other new technologies (see Global renewable energy trends).4 These renewable energy sources now come closest to meeting the growing demand for reliable, affordable, and environmentally responsible energy sources that utilities seek to provide. As a result, renewables have become the preferred energy sources for key consumers such as cities. Another key consumer that is valuable to both cities and utilities is corporations, which procured record amounts of renewables in 2018.5 Unlike most energy sources, wind and especially solar power can be deployed in and by the city itself. Finally, solar and wind power are citizen/ customer-centered energy sources because many residents and businesses are demanding these renewables and are increasingly empowered to deploy them on their own properties and buildings, or purchase shares of solar and wind projects or power through community energy initiatives.

    The Biggest, Purest, and Newest smart renewable cities

    SRCs recognize that solar and wind resources play a key role in powering smart city plans. Deloitte developed the SRC framework to identify and classify cities globally that are deploying solar and/or wind power in connection with their smart city plans. SRCs are the vanguard, charting a course that all smart cities are expected to pursue as they advance toward peoplecentered goals. With solar and wind already a part of their energy mix, and a pipeline for more, SRCs are strategically positioned to leverage their shared interest in renewables with utilities to more quickly achieve these goals. Deloitte’s SRC model considers the Biggest, Purest, and Newest SRCs to showcase the range of initiatives that are being implemented or considered, and the range of roles that utilities can play in initiating, shaping, or participating in them in conjunction with other service and technology providers (figure 2). Smart city plans are typically associated with the Biggest cities, which tend to be replete with legacy infrastructure and complexity, and face some of the greatest challenges and opportunities across all areas. Meanwhile, the Purest cities show what initiatives can bring cities closest to being entirely powered by solar and wind. Finally, the Newest greenfield projects demonstrate what a fully intentional and unhindered deployment of SRC initiatives can potentially accomplish at various scales. Looking at the challenges and successes of the cities in each of these categories can help other cities and utilities determine their strategies.

    “The objective of the [Smart City San Diego] collaboration is to improve the region’s energy independence, to empower consumers to use electric vehicles, to reduce greenhouse gas emissions, and to encourage economic growth.”6

    “Peña Station Next [is] a smart city and community focused on mobility, clean energy, and more.”7

    “ProjectZero is the vision for making Sonderborg ZEROcarbon by 2029, creating sustainable growth and new green jobs along the road—based on ambitious carbon reduction goals and new Bright Green Business solutions. Our vision is a powerful innovation engine for new solutions and business concepts. The innovation engine will show the future use of energy, food, water, and other resources. We strive to create market-driven concepts benefitting citizens and businesses. We do this by developing new solutions and collaborative partnerships based on smart climate solutions.”8

    More specifically, SRCs can be defined as cities with a vision that integrates renewables and smart initiatives. To qualify as an SRC, the Deloitte model requires that cities have a publicly available city plan that presents a vision (see sidebar, “SRC visions integrate renewables and smart city initiatives”). In addition, it must have already deployed solar and/or wind power (at least 1 percent of its city energy mix) and plan to deploy more. If the current solar/wind power share of the energy mix is less than 10 percent, the city must also have a renewable energy or decarbonization target (note that some of these targets may involve renewables other than wind and solar, and in the case of decarbonization targets, nonrenewable energy sources such as nuclear power).

    Figure 2 presents three types of SRCs. First, the Biggest SRCs comprise all the cities that qualify as SRCs and have over a million residents (and many more nonresidents served). The highest share of solar and wind power recorded among the Biggest SRCs is in Adelaide, Australia (42.2 percent of the energy mix). The list of the Purest SRCs picks up where the Biggest SRCs leave off: It includes all the cities, regardless of size, where solar and/or wind account for over 42.2% of the current energy mix. Finally, the Newest SRCs are greenfield smart city projects entirely powered with renewables.

    Applying Deloitte’s 360-degree framework to the Biggest, Purest, and Greenfield SRCs involves identifying how the deployment of renewables contributes to smart city goals (see figure 3). The next three sections will discuss each goal from an SRC perspective, with an emphasis on utilities’ role in SRCs’ initiatives.

    Green economic growth…Sustainable buildings and transportation…Higher quality of life for all…Understanding a smart renewable city’s enabling ecosystem…


    Smart cities have a growing opportunity and imperative to become SRCs. The integration of more solar and wind power into city energy mixes can directly power their goals to be more economically competitive, sustainable, and livable. In fact, these goals cannot be achieved without a significant share of renewables. Utilities play a key role in their successful deployment as electrification powered by both utility-scale and distributed renewable energy spreads in the building and transportation sectors, unlocking new possibilities for customer engagement. The Purest SRCs have already flipped the equation, presenting smart cities as a component of their renewable energy plans, recognizing that renewable power is a starting point for smart cities. It behooves both cities and utilities to be bold in their SRC journeys, as growth is not guaranteed. Cities are competing with one another, while utilities may risk losing business and other opportunities to nontraditional electricity providers. The first cities and utilities to achieve 100 percent renewables may reap the most reward as they attract a growing number of likeminded stakeholders.


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