by Brianna Crandall — December 19, 2014—The global “smart city” market will be valued at $1.6 trillion in 2020, forecasts global growth consulting firm Frost & Sullivan . Over 26 global cities are expected to be smart cities in 2025, with more than 50% of these smart cities in Europe and North America.
By 2025, it is expected that around 58% of the world’s population, or 4.6 billion people, will live in urban areas. In developed regions and cities, the urban population in cities could account for up to 81% of total population. This will pose serious challenges for city planners, who will have to re-think how they provide basic city services to residents in a sustainable manner, says Frost & Sullivan.
According to Ivan Fernandez, industry director for Frost & Sullivan Australia and New Zealand, governments of smart cities are transforming from a traditional model of a silo-based organization to a more collaborative, integrated service delivery model. Cities will collaborate with each other to drive smart city innovation by entering into partnerships with each other.
“Technology and ecosystem convergence, collaboration and partnerships between stakeholders from different industries, such as energy and infrastructure, IT, telecoms and government will also expedite the delivery of integrated services,” states Fernandez.
According to Frost & Sullivan, smart cities are cities built on “smart” and “intelligent” solutions and technology that will lead to the adoption of at least five of the eight following smart parameters—smart energy, smart buildings, smart mobility, smart healthcare, smart infrastructure, smart technology, smart governance and smart education, smart citizens.
There are significant opportunities to raise efficiencies in managing cities to make them smart cities, such as urban growth overburdening waste landfill capacity, and the cost of constant traffic congestion, points out F&S.
Smart energy
Smart energy is currently the fastest growing segment within the smart cities market and will be driven by the large-scale adoption of smart grids and intelligent energy solutions. According to F&S research, smart energy will make up 24% of the total global smart city market in 2025, growing at a compound annual growth rate (CAGR) of 28.7% from 2012-2025.
Fernandez continues, “In the last ten years, distributed energy generation is estimated to have more than doubled. Strong growth is expected to 2020, corresponding to nearly half of the increase in total electricity use. The game-changer will be electricity storage; it will help manage peaks, drive renewable energy uptake, support EV infrastructure.”
Smart buildings
Miniaturization, wireless enablement, and interoperability of sensors are key industry drivers that have allowed sensors to be part of building management systems. In 2012, the global market for sensors used in building automation systems was $1.75 billion. This is expected to rise to about $2.7 billion in 2016. Smart buildings will make up 7% of the total global smart city market in 2025, growing at a CAGR of 4.1% from 2012-2025.
Brisbane, Australia, is leading the way with plans for a CBD District Cooling System—a centralized water-chilling system that replaces air-conditioning chillers and cooling towers in individual buildings in the city’s central business district (CBD). This system will chill water during off-peak periods to supply CBD buildings during the day, and is expected to yield considerable energy savings.
Smart infrastructure
Smart infrastructure will make up 11% of the total global smart city market in 2025, growing at a CAGR of 12% from 2012 to 2025, says F&S. Key parameters of smart infrastructure include sensor networks as well as digital water and waste management. Fernandez points out that in Australia, 48% of all waste goes to landfill, while in Sweden that number is 1%. “Sweden actually imports 80,000 tonnes of rubbish every year to meet their energy requirements. And they are paid to do it!” Fernandez says.
On the plus side for Australia, the East Rockingham Waste to Energy Plant will generate 18.5MW from construction and demolition waste, commercial and industrial waste, municipal solid waste and green waste. “Councils and wastewater utilities are seeking to monetize waste, and technology is making smaller waste-to-energy (WTE) plants viable,” states Mr. Fernandez.
Making smart cities work
“Governments of cities should create a Smart City Stakeholder Group, encourage open collaboration, and build digital infrastructure such as eServices and mHealth,” Mr. Fernandez recommends.
He continues, “The private sector, on the other hand, should evaluate their role in the smart city market; build a ‘City as a Customer’ Strategy; identify potential partners, business models and consortiums; develop capabilities in data analytics and cloud-based services; and develop services as a business model.”
“For smart cities to work, begin with the end in mind. Tailor the technology solution to the DNA of the city, not the other way round,” concludes Fernandez.
