A report prepared for the American Public Power Association offers a smart city roadmap for public power utilities to consider and details risks for public power utilities that sit on the sidelines and do not actively engage in smart city conversations.
The report, “Creating a Smart City Roadmap for Public Power Utilities,” was written and prepared by smartenergy IP.
The paper offers guidelines and recommendations for public power utilities, while recognizing that each utility is as unique as the community it serves.
“While each path towards smart city may be different, the fundamental goals are the same: to leverage the latest technologies and business practices for improved operational and energy efficiency with the mission of improving customer experience and benefiting the community at large,” the report notes.
Defining a smart city
When defining the term “smart city,” particularly for utilities, “we must consider the essential meaning of the word smart — to have knowledge or intelligence — with the modern term, which has come to mean data-driven and connected,” the report’s authors said.
The paper defines smart as the intersection of digital with intelligence. Smart city, therefore, refers to a city that leverages digital connectivity and data analytics to drive intelligent decision making.
The paper points out that today, the definition of “smart cities” is not universally agreed upon. For example, it can refer to a city that focuses on carbon reduction or is introducing electric vehicles. It could also refer to a city that has implemented municipal Wi-Fi or integrated solar and distributed energy resources.
Many utilities identify smart city initiatives as the next phase of smart grid efforts, piggy-backing on AMI investments and deployments.
The paper said that a good example is San Antonio-based public power utility CPS Energy, which has been working with city leadership and other partners to develop a strategic plan for the community, called SmartSA. CPS Energy “is leading the conversation around how the utility and its partners can bring new efficiencies into the community.”
How the Association defines smart city
The Association recognizes the unique role of public power utilities in smart city efforts. Its Public Power Forward initiative is designed to help public power utilities prepare for a new era in electricity and helps public power utilities to address changing customer preferences, rate design considerations, technologies, regulation, and market forces.
The Association is defining a smart city in the white paper as a city that betters the lives of residents and businesses through mindful investments and deployments of advanced technologies. Specifically, these efforts can improve energy efficiency, reduce carbon emissions and improve reliability and customer service.
“These advanced technologies may include advanced network communications, adoption of IoT and applications, and the integration of distributed energy resources that will provide communities with improved automation and meet low carbon emission goals,” the paper said.
Where does public power fit in?
Meanwhile, the report notes that third party service providers “are all throwing their hats into the smart city ring, seeing an opportunity to monetize the smart city transformation effort.”
Many of them are willing to work with public power utilities to develop new technologies and services. “But this investment, which is critical to advancement of smart cities, is challenged by the limited funds available through local government efforts.”
The paper references the “Smart Cities Financing Guide,” put out by the Smart Cities Council in conjunction with the Center for Urban Innovation at Arizona State University.
The guide says that smart city initiatives face major capital challenges. According to the report, the projects can expect to be funded through a mixed bag of investments including government-based financing tools, development exactions, public-private partnerships, and private fund leveraging options.
But the Association sees this overall industry challenge as an opportunity for public power utilities. Public power utilities are well-positioned to understand where cities need to go and how to take them there, the report said.
The paper said that the advantages to helping design the roadmaps for their own communities are:
- Control over strategic decisions in planning;
- Reduced risk of monetary opportunity loss;
- Reduced risk of core business loss;
- Improved operational benefits to public power utility where they can identify synergies between grid modernization efforts and multi-use applications of existing technology investment; and
- Potential for seeking out future investment channels once utility blueprint and core direction is designed
Risks tied to not engaging in smart city conversations
There is risk for public power utilities not actively engaged in smart city conversations, the report notes.
These risks involve outside parties lobbying local government for new infrastructure guidelines and business strategies that may interfere with the day-today operations of the local utility. As an example, the paper said that telecommunications or cable companies are building new wireless networks or municipal Wi-Fi networks that can interfere with AMI. “Collaborative partnerships and communicating with local government can mitigate these types of risk.”
Therefore, California public power utility SMUD’s partnership with the City of Sacramento on 5G made sense, as there was a common need and synergies. SMUD’s participation in Sacramento smart city initiatives include 5G collaboration, green transportation solutions and clean grid initiatives.
Another risk for utilities not engaging with the public and private sector on smart city initiatives is potential restriction from future business models. Therefore, public power utilities need to engage in conversations early in the process to make sure there is proper coordination, as well as to ensure their interests are not superseded, the paper said.
In a smart city environment, the public and private sectors must align, and stakeholders, which at times have opposing interests, must communicate and coordinate with each other, according to the report.
“Given the role of local government in the design of the smart city, the public power utility must therefore play a critical role early on, well before the race for opportunity among third parties begins.”
Public power utilities must “shape the vision for their service territories and their customers’ experience. That means thinking about the future of smart technology holistically—and not just in terms of electric, water, or gas service delivery. That is because public power utilities, along with all utilities, must tackle the daunting task of asking what they will look like in the future.”
Moving towards a smart city blueprint
The paper includes a section that outlines an initial set of questions that can lead to a preliminary smart city blueprint.
The paper looks to break down what, specifically, public power utilities must do to engage and lead the smart city conversation.
According to the report, the first step in the development of the smart city roadmap for public power utilities is to answer several questions that identify critical information in the following areas: 1) People, stakeholders and processes; 2) Materials; and 3) Operations (key impacts).
Once a public power utility has pulled together the information needed to start developing a roadmap, it can begin to think about an outcome and the path to get there.
The paper includes a proposed “map” to begin laying information down into a shareable internal and external document to help communicate internally and to stakeholders the utility’s smart city plan.
The report is available here.