Smart city is defined as one that has an effective plan and projects in at least five of the eight functional areas of energy, buildings, mobility, technology, infrastructure, healthcare, governance, and citizens. Each of these key parameters has specific components that define the ‘smartness’ of a city, and all of them commonly involve the ability to harness various available digital technologies to develop intelligent designs thereby, creating a sustainable or future-ready city.
With the ever-increasing world population and growing urbanisation, it is imperative to create livable, sustainable cities for the future. According to the United Nations, currently more than half of the world’s population resides in cities, and by 2050 nearly two third of the world’s population is expected to live in cities. The benefits of developing sustainable smart cities are well-understood globally. These include reducing the carbon footprint in urban agglomerations with the adoption of greener technologies across energy, mobility, buildings, and infrastructure and bringing about improvements via smart solutions in public infrastructure planning, safety, health, and governance to aid in the economic growth of the cities. The Government of India launched the Smart Cities Mission on 25 June, 2015, with the objective to promote sustainable and inclusive cities providing core infrastructure, good quality of life for citizens, a clean and sustainable environment and smart solutions.
Smart grid and related enhancements are the important aspects of smart city, allowing for better usage of data analytics for outage management to improve the reliability and overall availability of the grid to customers. The bi-directional grid allows the flow of data and electricity both ways between the producers and consumers to create a truly resilient grid that can adapt to change in demand and provide an appropriate response. Further, making way for large-scale distributed energy with the help of renewables like solar rooftops can be a game changer with consumers transitioning to be “Prosumers,” cities can sustainably produce clean energy closer to where it is needed. Lastly, with the help of smarter, reliable, resilient and distributed energy driven grids, better integration of new technologies such as electric vehicles will make way for a truly sustainable smart city with a multitude of opportunities.
A smart grid necessitates the need for a change in the mindset of traditional power utilities to closely align with requirements of the future smart cities. Power utilities globally are adopting new business models and changing their ways of doing business to address emerging opportunities of the new energy world. For example, Germany’s biggest power company, E.ON. In 2014, E.ON announced that it would spin off its centralised power assets to make itself a distributed utility and embrace the “new world” of energy. Johannes Teyssen, E.ON’s CEO and Board Chairman described the move as, “We have now come to the conclusion that it will become increasingly difficult for a company with a broad portfolio to be successful and grow in both the new and the conventional energy world.” E.ON believes that the conventional energy world will continue to exist and to offer well-positioned companies attractive opportunities. However, the new energy world—encompassing sustainable solutions, autonomous and proactive customers, renewables, distributed energy, energy efficiency, and local energy systems—offers considerable growth potential. Frost & Sullivan’s 2025 Smart Grid analysis suggests there would not be a complete transformation to smarter grids worldwide, but processes would have gained pace with substantial changes in specific areas of grid automation and demand-side management. Some notable elements listed below are central to how a smart grid will empower a future smart city.
- There will be increased penetration of distributed energy resources. The share of fossil fuel-based centralised power generation will continue to decline, and self-generation will be widespread. Especially in smart cities, electricity from prosumers such as businesses, households, commercial establishments, will be comparable or even cheaper than utilities, making them reliable and secure in the face of natural calamities and more importantly, beneficial economically and environmentally.
- Grid automation will be a key growth area of smart grids that will be greatly beneficial for future smart cities. Information and communication form the foundation of distribution grid automation. Sensing and monitoring devices implementing features of new communications architecture, real-time state estimation and predictive systems, advanced control systems to optimise performance, asset management and work management systems. These will further help integrate with intelligent monitoring systems, customer information systems, and forecasting tools to help optimise investments and maintenance, providing the basis for asset management, efficiency, reliability, quality, and security.
- Changing the role of distribution utilities will become evident with a shift toward smarter grids. Distribution utilities will provide a wide range of new value-added functions to smart city consumers – shifting away from the traditional role of power supply and grid maintenance to providing flexible services, load-balancing, financing or operating or maintaining energy storage and EV infrastructure, etc.
- Microgrids will be an integral part of smart grids, making smart cities more resilient to natural calamities and vagaries of climate change. These will be powered by distributed generation resources, smart sensors, data management and analytics, advanced electronics, energy storage, and information and communication technologies.
- Penetration of smart meters to rise exponentially in grids across smart cities, Meter Data Management (MDM) and Meter Data Analytics (MDA) will be key to derive further value from smart meter installations. These provide add-on capabilities for data processing, analyses and reporting trends.
- Demand side management and demand response will enable smart city consumers and households to be active participants in the smart grid.
- Cloud services will encourage new business models, starting with a ready adoption of cloud-based solutions to facilitate B2B, C2B, and C2C transactions. Pay-as-you-use, no upfront CAPEX, percentage profit sharing and similar business models will emerge as part of smart grids supporting smart cities.
- Smart grids of the future will see increased market integration; there will be more cross-border exchange as well as the integration of intraday markets for electricity trading – many consumers of future smart grids are likely to enjoy the freedom to trade electricity from/between multiple sources. Further technologies such as Blockchain are expected to offer institutions and smart grid customers a transaction platform where one can trade with another directly without the need for a centralised system.
