ARTICLE: Engerati – Smart cities represent a major revenue opportunity for utilities

Utilities have the ‘know-how and the capabilities’ to accelerate smart city development, creating a mega new market for the energy industry, according to a new report.

Decision-makers and experts from 50 mid-sized cities in thirteen European countries, ranked utilities as the second most important stakeholder for smart city development, when interviewed by analysts at consultancy Roland Berger.

Utilities, which typically already operate key city infrastructure, could provide a host of new services relating to energy supply, mobility and housing. These new digitally-driven offerings would help urban centres meet their decarbonisation targets, while providing lucrative new revenue streams for companies under pressure by the changing energy ecosystem.

“Utilities are shifting from a regulation-driven, reliable, low-risk environment to a client-centric technology-driven sophisticated marketplace that will necessitate change and new technologies and business models,” says Dr. Torsten Henzelmann, managing director at Roland Berger and co-author of the report which was published in September.

“It’s therefore a good idea for them to develop tools and concepts with which they can target cities, where support for energy supply, smart mobility, smart communication and smart buildings is needed,” he adds.

Navigant Research forecasts the annual market opportunity presented by smart cities for utilities will grow from almost $45 billion in 2018 to over $100 billion by 2027.

Some companies are already investing in smart solutions for cities, with financing tending to focus on singular projects rather than holistic, complete offerings.

In the US, Oklahoma Gas and Electric, Georgia Power, Tampa Electric, and Florida Power and Light are leading deployment of smart street lighting globally, with each utility having deployed or in the process of installing over 200,000 connected street lights in their service territories. Georgia Power alone expects to operate between 900,000 and 1 million networked LEDs over the next five years.

Smart street lighting is the ‘low hanging fruit’ of smart city services, says Ryan Citron, senior research analyst for energy at Navigant.