Making Cities Smart

In my previous post, "What are Smart Cities? and Why?", I had provided some historical context into where and how the concept of Smart Cities fits into the overall narrative of cities, towns and urban developments.

In this post, I would like to discuss the opportunities and challenges in the middle of the second decade of 21st century, that are leading to development of Smart Cities. I will also introduce some of the Smart City initiatives that are being touted within the overall concept.

Modern Opportunities and Challenges

In some ways, Cities, both old and new can be made smart. From my perspective, the Smart Cities movement is a combination of technology and sustainable design practices that will be utilized to solve the biggest challenges for cities going into the 21st century. Let us start by understanding these opportunities and challenges at a deeper level.

Technology: An Opportunity

Within the sphere of Information and Communication Technology, independent developments have now started coming together and forming the basis for a set of "architectural forms" that will enable new living patterns. These developments can be grouped as

1. Realtime Status of Infrastructures
2. Scalable Networks
3. Scalable Computing Infrastructures
4. Ubiquitous Access

Realtime Status of Infrastructures

As sensors and embedded devices have become cheaper, it has become viable to deploy these sensors on a very large scale. With some level of power source that is either always available or can be continuously replenished (solar/ wind), a lot of the previous generation infrastructures can now be sensor enabled to understand in a realtime basis what is happening in the real world. Whether it is Smart Meters or Smart Buildings, this sensor enablement forms the first foundation of the initiative.

Scalable Networks

In addition to sensor enablement of many of the urban infrastructures, the next item was how do these devices communicate back to a server the latest status reports. The combination of IP based networks, and proliferation of cellular technologies (3G and 4G), has meant that devices can now communicate with a centralized location on a continuous basis.

Scalable Computing Infrastructures

As new devices are becoming sensor enabled, and networks can now be scaled to bring these updates back, the next bottleneck is infrastructure to handle this increased information flow as well as be able to process it under varying demand levels. Scalable computing infrastructures, aka Cloud computing, pioneered by Internet companies like Google, Facebook, Amazon and Yahoo, provide the next building block. This additional computing power can be leased on demand, making it accessible to much smaller scale organizations.

Ubiquitous Access

Finally, Ubiquitous Access of information provided by Smart phones means that people at all levels of the society can now tap into these networks and infrastructures with relative ease. The Apps frameworks offered by most smartphone manufacturers means that developers and software engineers can combine these data into new ways to create new applications based on a user's needs. Next, we will discuss smartphones that now play a dual role.

Smartphones: Moving from a Consumer to a Publisher 

As mentioned, within the last decade a lot of aspects on how technology is accessed and deployed around the world, have been quietly but unmistakably revolutionized. While the Internet revolution started almost two decades ago, the primary interface was the PC. In the last 5 to 7 years, the access interface for Internet has become un-tethered from a wired connection at a fixed location, to a mobile one. More importantly, the access device, aka "the smartphone" has been embellished with a lot of sensors that allows the device to become a data source as much as it is an access device. This means that not only can people stay current with latest information wherever they are, but at an aggregate as well at an individual level, people can broadcast their current information to any body who would like to know.

Sustainable Development: A Challenge

The obvious challenge of 21st century is sustainable development. As mentioned in my previous post, the sprawl development of the 20th century is seen as something that needs to be fixed. This is in spite of the fact, that technology development in the recent past actually encourages sprawl. To explain, much of the social infrastructure in big cities can now be replicated in remote areas without incurring the same cost. However, its the external costs that are driving most societies to look for an alternate development model.

These external costs are in terms of some of the following issues, that go across developing and developed countries. These are

1. Congestion on roads
2. Demand for non-productive uses for scarce land such as on-street and off-street parking.
3. Costs in terms of traffic accidents
4. Increasing energy demand specially in developing countries.
5. Increasing costs in Energy extraction and generation.
6. Health costs of Transportation and Energy Generation Emissions.
7. External costs that are being incurred and will continue to accelerate due to climate change

Opportunities to make cities Smart

In order to make cities Smart, cities will need to focus on initiatives that make modern city living more sustainable and reduce the external costs as much as possible. Much of these initiatives are focused on the following areas.

1. Switching from personal automobile to shared or mass transit.
2. Encouraging alternate forms of energy production to reduce reliance on fossil fuels
3. Making energy generation and consumption more demand responsive.
4. Tele-commuting and Tele-shopping

In the next post, we will see how technologies can be combined to create enabling technologies for Smart Cities.



 

What are Smart Cities? and Why?

After perhaps a decade, the term "Smart Cities" is back in vogue. Promoted by IT vendors like IBM, Hitachi and others, IT vendors are trying to bring the concept of instrumented and automated systems into the paradigm of cities and urban living.

Smart Cities are urban design and urban development approach that leverages recent Information Technology and Communication Technology advancements to provide a higher standard of living and more environmentally conscious and energy efficient city developments.

In the first post on the series, I will put on my rosy glasses and see what makes "Smart City" a good pitch.

Historically, cities have been the grounds where different political powers and social systems have arisen, and have faded away within the context of a settlement. As they say "Rome was not built in a day", most cities around the world are actually layers of cities built on top of one another, as a patchwork of different systems and sensibilities of different times and eras. In that context, Smart Cities are another flavor and style being crafted out of recent and modern technological advancements, as well as to solve some of the problems of previous city models. To understand how Smart Cities fit into the overall narrative, let us start with how cities came into being.

Understanding cities before they became Smart

In the beginning of human cities, these were market towns, or trading ports, where the cultivators and traders of their time came to buy and sell their wares. They slowly morphed into seats of political power as their wealth and influence grew leading to an age of empires. As empires grew, cities became fortified entities that could defend themselves from invading armies. The loot in these cases was taxes collected from the hinterland and armies raised from that capital to invade and protect.

Industrial and Imperial Advancement

During renaissance, cities like Florence became seats of cultural and artistic revolutions and also scientific discoveries funded by benevolent rulers. This growth in learning cities in Persia, Middle East and India preceded  the development of learning cities in Europe.

Eventually the scientific discoveries of renaissance led to Industrial revolution and funding of expanding navies and trading routes to develop resource and raw material supply chains. Cities during the Industrial revolution evolved from markets to a combination of trading and production centers. As a result they became polluting slums where the workers migrated from hinterland to find economic opportunities. The living conditions also gave rise to several epidemics due to prevalent living conditions, but eventually led rise to development of modern public health systems.

Automobile and Suburbia

As the societies understood the perils of Industrial revolution, as well as the horse carriage gave way to mass produced automobiles at the turn of the century, a movement started to reduce densities and provide more countryside style of living through development of modern sub-urbia. The development of electricity, modern water and waste water systems, telephone, radio and television allowed sub-urban dwellers to stay in single family residences and yet be part of the urban economy in some shape or form.

Modern communication revolution

While the Industrial revolution and Automobile were the foundation technologies of previous re-configuration of cities, the Smart City moniker definitely relies on TCP-IP networks. Starting from wired connections, TCP-IP based networks owe their popularity to an amount of scalability as well as some resilience. TCP-IP networks now bridge the high bandwidth networks found in many western homes and businesses with broad-band, as well as mobile networks such as GPRS, 3G and now LTE (4G). The ubiquity of TCP-IP networks has made "getting connected", a lot cheaper and easier.

The digital connection and sensor revolution

As modern TCP-IP networks have evolved, it has become possible to start connecting many of the sensor-based systems that have been deployed in many modern systems. Sensors can be connected to automation systems that can take decisions based on simple decision trees or algorithms. With these changes, many cities have realized these computerized systems can now be used to make urban systems more efficient and resilient.

The earlier transition of TCP-IP communication to Smart phones and wireless computing devices has also meant that people can now access many urban services and information from wherever they are.

But why the demand for cities to get Smart?

Many cities in the developed and developing world realize that the modern cities require a large amount of resources to serve and maintain them. In developed world, the demographic realities and operational budget constraints imply that cities do not have the resources to provide the quality of living they aspired to. They are being increasingly asked to do more with less.

In developing world, increased connectivity and exposure to western living standards through social and traditional media now has made a new generation of population, hungry of a standard of living that was only previously in the west. However, they are in a position to chart their course to a more efficient urbanization model instead of an energy and resource intensive development model.

Reducing the resource foot print for 21st century living.

The energy and resources needed to sustain sub-urban development can now be more optimally utilized to allow smarter development models. Automating these aspects of urban development, maintenance and operations is where the so called "Smart City" initiatives make the most sense.

Making the Pitch and the Sale

However, there are some challenges that make these not such an easy sell. While the pitch is becoming easier to understand, the sale is not that straightforward. This is primarily because it is perhaps not very clear, who is the customer that will pay for these roll outs. In subsequent posts, we will see how these may have an impact on the eventual realization of Smart Cities around the world.

In the next post, I will expand on the opportunities and challenges for Making Cities Smart.

Energy Trends in 2014 and beyond

I am no expert in energy, but the whole energy industry is undergoing a quiet transformation. It is very important to understand these changes as it will impact everyone for years to come.

There are few secular trends that are happening and will perhaps accelerate in the coming years. These are as follows:

1. Per capita energy consumption in the developed world is decreasing
2. Per capita energy consumption in the developing world is increasing.
3. US and Canada are becoming the marginal producers of oil and natural gas for their markets.
4. Fossil fuels may eventually become a marginal source of energy for generating electricity
5. Renewables and Distributed generation will become increasingly important leading to re-design of grids.
6. Energy storage will become more important going forward.

The above are bold statements, and we will need justification as well as an understanding of the magnitude of the statements to understand their impact.

Here is a table that provides the overall trends

Aspect	Country	2008	2009	2010	2011	2012
Total Primary Energy Consumption per Capita (Million Btu per Person)	United States	326.46	308.24	316.95	312.81
	Canada	407.86	391.11	385.10	396.56
	China	64.50	71.30	75.84	82.01
	India	17.45	18.51	18.69	19.85
	World	73.15	71.85	74.39
Total Electricity Net Generation (Billion Kilowatthours)	United States	4119.39	3950.33	4125.06	4100.14	4047.77
	Canada	621.74	596.75	585.11	622.98	644.08
	China	3280.67	3507.51	3904.88	4490.54
	India	796.81	838.75	885.75	974.88
	World	19161.09	19062.32	20253.93	21080.88
Total Renewable Electricity Net Generation (Billion Kilowatthours)	United States	392.74	429.65	440.23	527.49	508.36
	Canada	381.46	379.47	366.29	398.46	406.20
	China	596.79	639.28	770.92	800.97
	India	124.87	123.03	135.27	160.36
	World	3731.93	3871.43	4177.06	4402.43
Hydroelectricity Net Generation (Billion Kilowatthours)	United States	254.83	273.45	260.20	319.36	276.24
	Canada	370.55	364.96	347.84	371.93	376.21
	China	579.34	609.48	713.79	690.61	856.35
	India	109.14	103.17	113.28	129.36	114.50
	World	3171.51	3224.82	3412.16	3471.62
Wind Electricity Net Generation (Billion Kilowatthours)	United States	55.36	73.89	94.65	120.18	140.82
	Canada	3.71	6.64	9.56	19.69	23.07
	China	14.80	26.90	44.62	73.20
	India	13.70	17.80	19.91	26.00
	World	220.30	276.05	341.53	446.33
Solar Electricity Net Generation (Billion Kilowatthours)	United States	0.86	0.89	1.21	1.82	4.33
	Canada	0.07	0.13	0.19	0.46	0.54
	China	0.15	0.39	0.94	3.00
	India	0.02	0.02	0.02	1.00	1.10
	World	11.88	19.76	31.22	58.74
Total Petroleum Consumption (Thousand Barrels Per Day)	United States	19497.97	18771.40	19180.13	18882.07	18490.22
	Canada	2224.94	2162.92	2264.58	2266.05	2280.76
	China	7467.52	8539.73	9330.18	9852.08	10276.83
	India	2864.00	3112.74	3255.39	3410.54	3621.75
	World	84696.92	84917.65	87527.35	88743.91	89406.61
Total Oil Supply (Thousand Barrels Per Day)	United States	8563.60	9133.80	9684.53	10136.21	11104.51
	Canada	3343.58	3318.83	3441.73	3597.33	3856.44
	China	4036.67	4067.54	4362.66	4346.98	4372.45
	India	874.97	873.59	965.30	995.81	990.18
	World	85438.91	84592.52	87157.80	87572.88	89292.49

The Long(er) View in 2014

The Long(er) View in 2014

When making any decisions about the future, one needs to look at long term trends, medium term episodes and short term events. They all guide where we are likely to be in a few years/ decades. Also, important is to understand the trends that will happen no matter what, and other things that will seek to counter-balance or reinforce these trends. In many cases, unraveling of some trends will set off domino effects that will fundamentally alter the reality that we see.

Overall trends can be assessed in the following areas.

1. Demographics
2. Technology
3. Science
4. Energy
5. Economy
6. Social
7. Politics

Out of the above, I would rate Demographic trends to be most fundamental. Science and Technology follow a close second. The remaining – Economic, Social and Political trends to me are generated out of the more fundamental forces that are likely to be more kosher.

Demographic trends in the next decade

The demographic trends in the near future is almost clear. With 2.5 out of the 7 billion people on the planet (37%) living in China and India, the world's population is becoming more skewed towards South East Asia.

Global Population by country in 2013

A more fair comparison would be the density of population.

Global Population Density

Also, if we compared the population in East and South East Asia, we would find them to be comparable.

For most of the world population (including China), fertility rate is 1-2 births per woman. Also, world population growth rates around the world hover from -ve to 1-2% in most of the planet. So, what does all this mean?

Annual Population Growth Percentage by Country

Next the median age in different countries of the world.

It means that there will be more older people in richer parts of the world, while more working/ younger population in poorer parts of the world. While a small percentage of the working population may choose to take care of the old and rich, it is more likely that the now older and retiring population would want the younger population to take care of them. This could happen through the following ways

• Healthcare professions may become more lucrative for younger population
• More automation and technology coming into healthcare
• More investment into training and education of younger people in health and medical disciplines.
• Establishment of large healthcare organizations that may provide direct employment opportunities to working populations in current countries.
• Manufacturing and innovation moving to more populous countries in Asia and Africa
• It will also be important for currencies to stay favourable for enticing younger populations to focus overseas.

If we see global expenditures on health as percentage of GDP, we can see the following trend.

Health Expenditure as a percentage of GDP by country matches the median age distribution shown above with some minor variations

In dollar terms, we can see that expenditures are focused on the richest western counries in the world. We can see that governments will see that healthcare is no longer an expense they can allow at its current levels. To make the process more efficient, we should see governments putting more emphasis (and dollars) on preventive healthcare than on traditional medicine and recovery.

In dollar terms, expenditure on health probably is more in line with per capita GDP. As per capita GDP rises in other countries, we can probably expect absolute dollar expenditure on health rise more as well.

The increased dollars will also probably entice next generation of technology breakthroughs to come in the areas of health and medicine. Portable devices that allow patients to monitor their health and report it on a routine basis to health care professionals sitting remotely will become the norm. Add the capability to automate the backend using statistical and predictive analytics will add to the process.

Technology Trends

Technology is disrupting the economics of many fundamental value chains. Steve Jobs idea of modeling Apple on Sony instead of Microsoft, upon his return to Apple, and then using technology to try and disrupt each and every industry Sony was in (almost), including music, media and entertainment is a case in point.

As technology evolves, the threshold economics of many traditional industries will give way. Industries such as Banking (online banking), Trading (online), Finance, Higher education (MOOCS), Insurance (Geico), Entertainment (Netflix and YouTube), Print Media (websites, Facebook, declining advertising and readership), etc. have already felt the tectonic plates shift with communication and Internet technology. As new platforms emerge, they unravel the economics of previous business models and allow new businesses to emerge.

Mobile

New changes will likely be increased adoption of 3G and 4G technologies in mobile. Current adoption is 30% in markets where 3G is deployed, and 4G deployment is accelerating as people are accessing more online services on their mobile. It is likely in next few years, 3G and 4G adoption will grow substantially. This is more true for areas where no other competing technologies such as television and fixed line phones and Internet have been deployed.

Also, as the mobile phone batteries improve, processing improves and demand for gaming and media consumption on mobile increases, it is likely that the phones will become bigger and adoption of smart phones will increase. Also, as TV content becomes more accessible on smart phones, it is likely that the smart phone user base will grow beyond urban to more broad-based as for traditional Television audience.

Smartphone adoption will rise across all countries with additional services coming on line.

Automobile Technology

Automobile technologies are increasing range and reducing price of electric vehicles. Tesla motors seems to be eying a more sizable percentage of the market in coming years, and other vendors are also investing in making traditional combustion engines, hybrids and electric vehicles more economic in terms of cost of ownership. Pure electric cars now provide a range of 300 miles at a full charge that costs 9 dollars on average.

In other countries, which are not producing their own oil (and hence have to rely largely on oil imports), the move to mass transit modes will intensify specially in urban areas. Given congestion and cost for travel, it is also likely that electronic commerce and e-delivery will intensify. In some countries, where the logistics and distribution is not well developed, online retailers may partner with brick and mortar companies to promote last mile delivery. Given these scenarios, it is likely that mobile commerce will also intensify.

Internet

There is wide disparity between countries in terms of per capita bandwidth consumption. This is an image from 2003, however this is perhaps indicative of the order of magnitude.

Given the economic realities that underpin these innovations, it seems most likely that these innovations will intensify. In the short and medium term, companies will benefit from capital investment in last mile connectivity.

Science trends

Much of scientific research is focused on medicine and health. This is a space I need to do more research to understand the trends a little deeper.

Energy Trends

Energy trends are a little mixed at this point. The ongoing exploration and extraction of oil and gas in continental North America and in Russia is likely to put pressure on OPEC. However, these efforts need oil to stay above 80 to 100 dollars per barrel. Therefore, it is unlikely that price of oil is going to change even with US and Europe reducing their reliance on middle eastern oil. This will make alternative energy sources more appealing including solar, wind and others. Also, as the adoption of electric vehicles increases, it is likely that solar adoption will increase both at grid as well as consumer side. On the consumer side, we can expect households, offices, plugin charging stations increase their adoption of solar and other alternative forms of energy.

Given new alternative forms of energy sources coming online, it is anticipated that power grids will be re-balanced to allow grids to tap into new forms of energy. Initiatives such as Smart grid roll outs will see investments in digitization and improvement in reliability of the grid. Smart grid drivers seem to be of two kinds – firstly, introducing Demand Responsive capabilities and secondly, Supply Responsive capabilities. Given energy efficiency is improving across most usage scenarios coupled with Time of use pricing, it is likely that Supply Responsive measures will be a bigger driver for change to the Grids.

That now leaves Economy, Social and Political trends that we will cover in the next post.