BCG - Smart Cities by Dr. Holger Rubel at GIB Summit

Smart Cities – how to master the world's
biggest growth challenge
Dr. Holger Rubel, BCG Frankfurt
21 May 2014

Smart cities_GIB Summit_21May14.pptx 1Draft—for discussion only
Copyright©2014byTheBostonConsultingGroup,Inc.Allrightsreserved.
Urbanization is changing the world
Emerging market cities have changed beyond recognition
Shenzhen in 1990
Rithala
Rohini West
Rohini East
Pitam Pura
Netaji Subhash
Place Pratap
Nagar
Pul
Bangash
Keshav Puram
Kohat Enclave
Kanhiya Nagar Inder Lok
Shastri
Nagar
Tis
Hazari
Length: 8.3 km Length: 110 km
Shenzhen today
Delhi Metro in 2002 Delhi metro today

Emerging market cities need to cope with massive growth
Some emerging market cities will grow by as much as ~10 million inhabitants in 15 years
São Paulo 18%
Mexico City 22%
Calcutta 31%
Jakarta 33%
Cairo 34%
Mumbai 37%
Manila 40%
Tianjin 40%
40%
Wuhan 43%
Shanghai
Chongqing
45%
Guangzhou 48%
Karachi 50%
Delhi 50%
Chennai (Madras) 50%
Beijing 51%
Shenzhen 52%
Dhaka 53%
Bangalore 59%
Kinshasa 73%
Lagos 75%
Population growth in emerging markets mega cities 2010-2025 in % and absolute (in millions)
Source: UN World Urbanization Prospects – Review 2011; BCG analysis
22 11
139 4
2315 8
1610 5
2315 8
138 5
158 6
1911 8
2320 4
2520 4
1914 4
1310 3
1511 4
2719 7
1612 5
129 3
1410 4
139 4
2820 9
1510 5
2013 7
33
Population 2010 (mio)
Growth 2010-2025 (mio)Americas
Asia
MEA/Africa
Asia driving population growth in cities – finding smart
concepts key to cope with related challenges

Developed countries cities have significant climate change
goals that often go beyond national commitments
• London: 38%
• Berlin: 40%
• Paris: 25%
• Madrid: 20%
• Warsaw: 20%
• Roma: 20%
• Dublin: 20%
• Helsinki: 20%
Europe: Covenant of Mayors
• Covenant signatories aim to meet and exceed
the European Union 20% CO2 reduction
objective by 2020
• Local and regional authorities commit
voluntarily to increase energy efficiency and
use of renewable energy sources
• > 4,000 mayors with ~ 164 million inhabitants
involved
• Cities fix climate reduction goals for 2020:
• Stockholm: 45%
• Amsterdam: 40%
• Zurich: 28%
• Copenhagen: 20%
USA: Conference of Mayors
• Establishment of US mayors climate
protection agreement in 2005
• > 1,000 mayors with ~ 88 million
inhabitants involved
• Participating cities commit to take following
three actions:
– Meet/beat the Kyoto Protocol targets in
their own cities (7% reduction from
1990 levels by 2012)
– Urge state and federal government to
enact policies and programs
– Urge U.S. Congress to establish a
national emission trading system
Source: usmayors.org; EU covenant of mayors; BCG analysis

Cities will have to manage two large, interrelated challenges
Growth & Urbanization:
More people living in cities (% and total)
Climate change:
Cities key to winning the climate change battle
• For the overall battle against climate change to
succeed, city GHG1 emissions need to be reduced
significantly
World population in bn
10
8
6
4
2
0
% Urban population
80
70
60
50
40
30
20
20502040203020202010200019901980197019601950
40%
30%
30%
GHG1 emissions repartition in 2011
In city
Possibly in city
Rural
60%
20%
20%
Production-
based estimate
Consumption-
based estimate
• Share of people living in cities will increase from
~ 50% today to ~ 70% in 2050
• Cities must provide infrastructure for a growing
world population and an increasing percentage
of people living in (mega-) cities
1. GHG: green house gases Source: United Nations Cities and Climate Change Report; World Bank Cities and Climate Change Report; World Urbanization Prospects: 2011 Revision
Population Database; press research; BCG analysis
World population
Urban
population

"Smart Cities" improve sustainability, economic viability, and
citizen well-being using innovative services and concepts
Environmental, social and economic
objectives of cities
Smart City definition for this
presentation
1. Information and Communication Technology
Source: Pike research; European Smart Cities project; European Commission; press research; businessdictionary.com; BCG analysis
Smart Cities employ innovative services and
concepts to improve environmental
sustainability, economic viability and citizen
well being by using
ICT based technologies
– e.g. high speed networks
– e.g. sensor and actuation technologies
– e.g. advanced analytics
Non ICT based innovative technologies
– e.g., renewable power generation
– e.g., low emission vehicles
– e.g., energy efficient building design
Urban Planning concepts
– e.g., sustainability-enhancing city layouts
– e.g., innovation, technology and business
platforms
• Investment
• Jobs
• Innovation
Economic viability
• Energy efficiency
• Pollution
• Resources
Environmental sustainability
• Public safety
• Education
• Healthcare
• Social care
Citizen well-being
1
2
3

Five major sectors in smart cities
Technology examples
Smart Buildings
(Remote, cross)
Building/Energy
mgmt. systems
Smart Energy
Smart meters
Electric vehicle
infrastructure
Distributed
generation
integration
Demand-Response
Smart Transport
Intelligent
transportation
systems
Tolling &
Congestion
charging
Smart Water&Waste
Smart water
meters
Distribution
network control,
leak detection, GIS
Smart Social
E-government
Remote social
infrastructure
(health, education)
Safety & Security
Public transport
system information
sharing
Smart parking
Smart consumer
appliances and
devices
Storm and flood
management
ICTNonICT
Co-Generation
Renewable
Generation
Low emission
vehicles
Low emission
public transport
system
Purification
methods
Leakage reduction
Green hospitals
...
Energy efficient
building design
Energy efficiency
refurbishment of
old buildings
... ... ... ...

Smart cities can be mapped along two key dimensions
+
–
–
Importance
of ICT
age of city 'Make an old
city smart'
' Build a new city'
'Focus on urban
planning'
'Leverage
ICT'
Rio Operations
Center
Songdo
Masdar
Amsterdam
Public/private partnership Private corporations/investors Government/state owned
1
2
3
4
+
Europe/NA/LatAm
Asia/Middle East
• Existing cities
• Typically smaller
pilots/ projects
• Higher ICT share
• New cities
• Large scale
projects
• Urban planning
focused
Chicago
Open Data
5

Songdo – South Korea's new sustainable business hub
Key facts Songdo
Project
Overview
Key data
Key
objectives
Major
Partners1
• Largest private real estate development in history
• Aims to create new and sustainable business hub
in Asia
• Cost: $40Bn
• Size: 1´500 acres, 80´000 apartments,
75´000 residents
• Timeframe: 2003-2020
• Environmental sustainability: Become a leading sustainable city worldwide
• Economic viability: Develop a concentrated financial, economic and technology center
• Citizen well being: Provide state of the art social, cultural and sports infrastructure
1. Exemplary, no exhaustive list
NY-based private real estate
development and investment firm
South Korean Engineeirng and
Construction firm
1

Citizen well being
Economic viability
Songdo is the largest private real estate investment in history
Urban planning
• Incentivization of public transportation means
• Reduction of energy and water consumption as
well as waste
• Building construction according to sustainability
certification standards
• Concentrated financial, economic and technology
center, free economic zone
• 3.5 hours flying time from one third of the world´s
population
• International Airport Incheon 15 minutes drive
from Songdo
• 40% of open space (600 acres)
• City design around central park (100 acres)
• State of the art educational, cultural, shopping
and health care infrastructure
Office space
Commercial space
Residential space
Public space
Opera house
Golf Course
Central Park4.645.000 sm office space
225.000 housing
opportunities
Large shopping malls,
department stores
1

Songdo focuses on activities across four of the
five major sectors
Smart
Energy
Smart
Transport
Smart
Water&Waste
Central Park canal
uses seawater
instead of fresh
water
Smart
Buildings
Sector Initiatives and projects
EV charging
stations
25km bicycle
lanes
5% parking for
low-emission
vehicles
Most buildings
LEED certified
75% of building
materials recycled
10.000 Cisco
telepresence units
planned
Centralized
pneumatic waste
collection system
Central, city-wide
co-generation
facility fueled by
natural gas
Energy efficient
LED traffic lights
ICT
1

Amsterdam – 30 Smart City pilot projects
Key facts Amsterdam
Project
Overview
Key data
Key
objectives
• Public/private partnership with the aim to develop
Amsterdam into smart city
• Main tool: inform. platform where entrepreneurs can
initiate innovative solutions and test them on larger scale
• Environmental sustainability: Reduce ecological footprint of city
• Economic viability: Provide entrepreneurs with possibility to test concepts on large scale
• Citizen well being: Improve quality of living in Amsterdam
• Project themes: Living, Working, Mobility, Public
facilities, open data
• Size: 30 Projects in 3 neighborhoods of Amsterdam
1. Exemplary, no exhaustive list
Major
Partners1
3

Citizen well being
Economic viability
Amsterdam is running 30 projects in the city area
• Introduction and roll out of new energy concepts
• Improvement of energy efficiency of public and
private infrastructure
• Incentivization of energy efficient means of private
transportation (e-cars, car sharing)
• Provide opportunities for young entrepreneurs to test
ideas/concepts on a large scale
• Attract large and small corporations with affinity for
sustainable city development
• Introduce new/smart work concepts
• Development of sustainable sports and cultural
facilities
• E-government and e-healthcare solutions based
on ICT
3

Sector Initiatives and projects
Projects are addressing all sectors
Smart
Energy
Smart
Transport
Smart
Water&Waste
Introduction of ICT
solutions at care
institutions
Smart
Buildings
New car sharing
platform
Smart work
centers equipped
with latest ICT
infrastructure
Smart
Social
Energy efficient
public swimming
pools
Energy saving
behavior projects
and competition
Smart grids for
optimized power
usage (LV/MV
monitoring
200 shore power
stations allowing
ships to connect
to green energy
Introduction of
tele-presence
units
Introduction of
smart containers
Smart building
concepts
minimizing
energy usage
Fuel cell pilot in
17th century
building
E-car charging
stations
ICTICT
ICTICT
ICT
3

City Type:
Existing city
Project Scope:
Pilot projects; roll-outs
Sector Focus:
Energy
Smartness Degree:
High (e.g., smart metering)
City Type:
Existing city/ hypergrowth
Project Scope:
City-wide enrollments
Sector Focus:
Transportation, Security
Smartness Degree:
Medium (Transportation),
High (Security)
City Type:
Existing city
Project Scope:
Pilot projects; roll-outs
Sector Focus:
Energy, Transportation
Smartness Degree:
High (e.g., smart metering)
City Type:
New city/hypergrowth
Project Scope:
Sector Focus:
Energy, Transportation,
Water&Waste, Education
Smartness Degree:
High (e.g., driverless urban
transport, renewable)
City Type:
New city/hypergrowth
Project Scope:
Sector Focus:
Energy, Water&Waste,
Transportation
Smartness Degree:
Low (basic infrastructure)
City Type:
Existing city
Project Scope:
Pilots and city-wide
enrollments
Sector Focus:
Energy, Transportation,
Social
Smartness Degree:
High (e.g., electric vehicles,
telepresence social infra.)
Different approaches to smart city development
Key regional characteristics – overview
North America
South America
Europe
Middle East
Developing Asia
Developed Asia
Source: Press Research, BCG analysis

Today: North America To come: Europe Long-term: Asia Pacific
Different growth patterns and changing regional relevance
Largest market today
• First step:
Smart meters (roll-outs
started) and buildings
• Second step:
Smart transport and
government
• Greatest risk is the lack of a
coherent approach
Greatest market to come
• Supranational (EU) decisions
and support for new technology
pilots and regulation/technology
penetration targets create huge
opportunity1
• First step:
Smart meters and buildings
• Second step:
Smart transport and government
Long-term largest market
• Overall market driven by Chinese
investments
• South Korea, Japan and Singapore the
centers for smart city innovation
• In developing countries (China and India)
strong basic infrastructure investments
• First step in developing countries:
Smart meters (basic technology, theft
prevention focus), public transport, traffic
management and electric vehicles
• Second step in developing countries: Smart
buildings
1. E.g. regulation for smart meter deployment, greenhouse gas emission targets, energy efficiency targets etc.
Source: Pike Research; press research; BCG analysis

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