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CLIMATE ACTION PROGRAMME


15 January 2013

Smart cities: a pathway to inclusive growth

Smart cities: a pathway to inclusive growth

Summary

The Middle East is on the eve of an energy transition that will affect all walks of life. Arab countries can no longer depend solely on hydrocarbons. In the long run, they will have to shift to more sustainable resources like solar or wind power. Small and Medium Enterprises (SME‟s), corporations, cities and national jurisdictions will play the key role in this transition. Smart grids will not only improve network resilience and reliability; they will also result in energy saving (natural gas in particular). The overall result is a positive effect on the efficiency of present-day infrastructure. In the near future, smart grids will also enhance the quality of life by creating a breeding ground for innovation. This is an incentive to higher-level jobs, better education, transport and healthcare in a less polluted environment.


"Infrastructure plays a fundamental role in development, whether it‟s a business, a city or a society. If customers do not use utilities smartly, then power will be wasted. So we need to make utilities smart and make the grid smart”
HE Saeed Mohammed Al Tayer, Managing Director and CEO of DEWA


 

Smart Cities: a pathway to inclusive growth


Renewable energy sources like solar power, solar cooling or ultra-efficient heat pumps could be installed and can even be rapidly implemented but cannot provide enough electricity to match this gap. Meanwhile, progressing wireless telecommunication technology is penetrating regional markets in the Middle East fast. In Saudi Arabia, for instance, Internet connections have doubled since 2005 while broadband density quadrupled, and the costs of both have dropped within that period by over twenty percent. During the last ten years, telecommunications in Saudi Arabia have contributed 8.8% to GDP, surpassing electricity with almost 3.5%.

Battle for talent Integration of Information and Communications Technology (ICT) within the framework of utilities in the Middle East is of paramount importance to create pathways for more inclusive growth, so that it can accommodate both centralised and dispersed flows. Cities, as hubs of the global economy, are the focal points of this transformation. Instead of being a mere substitute for labour, modern information technology will attract high profile workers. More than half of the world‟s population already lives in cities. Urban workers are increasingly highly skilled, educated, innovative and entrepreneurial. The better their education, the lower their unemployment will be. Moreover, the younger generation is brought up with Internet, providing a fertile breeding ground for creativity and innovation, while more than one-third of all newcomers have a college or university degree. Industry therefore expects that the cultural shift from „bricks and mortar‟ to „brain and creativity‟ soon will lead to a global battle for talent between major cities. In a recent study researchers compared “connected city” smart grid cities with North American averages. They found that connected cities have an annual GDP growth rate that is 0.7 per cent higher, an unemployment rate that is a full percentage point lower, and office occupancy rates 2.5 per cent higher than less advanced cities.

These characteristics offer excellent prospects for cities in the Middle East. Although a smart grid infrastructure is in its infancy and two-way telecommunications and energy flow models haven‟t permeated hearts and minds of its citizens yet, the vast majority of the population, rich, highly educated and mobile, wants to be on the cutting edge. They are eager to use the best and latest technologies, not only to distinguish themselves as pioneers of the world but also to harvest the fruits of this first-mover advantage. It shouldn‟t take much for civic leaders to convince consumers to adopt smart technologies and at the same time learn from international experience for maximum benefit.

 

Drivers

With smart grids, Middle East cities can leapfrog into the heart of the future while simultaneously providing stability, reliability and efficiency for its utility infrastructure. Smart grids offer flexibility to match demand and supply of variable sources. With smart grids, resources like natural gas can be optimised for every generated unit of electricity and water, saving energy, minimising harmful emissions and creating a healthy city that can successfully compete at an international level.

At its core, smart grids regulate multi-directional flows of energy and water that support power generation from different sources, centralised or renewable and/or dispersed. Though most consumers don‟t realise, net metering and flexible tariffs for variable sources during different times of the day are the result. Accurate, online information flowing from the grid has the profound ability to enhance network management and to raise the standard of service for citizens, SME‟s and corporations. Smart grids also provide greater access to energy generation and storage like solar roof panels, cooling or ultra-efficient heat pumps. Moreover, advanced information systems will not only lead to more efficient use of the grid. They can also result in better transport, by providing better access to low or zero emission vehicles (hybrid or electric). Last but not least, combining advanced smart technologies into the grid with existing and new green buildings will improve network resilience, efficiency and reliability of the overall infrastructure as well. As these advantages are enormous, it is forecasted that smart grid technology will become a multi-trillion dollar industry by 2050, accommodating a whole new landscape for start-ups and investors in all the utility sectors.

“Establishing a smart-grid is not an option but a must for Jordan in order to improve services and move the country towards the future.”
Ahmad Hiyasat, former commissioner Electricity Regulatory Commission

 

Towards smart cities


Middle East countries have the workforce as well as the investors to establish the first cost-effective smart city in the world. Projects and trials on a small scale have already taken place in the United Arab Emirates, Dubai, Jordan and Qatar. At Dubai airport for instance, electric busses are used. Dubai Electric and Water Authority has taken a pro-active approach to facilitate and encourage green developments. Since a large number of buildings were constructed this century, it is relatively easy to implement smart grid technologies to enhance efficiency, to reduce peak load and to improve services. By 2014, all buildings in Dubai must be energy efficient according to new green building codes. Moreover, this spring Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum has launched the first phase of the biggest solar park of the region, generating 1000 MW (Megawatts) when completed. Rooftop solar schemes could provide another 2500 MW (which is 20 percent of domestic power needs). With a population of over two million and a reputation to attract huge investments, the capital has the potential to become the first smart city in the world.

However, other Middle East cities have similar opportunities in innovative zones where the latest smart grid technology is applied. King Abdullah Economic city or ALEC Energy city in the Kingdom of Saudi Arabia could also take up this role, as well as the State of Qatar. With its promise to host the 2022 World Cup, Kahramaa, Qatar‟s energy and water authority, committed itself to research and thereby develop its potential for smart grids. The region‟s climatic conditions should be the perfect hotspot to implement smart energy systems like advanced solar cooling.

In the North, Jordan wants to implement other smart grid technologies: early 2013 this Kingdom will finalise a comprehensive study funded by the US Trade and Development Agency (USTDA) to upgrade the infrastructure of the largest three electricity distributors in the country. Through smart metering it will provide online data on capacity loads for providers and timely billing information for consumers. According to the Electricity Regulatory Commission of Jordan, smart grids are imperative to match several renewable energy and oil shale-fuelled power stations that are expected to be operational later this decade.

The way ahead Smart cities are, in a nutshell, all about interconnectedness in a further constrained world. Contrary to Europe and North America, Middle East cities do not have an aging gas infrastructure. Cities like Dubai, Abu Dhabi or Abdullah city are modern and electricity based. Regulators are forward-looking and municipalities have budgets for innovation. That being said though, a cultural change is needed to convince customers, suppliers and governments to transform smart grids into smart cities and, maybe, even into a Power Matching Emirate where all information on energy and water flows are interconnected.

Whereas customers must be made aware of the advantages of smart grids (e.g. portals, alerts, comparisons and advice), leading to monitoring devices and iterative action (e.g. householdappliances, smart metering and differentiated tariffs), producers and suppliers ask for more reliability, reduction of energy losses and expansion of the power grid. Cities in the Middle East can learn a lot from international experience and first-class examples and at the same time ensure that adaptation of smart grids will be done in the most cost-effective ways.

If successfully implemented, smart cities can offer far more than just operational excellence, environmental compliance, reliability, security of supply and consumer participation. They will create incentives for start-ups beyond the ICT and utility sectors, they will boost commerce and capital investments and they will provide clean transport and better access to health care. But above all, smart cities are the best approach of reducing the tremendous strain on the present-day water and energy infrastructure, thus enhancing the quality of life in the hot climate of the Middle East.
 

Make it real

California
A prime example where the consumers have and hold the power in their hands, is happening in California. Glendale Water & Power succeeded in a large-scale rollout of smart meters (electric and water) to over 116.000 customers. The new smart metering infrastructure and data management system now support multi-directional communication and use of HVAC systems, pool pumps and in-home energy displays. Customers in Glendale have internet-accessible portals to check and change their own electric and water usage according to different tariffs during the day. The new system received the highest customer score among smaller utilities, surveyed by the smart grid maturity model (CEC).

PowerMatching City
In 2007, a consortium in the Netherlands launched PowerMatching City. This smart grid project involved 25 households in Hoogkerk, a small district in the northern part of the country. The project has demonstrated that it is possible to implement a living smart grid with a corresponding market model, using existing technologies. Inhabitants were „connected‟ to one another as part of the trial to test the social impact of a smart grid. The homes are equipped with combined heat and power systems (micro CHPs), heat pumps, smart meters, PV panels, charging stations and other smart household appliances, as well as feedback information systems. This ensured the integration of gas, centralised power and renewable energy sources on a household level, thus creating flexibility for peak loads in electricity demand. The new system allows end users to trade energy on the local market without losing any comfort.
In view of the successful results of the first phase, the project has recently been expanded to 70 households with consumer involvement through an interactive interface. The effects of introducing real-life propositions to the customers are going to be developed by the energy company. Last summer the UN Conference on Sustainable Development in Rio de Janeiro chose PowerMatching City to be listed on Sustainia100.

 

Author: Mohammed Atif - DNV KEMA
Editor: Tseard Zoethout.

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