Date: March 06, 2019

Time: 09.30-11.00

President: Laurent ROUACH, membre du comité de LuxReal, CEO Eliacin (Luxembourg)

Panellists

In order to answer these questions, several speakers will share their experiences, practices and research, namely: 

  • Mondher CHARGUI, Senior Transport Specialist, European Investment Bank (Luxembourg)
  • Fabio D'AVERSA, Advisory Partner, PwC Luxembourg (Luxembourg)
  • Kamil DÖRFLER, Senior Urban Specialist in Project Directorate, European Investment Bank (Luxembourg)
  • Denis HAMEAU, Conseiller Délégué Enseignement Supérieur et Innovation, Chargé du projet OnDijon Human Smart City, Ville de Dijon (France)
  • Julien LICHERON, Urban Development and Mobility, Luxembourg Institute of Socio-Economic Research (LISER) (Luxembourg)

Context

From a global point of view, this century urban populations have overtaken rural populations.

In 2050, the population worldwide is expected to reach 9 billion people, of whom two-thirds will live in cities, including in more than 50 megacities.

Numerous areas are finding it difficult to keep up with this soaring urbanization, as demonstrated by its significant impact on the environment and health, energy waste and social exclusion, and as a consequence, a deteriorating quality of life.

These demographic changes require initiatives by Communities to manage these challenges and adapt to them:  One of the powerful responses is the intelligence of the areas.

Smart cities, designed to be a convergence of communication, information and infrastructure technologies, aim to improve urban life, increase the efficiency of services and as such, this quality of life.

This “intelligence” aims to meet the needs of Communities, businesses and citizens, by reconciling the environmental, social and cultural dimensions.

 

  • It is based on the digital aspect (sensors, data production, analysis tools), leading to organizational and societal evolutions.
  • It mainly affects the mobility economy, energy management, data management and the collaborative aspects.
  • Its ultimate aim is to make cities more sustainable, more economical and closer to their citizens and to respond, in a relevant way, to problems that are set to increase: An intelligent city is also one that does better with less.

Nevertheless, this promise generally exceeds the capacities of the Communities and often conflicts with their short-term budget priorities.

Due to a cost assessment that is still uncertain, the experimental nature of many projects and the transversal nature involving different services, Communities struggle to find viable economic and business models: These new funding strategies, which guarantee the deployment of innovation and the continuity (including financially) of the service, are a major stake for the emergence of Smart Cities.

However, numerous investments in Smart Cities have proved their cost-effectiveness in the medium term, but have not been deployed on a larger scale due to a lack of resources. One example of this is the energy domain (smart management of lighting or of public buildings). In France, a study by the consultants Roland Berger showed that economies generated by the intelligence of the areas could reach 9.2 billion euros in 2025, while a study by Siemens identifies a certain number of smaller initiatives that could generate savings, allowing an investment of 6.6 billion euros to be made.

The size of the market warrants the interest: In the United States, according to MarketsandMarkets, it will reach 147.5 billion dollars in 2020.

It is therefore a question of mobilizing different sources or imagining new collaborations with the aim of financing and managing equipment or solutions that guarantee or contribute to a public service.

Therefore, we must also seek creativity and technical innovation from a financial point of view.

What are then these new financing models and tools for the disruption of the infrastructure projects in the Smart City projects?

Which promising economic models are associated with these urban infrastructure projects to allow the public authorities to get the budgetary margin back?

Issues

  • By reaching a consensus on the metrics and externalities to take into account in order to grant an area the status of Smart City, what are the costs in order to achieve quality of life while respecting users that are residents or just passing through: investments into digital technologies and those simply related to the development of urban spaces?
  • Depending on the projects (type, duration, amount), what are the different financing options that can be envisaged?
  • Public service delegations, partnership contracts (like the performance contract that links Dijon to several private businesses sums over €100 m), joint venture companies, suitable for making coordination between the actors easier?
  • Does the deployment of investment reimbursement mechanisms wagered on the generation of savings work on a large scale? How to use new technologies to make urban developments (buildings, neighbourhoods, private and public infrastructures) financially autonomous? Purchase/resale of electricity, heating between buildings?

Other tools can be envisaged:

  • With investments in low-carbon projects often playing an important role in Smart Cities, can green finance (green bonds) provide leverage? Or other instruments with a social impact?
  • Could crowdsourcing in projects built together with citizens who are involved in the definition of the project, its financing and indeed in its concrete realization also be an option?
  • Can an evolution of use towards the provision of a service rather than the acquisition of goods be deployed on the Smart City scale?

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