How cities are accelerating the energy transition


City leaders around the world are committing to smart city objectives as they attempt to shape the development of their cities to meet social, economic, and environmental challenges. This article highlights how city energy strategies are central to the smart city vision and what that means for the energy industry as a whole.

Cities are a focal point for some of the most profound economic, environmental, social, and technological issues facing the world today. Not least of these is the need to move to cleaner and more efficient energy resources to meet the demands of the 2.4 billion additional people that will be living in cities over the next 35 years. As they attempt to meet these challenges, cities are recognising the importance—and the opportunity—offered by changes in energy infrastructure and energy markets.

These trends are all part of a broader transition in the energy sector that Navigant identifies as the emergence of the Energy Cloud. The Energy Cloud represents the shift away from centralised power generation and distribution toward a networked and dynamic infrastructure that incorporates demand-side generation technologies and capabilities and renewable energy sources alongside traditional assets.

Such a system is characterised by increased complexity and redundancy, allowing for greater choice in the manner in which energy is generated, supplied, and consumed.

As a result, commercial, industrial, and residential energy consumers are becoming more actively engaged in energy management and generation. Cities are also seizing the opportunities presented by the Energy Cloud and are working with utilities and other stakeholders in the creation of new urban energy systems.

There are five key areas where cities can shape the energy transition to the benefit of all citizens and other city stakeholders:
• Accelerating the shift to renewable energy.

An area where cities are already having a significant influence is in their support for renewable energy. Cities are increasingly proactive in encouraging their utilities to shift from fossil fuels to renewable energy in order to meet carbon emissions targets. Cities are also encouraging residential and commercial power generation through programmes to support solar PV and small wind generation, combined heat and power systems, and other community energy schemes.

• Driving the adoption of smart grid technologies.

Support for renewable generation by city authorities increases the pressure on utilities to deliver an infrastructure that can integrate these new resources in a manageable way. This also accelerates other changes in a city’s energy infrastructure. Cities are the focus of extensive smart grid pilots that are demonstrating the increased control, flexibility, and integration enabled by a digital infrastructure for grid monitoring and management.

• Increasing energy efficiency.

Collaboration between city departments and local energy utilities to improve energy efficiency is one of the simplest and most effective measures for reducing the energy footprint of a city. Coordinating programmes for energy efficiency improvements is an obvious step and enables cities and utilities to target the most appropriate residents, businesses, and communities for retrofit and rebate programmes.

• Increasing resilience.

Resilience has long been part of the debate about the nature of smart cities, but it is becoming a much more central part of the discussion. Resilience requires an assessment of each city’s complex and interconnected infrastructure and institutional systems that span the physical, economic, institutional, and sociopolitical environment. Electricity networks are at the heart of this complex web of infrastructure interdependencies. A failure in the electricity network can have a dramatic impact on water, sewerage, health, communication, and transportation systems.

• Cities and energy markets.

One of the most significant trends emerging around smart cities and their energy policies is an increasingly proactive approach to energy management. Cities are becoming active players in their local energy markets, collaborating with their existing utilities where that makes sense, but also increasingly willing to challenge and even compete with those providers. MI

Eric Woods is a research director leading Navigant Research’s coverage of smart cities. He has written numerous reports on smart city markets and technologies. He has more than 20 years of experience as an analyst and consultant on new technology trends.


Navigant Research, the dedicated research arm of Navigant, provides market research and benchmarking services for rapidly changing and often highly regulated industries. In the energy sector, Navigant Research focuses on in-depth analysis and reporting about global clean technology markets.