From 2014 till 2050 urban population will increase by 63%. Economically and environmentally sustainable infrastructure should now get prepared for this growth.
Smart cities have become an answer to the challenges and opportunities created by rapid urbanisation and technological progress. 80% of the global GDP is produced in cities, concentrating the majority of financial and intellectual resources. By 2030, 12 megapolises are expected to appear in addition to existing 28.
The most rapidly growing urban centres currently have over 1 million citizens, located in African and Asian countries with low and middle income level. From 2020 to 2050 Africa is expected to take over the most rapid urbanisation pace.
It causes unprecedented issues for the environmental and human well-being: 70% of anthropogenic carbon dioxide emissions, which lead to climatic changes, accounts for the cities. On the one hand, in some parts of the world water and electricity consumption are soaring, requirements for sanitation, education, public health service, accommodation, transport and public services are higher than ever. On the other hand, numerous citizens are still deprived of essential facilities. Thus, in 2015 828 million people lived in substandard housing without such basic services as running water and sanitation, and slum areas population is increasing by 6 mln annually.
The necessity to overcome these challenges in the framework of the UN Sustainable Development Goals provides a strong reason for investment into development of smart sustainable cities and, correspondingly, into most advanced technologies.
The potential of a traditional urban infrastructure in such cities is multiplied thanks to automation, digitalisation, and real-time data exchange. It has been calculated that by 2020 adaptation of digital technologies in urban infrastructure can reduce greenhouse gases emissions by 15% and save up to 600 billion euro globally. The brightest examples are lighting systems fitted with motion sensors; drones collecting data about water and air condition in the target points, «smart» garbage cans informing the community services about being filled up.
The systems of the smart city effectively use data and services provided by digital technologies. Among them are Internet of things and sensor networks, cloud data processing, open databases, public blockchain. They help community services to quickly react to emergency situations, increase сitizens’ involvement, offer new services or improve the existing ones, determine the lack or excess of resources, verify the origin of goods. Digital ecosystem will help unite different elements of an urban infrastructure – electricity and water supply, drainage, transport, and optimise services in favour of the citizens. In the perfect model city services are united into one super-system, capable of self-management and adaptation.
Smart cities make a rapidly growing market. In 2016 its capitalisation) was evaluated at $563,36 billion, and by 2025 it can exceed $2.57 trillion, which creates enormous demand for technological solutions, finance and human capital.
The key participants of smart cities solutions market are renowned corporations: ABB Group, Accenture, Cisco Systems, Schneider Electric, Siemens, IBM Corp., General Electric and Microsoft. Such companies as Hitachi, Honeywell International Inc, Intel, Oracle, Huawei Technologies Ltd and Johnson Controls also participate in development of intellectual urban solutions. At the same time, smart cities are a rewarding playground for tech startups, inventors and young businessmen.
The market of smart cities can be devided into six large segments: management, education, transport, engineering, public health service, communal services. Nowadays «smart management» makes the biggest part of the capitalization. Already now many countries provide services to their citizens via digital technologies.
Investment opportunities
Some technological tracks, which are being or can be widely used in smart cities, are already showing high growth potential. According to Intel forecasts, in ten years capitalisation of IoT industry only will reach $1.5 trillion. EcoMachines Ventures company, which invests into modern environment-friendly technologies, has outlined ten fields of smart cities solutions market, which have the biggest potential from the point of view of a private investor.
Sustainable energy industry. Cities consume more that 2/3 of the world’s electric power, which makes the demand for renewable power sources, recycling wastes into energy, energy accumulators, intellectual networks and energy-saving technologies.
Construction. Modern construction industry requires use of robotic engineering, modern materials and eco-friendly design. Also up-to-date are the technologies reducing dependence of buildings on heating and cooling systems (heat-saving, passive cooling technologies).
Smart buildings. Sensor networks and data analysis technologies allow to manage objects and improve working spaces more efficiently and sensibly, cutting expenses on office exploitation, improving working conditions and reducing the amount of waste.
Waste management. The traditional linear model of waste management (from the dustbin to the landfill) is being changed into the model of circular economy focused not only on recycling, but also on reducing waste volumes. This creates demand on innovative kinds of packaging, new ways of collection and utilisation of waste.
Food. Fashion on healthy lifestyle creates bigger demand on fresher food of local origin. This market needs new solutions in the field of logistics, tracking and monitoring food products, decentralisation of their production, new schemes of food waste treatment.
Public health service. The growth of people’s lifespan has brought the importance of solutions for senior citizens – those can include Internet of things, digital and robotic technologies: assistance in everyday tasks, safety monitoring, telemedicine, intellectual stimulation technologies.
Workplaces. The appearance of modern «digital nomads» and common working spaces gives the opportunity to create new services promoting new models of work and business.
Data centres. Huge amounts of databases, produced and consumed by buildings and infrastructures will require creation of database centres of a new generation, more compact and efficient.
Smart transport. Battery vehicles and driverless transport, smart roads, applications for planning trips will solve such problems as heavy traffic, air pollution, loss of time in traffic jams.
Drones. Drones of the smart city can carry out the delivery of goods, monitoring of the traffic and the condition of the environment.
According to Cisco forecasts, the market of information products for smart city infrastructure will reach 32 billion euro in next 10 years, and within this period the global need in investment will reach nearly 980 bin euros in this sector, Investment opportunities opened by Paris Climate Agreement are evaluated at $12 trln (as estimated by Bloomberg New Energy Finance).
--