Posted: 03 Jan. 2020 4 min 58 sec min. read

Utilities and renewables: making smart renewable cities

As smart cities look to achieve their goals, two distinct categories often emerge: those cities that need to renew legacy infrastructure and those that can start with a blank slate. While the former may seem daunting when compared to the latter—or vice versa, depending on your perspective—both scenarios can reap benefits from what may seem an unlikely source: utilities.

Electric utilities can become integral players in helping smart cities reach their goals by providing renewable energy, such as wind and solar. By tapping into and building a relationship with their electric utilities, smart cities, regardless of their legacy systems, can become even smarter—becoming smart renewable cities (SRCs).[1]

The smart city-utility connection

Cities and utilities have several commonalities that make them natural allies in the pursuit of the smart city mission, that is, to promote economic growth, sustainability, and quality of life. Most of the world’s population now lives in electrified urban centers, with the rate of urbanization and electrification growing every day.[2] Cities and utilities often have overlapping geographies and assets and almost always serve the same constituents and organizations. The points of connection place utilities in a unique position to carry smart city goals forward.

Utilities’ infrastructure can support smart cities. Streetlights can be configured to serve as charging stations or outfitted with sensors to collect data on anything from traffic to parking. With utilities’ connection to nearly every home and business, smart city initiatives can reach communities via smart home systems. Utilities’ smart meters can even monitor water leaks and regulate energy use.

How renewables can make cities smarter

While utilities can support discreet tasks in the execution of smart city initiatives, their most significant contribution may be as a provider of renewables. Sustainability is increasingly a part of the smart city ethos – and is a key reason why renewables are becoming a preferred energy source for these cities. Wind and solar energy not only contribute to depollution, decarbonization, and resilience but can also enable clean electric mobility.

Several factors are making renewables more accessible. Solar and wind power are at price parity with conventional energy sources in major markets across the globe, and their integration into the grid is increasingly feasible. Electricity storage and other technologies have advanced and are helping address the problems of intermittency from variable renewables. Growing demand from not just smart cities but also from corporations, residential customers, governments, and communities seeking energy choice - across the developed world and emerging markets - are pushing renewable adoption to new heights.

As a result of these developments, utilities can play a key role in smart cities. Smart city goals of economic growth, sustainability, and improved quality of life are ambitious and far-reaching. Working together, utilities and SRCs can support them by deploying renewable energy to:

  • Promote sustainable economic growth. Now that the world’s top solar and wind markets have reached price parity with conventional sources, integrating renewables into a city’s energy mix may be cheaper than constructing new or operating existing conventional generation. This can translate into lower electricity rates.[3] For example, one SRC’s electricity prices decreased by nearly a third once it reached its 100 percent wind and solar goal.
  • Attract and retain companies. An SRC’s business community can leverage a city’s green status to attract jobs. A high share of renewables in a city’s energy mix has proven attractive to Fortune 500 companies, including members of RE100, a growing group of companies committed to achieving and/or maintaining 100 percent renewable use.[4] And these companies often offer the high-paying jobs cities to attract. 
  • Manage energy and natural resources wisely. Equipping smart buildings with solar panels and/or micro wind turbines, and potentially with energy storage, creates distributed energy resources (DER) that can be used for self-generation and can potentially feed power into a microgrid or back to the central grid. Utilities are indispensable to two-way communication between DER and the grid.
  • Drive cleaner air and reduced emissions. All-electric transportation modes open opportunities for deploying wind and solar power—from running a transit system on 100 percent renewables, to using rooftop solar panels to power metro stations. Utilities can also support the deployment of electric vehicle (EV) charging infrastructure and encourage EV owners to shift EV charging to times when excess renewable power is available on the grid. And they can use EV batteries to help balance the grid by starting, stopping or slowing charging according to grid needs, or even drawing power from the EV to the grid to help meet peak power needs.

Foster inclusivity. There are concerns about a growing “green gap” between affluent households, where ownership of solar panel and EVs remains concentrated, and lower income residents who could be left to shoulder the costs of legacy energy systems. In response, many SRCs have launched initiatives to expand access. Net metering has fueled rooftop solar booms among some less affluent SRC populations. Other SRCs have implemented initiatives to lower upfront costs for solar systems. Some utilities are even covering panel installation, maintenance, and insurance in exchange for leased residential rooftop space to host solar-plus-storage systems.

Stepping up

Smart cities are becoming another driving force in the increasing demand for renewables. With the amount of power needed in the average city—lighting streets, transporting people, powering buildings—it’s not just a good idea for smart cities to look to renewables to help meet their goals of promoting economic growth, sustainability, and quality of life; it’s an imperative.

Utilities should recognize the role they have to play in smart cities, and the opportunities it presents. In the new era of smart cities, the impact of utilities will likely grow, as utilities partner with cities in their journey to become smart renewable cities.

[1] Deloitte developed a framework to identify and classify global cities that are deploying solar and/or wind power in connection with their smart city plans. Read more about how these Smart Renewable Cities (SRCs) are charting a course that other smart cities can follow as they pursue their people-centered goals of economic growth, sustainability, and quality of life. https://www2.deloitte.com/global/en/insights/industry/power-and-utilities/smart-renewable-cities-wind-solar.html, p. 8

[2] https://www2.deloitte.com/global/en/insights/industry/power-and-utilities/smart-renewable-cities-wind-solar.html

[3] Ibid.

[4] Ibid.

Key contact

Marlene Motyka

Marlene Motyka

US and Global Renewable Energy Leader

Marlene is Deloitte’s US and Global Renewable Energy leader and a principal in Deloitte Transactions and Business Analytics LLP. She consults on matters related to valuation, tax, M&A, financing, business strategy, and financial modeling for the renewable energy and power and utilities sectors. Marlene has been at Deloitte for more than 22 years and holds a Master of Business Administration in finance from Rutgers University and a Bachelor of Science in mechanical engineering from Lehigh University.