Smart and Sustainable Future Series - Building a Smarter Future | Deloitte UK has been saved
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A revolution is coming, and our cities are changing. Following on from the previous post in our Smart and Sustainable Future Series on a Net Zero Future, there is an increasing focus on developing smart and sustainable real estate and infrastructure among governments, corporates and households alike. In this post we’ll take a look at some new materials and construction methods, smart solutions to the increase in demand on the electricity grid, as well as connected devices, the Future of Mobility and what a smart city of the future might look like.
With the built environment estimated to account for 40% of carbon emissions, developers and construction companies are looking to new materials and new technologies to fulfil their net zero pledges. One material making a comeback has actually been used for thousands of years but became overlooked during the rise and rise of steel and concrete. With both of those materials guilty for significant carbon emissions during their creation, the focus has shifted back to humble pieces of wood.
Modern techniques lay the pieces perpendicular to each other to create larger segments of cross-laminated timber (‘CLT’). Not only can this ‘Mass Timber’ meet strength requirements as well as steel, they also pass modern fire regulations through an inclination to char rather than burn. Often these are actually used as fire retardants to shield steel cores. As buildings become taller there are complications with wooden construction as they sway more quickly in high winds than steel buildings, but for the majority of buildings wood may well be the future.
Indeed, the wood revolution has already begun in many countries who have active lumber industries, such as Norway. In France, President Macron announced that all new buildings funded by the French state must contain at least 50% wood while already, all buildings for the Paris 2024 Olympics must be 100% wood if they are under eight storeys.
This transition is possible under two key conditions, firstly that harvested forests are sustainably managed, and secondly that the embodied carbon in the wood is also managed at the end of its useful life, being converted for other uses rather than burned back into the atmosphere.
This revolution is coming hand in hand with another advancement – modular construction. The concept is to pre-fabricate sections of construction off-site and assemble them on-site in a manner akin to a giant Lego set. Using standardisation, automation and 3D printing these pieces can be made more accurately under controlled conditions, and also reduce traffic, noise and pollution at the construction site itself. Working together with new materials like Mass Timber these construction methods can actually be faster and cheaper once built at scale, and these savings can be felt by developers, construction companies and consumers alike.
These techniques could not only make housing more affordable, but also more adaptable. As a couple start a family or children move out, modular floor layouts could be flexed to match current needs much more easily than under current construction methods.
With the cost of electric vehicles expected to reach parity with petrol and diesel vehicles in the middle of this decade, and the sale of petrol and diesel vehicles being banned from as early as 2030, the pool of electric cars will rapidly rise from the 230,000 on the roads today to a much greater portion of the 38 million total number of cars in the UK. Developers will have to rethink how and where cars can be stored in order for them to charge, and once vehicles become autonomous it opens possibilities for central charging depots where cars are shared and called up where needed. Sensible solutions need to be found to embrace the possibility of opening up old parking space for pedestrian areas while minimising autonomous vehicles driving around with no passengers. Building infrastructure in modular ways will allow for easier upgrades as new technology emerges and for swifter maintenance, reducing the need for long roadwork delays.
How we heat our buildings will also need to change. Currently only 4.5% of heating in the UK is from low carbon sources but the Committee on Climate Change (‘CCC’) proposes that this will need to rise to 90% of homes and 100% of non-residential buildings to get to the UK’s net zero carbon goals by 2050. Heat networks using electric heat pumps, hydrogen, biomass and waste heat will all need to be considered and used in different proportions for different use cases. Focus on developing energy efficient buildings will only increase, including incorporating on-site renewable energy in line with the UK Green Building Council advice.
With the onset of 5G and the Internet of Things, millions more devices will be coming online and will need to be powered, while switching to renewable energy sources will mean that the energy supply is a lot less predictable than under current fossil fuels.
This will bring significant challenges to the national grid but also potentially some novel solutions. The vast increase in the number of large batteries available gives the opportunity to fill car batteries when the grid is in peak supply and feed back into the grid for rebates during times of peak demand. The Government is consulting on mandating that all charge points are made smart for these purposes. Peer to peer trading of electricity and artificial intelligence to manage the complex processes of powering millions of different devices will also likely come to the fore.
Connected devices will help revolutionise the Future of Mobility, helping to deal with the first/last mile problem of connecting people to mass transit. They will also help to solve the same issue with freight, where solutions are considered from autonomous underground freight deliveries to local storage centres, to the use of drones to deliver your groceries.
The rise of big data and analysis will use embedded connected sensors to assess the efficiencies of all aspects of the city from energy usage to waste management to traffic systems. By knowing where vehicles are and where they’re going, artificial intelligence will be able to analyse the most efficient way to move them around the city through ‘green waves’ of traffic lights. Roads could be cleared for emergency services to get straight to the scene while avoiding traffic.
As with any revolution, with change comes uncertainty. Understanding the changing landscape, breaking it down into the key drivers and risks, and then being able to model out scenarios can help to simplify even the most complex of business decisions. Getting comfortable with the worst case scenario means that for your base case and above it will be all upside, and understanding the sensitivity to key drivers gives a better feel for the risks to returns and operational metrics. Smarter modelling allows businesses to move forward sustainably into the future with confidence.
Stephen is an experienced member of Deloitte’s Business Modelling Centre of Excellence having joined the team in 2015, and undertaking a secondment to the equivalent team in the US firm (the Modelling Advisory Practice) between 2017 and 2019. Stephen lead’s the team’s focus on a ‘Smart and Sustainable Future’ across smart cities and the future of mobility, to renewable energy and modernising the grid, to sustainable real estate, to helping client’s understand how the decisions they need to make to get to their Net Zero goals. He has extensive experience across a range of modelling, analytics and project management services and across a number of industries, mainly developing, testing and documenting complex financial and operational Models. Stephen is a member of the Institute of Chartered Accountants of England and Wales (‘ICAEW’).