After Jim Rogers moved to Charlotte, North Carolina in 2006 to become CEO of Duke Energy, it didn't take long for him to see the importance of energy to the region.
Charlotte was known as one of the biggest financial hubs outside of New York City. But it wasn't nationally known for being a leader in energy, even though the surrounding region is home to more than 125 energy and cleantech companies, including Areva, Cree, Siemens and Duke Energy itself.
Rogers decided he wanted to leverage that expertise and make Charlotte a hub for energy innovation in order to attract even companies to the area.
In 2009, Rogers -- a man known as part old-school coal baron and part new-school innovation champion -- organized a summit to bring together the leading minds in the energy business. The coordination spawned a plan to make downtown Charlotte a showcase for emerging energy technologies. The initiative, called Envision Charlotte, was unveiled on stage at the Clinton Global Initiative by former President Bill Clinton himself in 2010.
"Jim Rogers really was a visionary," said Amy Aussieker, executive director for the non-profit Envision Charlotte.
The public-private pilot, which included Cisco, CH2M Hill, Siemens, Itron and Verizon, involved the installation and networking of digital water and electricity meters in dozens of large buildings. The data was then measured, shared and used for behavioral energy-efficiency programs within the downtown office buildings.
Three years later, at the 2014 Clinton Global Initiative conference, program officials announced they had dropped energy use among participating downtown buildings by 8.4 percent, with more than 6 percent of the drop attributed to behavior shifts. That resulted in $10 million in savings for businesses across 64 properties.
Photo Credit: Charlotte Center City Partners
Now beyond pilot stage, Envision Charlotte's goal is to cut energy use in the city by 20 percent over the next few years. Leaders are also thinking longer-term about how to leverage the public-private partnership to make Charlotte a fully instrumented city, complete with digital meters and sensors for measuring how people interact with the urban environment.
This week, Charlotte secured a $500,000 grant from the Department of Energy to expand the program.
"We didn't start out doing a smart cities project. We started by collecting the data and studying it," said Aussieker. "But now we're really going down the path toward deeper analytics and getting the utilities, university and energy companies to work together on finding new opportunities for how to use it."
People often think of futuristic building designs when imagining smart cities. But Charlotte is perhaps a more accurate representation of the city of the future -- one that will evolve over time as resources get tracked more closely.
"The easiest place to start is energy and water. Those two resources are foundational to a smart city," said Russ Vanos, the senior vice president of strategy for Itron, which is the meter provider for Envision Charlotte.
“The easiest place to start is energy and water. Those two resources are foundational to a smart city.” Russ Vanos, Itron
One of the top suppliers of smart meters and smart grid technologies in North America, Itron is expanding into numerous cities under the assumption that energy and water will be an important catalyst for networking the urban environment. With a long history in the water, gas and electric metering and systems space, the company is partnering with city planners across the world to digitize infrastructure.
Since Philip Mezey became CEO in 2012, Itron has put much more emphasis on cities as a way to help them better manage resources using smart water, gas and electric systems and analytics services. The company became a founding member of the Smart Cities Council that year, and soon started pursuing urban networking projects in an effort to focus on the early adopters and "accumulate positive results."
Beyond Charlotte, Itron is partnering with cities such as Baltimore, Detroit and Copenhagen to help them leverage meter data to fine-tune the management of energy and water resources. It has also supplied 25,000 water, gas and heat meters to developers of the Tianjin Eco-City in China.
"Since we started talking about the smart cities concepts, we've created awareness for smart meters where customers didn’t realize they had the need," said Vanos. "It's expanded the way people look at measurement and outcomes."
Source: Itron
That growing awareness is attracting new business for meter suppliers and analytics providers across the board. That's why many of the leading companies in computing and grid modernization -- Itron, Cisco, IBM, Schneider Electric, Siemens, Microsoft, Toshiba and Silver Spring Networks -- are carving out a niche for themselves in the urban environment by applying their grid connectivity and analytics prowess to systems that make cities function.
"It's amazing to see how many players are now working on smart cities," said Vanos.
Projections for the value of the smart cities market range from $1.2 trillion to $1.5 trillion by the end of the decade as urban communities network buildings, transportation systems, government operations, energy systems and people.
According to a report from Frost & Sullivan, the energy portion of the smart cities market will be worth $240 billion by 2020. The infrastructure portion, which includes water, will be worth roughly $195 billion by then.
The savings potential is large for cities as well. Even in Charlotte, which has low power prices and an abundance of water, businesses have been able to save $10 million in the first few years of implementation. Aussieker said more data on savings and building performance will be coming soon.
Making sense of that data will be the defining task of the smart city era.
As information from smart cities projects grows, vendors like Itron are partnering with large corporations such as Microsoft and IBM, which have built business units around analytics for cities.
Itron builds urban networks of meters and sensors that measure everything from streetlights to solar systems, allowing it to perform analytics in the field at the device level. It can then send that information to a company like Microsoft, which uses its data analytics software platform to uncover new patterns in how infrastructure is performing.
"We'll collect and do analytics around electricity, electric, gas and water -- things on the edge of the system. And then we'll partner with others to do the truly big data analysis," said Vanos.
Like Itron, Microsoft has built up its smart cities business under the assumption that networked urban infrastructure will be one of the biggest drivers of revenue. Microsoft's partner network has surpassed 300 companies that are offering more than 1,000 solutions for making transportation systems, schools, healthcare facilities, commercial buildings and energy systems smarter.
"This market is easily tens of billions in software sales in the coming years," said Rob Bernard, the general manager for cities and sustainability at Microsoft.
A large portion of those sales will come in an incremental fashion as cities start with pilot metering programs for buildings and build them up to encompass streetlights, electric vehicle chargers, public transportation systems and distributed energy.
"We're seeing a lot of cities and companies looking to recreate what Charlotte is doing," said Bernard. "Transforming your city doesn't have to be a highly complex, intimidating scenario. It can happen as a modularized system and build over time."
In that respect, the smart city is not some unobtainable, futuristic concept -- it's already here.
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