Study Shows Smart Cities Will Make Annual Savings Of $5 Trillion Per Year
A white paper released this month by ABI Research has concluded that smart cities could cause global cost savings of $5 trillion per year. The report, based on the achievable savings of 75 cities with populations exceeding 5 million people, took an in-depth look at the impact on individuals, enterprises and governments if IoT technology were to play a leading role in city infrastructure.
Although the report was largely extremely positive about the cost and efficiency savings which could be made, researchers cautioned that such results would only be achievable if different leading players were to collaborate in the use of IoT and smart technologies and embrace a holistic approach.
Due to increased and intensive urbanisation we now see very high concentrations of people, businesses and industries in cities worldwide. The report from ABI Research revealed that for cities to make the most of their existing assets, maximise their efficiencies, build economies of scale and develop more sustainable living environments, smart city and IoT technology will need to be fully integrated into city infrastructure and living. In addition, a new sharing and service economy will need to be embraced by citizens themselves for maximum efficiency and cost savings to be achieved. The key tools to reach this cost cutting goal will be automation, artificial intelligence, sensors, data-sharing and analytics.
The report pinpointed the key groups where financial savings could be made, with the top three cited as citizens, enterprises and governments. Citizens could make a collective saving of as much as nearly $27 billion per year in areas ranging from utilities through to education if smart technologies were fully adopted.
For example smart meters (electronic devices installed in homes which record consumption of electric energy and communicate that information back to the utility for monitoring and billing) and microgrids (localized groupings of electricity sources which are normally connected to the traditional centralized electrical grid, but are able, when required, to disconnect and function autonomously) will cut costs for individuals and families as well as improve efficiency. In education a hybrid system of online and physical learning will make studying more streamlined and lead to further cost savings.
Next up come enterprises which alone could save us much as $14 billion per year — a whopping 25% of operational costs — according to the same report. Through the use of more energy efficient options in freight transportation like drones, robots or driverless vans and trucks, not to mention smart manufacturing plants, businesses could reap massive financial rewards.
Finally, governments could save almost $5 billion annually once infrastructure like smart lights and smart buildings are introduced. In particular, maintenance and repair costs are expected to be significantly reduced.
“While smart cities technologies offer multiple benefits, very significant direct cost savings represent a key incentive to embrace urban innovation for city governments, citizens and enterprises alike.” said Dominique Bonte, VP president, Markets, ABI Research.
Application programming interfaces (API) are likely to play a leading role in smart city technology by seamlessly connecting the crucial elements of infrastructure with both devices and users. Other benefits of APIs include secure exposure and reuse of data and the increased speed of app development.
Jim Nolan, Executive Vice President, Chordant, at InterDigital, reinforced the importance of collaboration if smart cities are going to achieve these efficiency and cost savings, as well as provide the host of additional benefits to citizens, enterprises and governments. He said:
“The true potential of smart cities won’t be realised if governments, enterprises and citizens don’t work together in harmony. Doing so will promote the emergence of smart city marketplaces and open platforms, where third-party players are able to ensure seamless integration of new smart city technologies into legacy platforms and systems.”
