Moreover, future cities will bring not only a concentration of domestic demand for utilities but may also home far more diverse economies. Even today, the world’s 300 biggest metropolitan areas account for half of global GDP, and this proportion will increase significantly if anticipated trends for decentralised, urbanised industry and agriculture take hold.
Clearly, all these developments have massive implications for energy and water systems, magnifying and changing the profile of demand.
Internationally, numerous initiatives are underway to try and understand how the social, environmental and economic requirements of future cities can be met and who will be the major winners as solutions are monetised.
So far, these programmes have been characterised by fragmented schemes – establishing demonstration projects and pilots working in isolation. In the next five years however, we can expect to see considerable convergence in future city initiatives and the emergence of more tangible models for the operation of integrated, multi-vector, city systems (see chart Integration of city system, p15). There is a common belief among experts that new models will see city authorities seize more control of their power and water management.
For utilities, this means the time is ripe for more engagement in broad, collaborative city innovation programmes. To date, large technology and communications companies with expertise in manipulating big data have been working with UK innovation hubs such as the Future Cities Catapult, while utilities have been conspicuous by their absence, concentrating instead on the intra-industry innovation priorities set out by regulators or simply waiting to see what early movers achieve before committing themselves.
While this is understandable, some industry commentators fear it could cause utilities to suffer declining relevance to emerging players – including city authorities who might take a far more proactive role in managing energy use within their jurisdictions in years to come.
For suppliers, this could mean missing out on new business streams in the provision of energy and environmental management services to cities. For our regulated networks, the consequences could be even more severe, according to John Scott, director of Chiltern Power. “If the regulator steps in to carve out space for new entrants – in the interests of customers – the networks will be left with a low value slice. They will become simply the wires owners and suppliers of last resort for largely energy-independent communities. You can be sure the regulator would squeeze the income they are allowed to make for only supplying a back-up role.”
Adding a gloomy conclusion to this scenario, Scott adds: “If you allow this evolution to happen, you have to ask, ‘Who will want to work for these low-value, fallback providers?’”
Read on for insight into the state of play for future cities in the UK and exploration of the associated challenges for utilities.
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