TO DO 1: TRANSLATE THE GENERIC VISION
into a strategy and/or policies, policies and timeframe per objective, supported by high-level leadership in the city administration
The first TO DO is that the generic vision or comparable long-term plan has to be translated into strategy and/or policies and timeframe per objective. This indicates roughly the direction to go and which solutions could be contemplated. For example, if the objective of the vision is to reduce local air pollution levels by a smart city project, it is evident that this objective can be achieved in different ways. Healthier transport modes such as walking and cycling might be encouraged by closing roads for car traffic, e-buses could be made mandatory in concessions for public transport, intelligent transport systems can use sensor data to lower the speed of traffic resulting in lower emissions, and travel by personal car can be made much more expensive by introducing road pricing or toll systems. Per objective, a preliminary strategy and/or policy must be established, accompanied by a defined timeframe, for discussion with key stakeholders later in this DECIDE & COMMIT stage.
This will usually be done in interdepartmental meetings, workshops, and brainstorm sessions, supported by assignments to consultants or collaboration with local research partners. Field trips and site visits can help to gain an overview of solid approaches and good examples.
Support by high-level leadership is crucial for this TO DO. A committed person or group within the city administration, such as the (Deputy-)Mayor, a Councillor or Director of Unit, must champion the cause and facilitate the process from planning to implementation. This commitment of municipal support helps to reduce the perception of risk, attract investors and partners, and engages the public.
An important pre-condition for high-level leadership is for smart city projects to fit within the overall city strategy or vision, as proposed by this roadmap in the VISION stage. This requires timely engagement and buy-in at the highest political levels through information and education, and explicit approval in the city council on official policy documents such as a smart city or low energy district strategy (so not only support at the level of practitioners). Therefore, the narrative of the envisaged project should highlight positive effects that relate to the overall goals of the current political landscape (e.g. economics, jobs, tourism). In addition, indirect benefits and co-benefits which can be expected from the contemplated directions, such as less air pollution, lower operational costs of infrastructures, or less congestion, can help to make the case. If the contemplated directions are too ambitious, innovative, or demanding for the current political landscape, it is wise to start with smaller, less ambitious (or controversial) projects, and work up to larger-scale, aspirational projects afterwards. Getting approval for a small living lab, for example, might garner enough support and attention that larger projects within the city could become more viable.
EXAMPLE:
“Regarding projects’ prerequisite of needing strong political support, trials and industry–led mechanisms can help to increase confidence of decision makers. De-risking interventions by academic and industry-supported trials and having a housing provider management receptive to be a test bed of solutions goes much of the way to alleviating this unease. The emergence of long-term guarantees in terms of performance of solutions is one response that has already opened the door to the wider adoption of low energy solutions such as deep retrofitting of homes” (adapted from Rivada et al., 2016).
Why?
WHY? This TO DO is a first step in working out different approaches, which need to be discussed, revised and adjusted later in the process, in dialogue with the city administration itself, and key stakeholders including citizens and local businesses.
As smart city projects are generally considered riskier, strong political support is often a requirement for a successful project (Rivada et al, 2016). Insufficient political will and highlevel leadership can provide another layer to the challenge, especially if the project requires municipal support in the form of staff capacity or policy changes (BEEM-UP, 2014). The need to have a political champion to push for change was illustrated by interviewed staff: “citizen focus is in the focus of the Mayor - she is going to all of the districts and really reaching out to the citizens, and talking with them, and also have an conversation to see what are the needs of the citizens” (Interviewee #5, 2017).
TO DO 2: DETAIL THE ROLES OF STAKEHOLDERS
by agreeing on responsibilities during the preparation phase, start preparing PPP’s, recruiting local endorsers
Following, the next TO DO focuses on bringing more detail in the respective roles of all key stakeholders. The city administration must identify these roles more precisely and consult in depth with stakeholders about the strategy and/or policies proposed in the previous TO DO and their implications for day-to-day operations, living environment, finances, etc. of the stakeholders. During
this stage, it is important to reach an agreement on the responsibilities of all key stakeholders for the preparatory phase of the project. Possibly, more formal forms of collaboration can already be explored, for instance by starting to prepare PPP’s. Besides, recruitment of ambassadors and local heroes who are willing to endorse the overall vision and strategies or policies, will help to create public support for them.
EXAMPLE: STIMULATING ACTIVE PARTICIPATION OF STAKEHOLDERS
The SmarterLabs project, funded by JPI Urban Europe, charted important preconditions for proper stakeholder engagement. Creating ownership of all stakeholders and people involved in a dedicated process, sets cornerstones for later acceleration of the
impact that is generated in an experimental smart, sustainable cities project. Bringing all stakeholders together from the beginning, collecting their ideas and listening to them while explaining the objective of scaling up or replicating the results at the end of the project right, is crucial. A moderated and clear process must be set up, in which the acceleration of the impact generated in the experimental project, is stressed right from the start of the project. Active participation of citizens and other organisations is by no means a given, and initially participants might need to be attracted to actively participate in the project and receive some form of reward. The understanding should be that participants are experts in their lifeworld, street and neighbourhood. Therefore, an adequate monetary compensation might be needed. In cases such as Paris and Madrid, using participatory budgeting had shown to be very useful to stimulate active participation. Also, individuals and associations while act as multipliers can widen the circle of engagement to better understand complex settings and generate more robust and innovative knowledge and urban sociotechnical development. Knowledge brokers, who are well anchored in the neighbourhood/street/district where the project is conducted, know the urban actors and the community as well as public administration can provide the links between the different project partners in an experimental project. However, Active participation of citizens and other organisations is by no means a given, and participants might need to be attracted to actively participate in the project and receive some form of reward such as monetary compensation or participatory budgeting (SmarterLabs, 2019).
WHY?
The buy-in of key stakeholders is needed for successful integrated planning and implementation of smart city and low energy district projects. This commitment is needed from the start of the plan, to ensure that the actions that are eventually proposed, are
co-designed and co-created with these stakeholders. This intermediary step is needed to prepare the ground for this co-design and co-creation, as formal and legal responsibilities of involved stakeholders might influence the feasibility of proposed strategies and policies, while the interests of the key stakeholders need to be aligned with those of the city administration.
TO DO 3: RE-ALIGN SMART CITY GOALS, AMBITIONS AND POLICIES
with other local targets and overall long term city plan, and with regional, national, EU and UN targets
In the VISION stage, the legislative framework and binding national and European commitments have been explored. Now the strategies and/or policies have been defined in more detail per objective, and their timeframe is known, it is time to ensure again that these strategies and policies are properly (re-)aligned with other local targets and local plans, such as the Sustainable Energy (and Climate) Action Plans developed under the Covenant of Mayors for Climate and Energy, and regional, national, EU UN targets, such as the SDGs. In the case of SE(C)APs, the added value of this methodology related to those plans could be that this roadmap not only ensures capacity and enlarges the scope, but also helps to tackle behaviour in an integrated way. Exchange and communication with the regional level and with metropolitan areas (in case the city collaborates formally at agglomeration level), on the intended strategies and policies is essential for this TO DO. Often investments in smart operations of urban infrastructures and public transport or decisions on smart (re)development of urban areas are taken or approved at this level.
References
Solution Booklet Why Circular Cities?
A circular economy is an economic system that decouples economic growth from the consumption of finite natural resources. In a circular economy, fewer and more durable products are made partially or
EXAMPLE: SYSTEMS THINKING FOR ENERGY AND SMART CITY PLANNING
The STEEP Methodology uses a form of systems modelling known as a Hierarchical Process Model (HPM) to develop a shared understanding by the problem owners about how to achieve the transformation. The conceptual model can be developed by the
owners of the transformation in a facilitated group model building workshop, or by a systems expert interviewing the owners, or a mixture of both (see example below), and has been applied in FP/ STEEP and SCC-01 REPLICATE projects. The system model is designed to help with decision making and therefore the processes can be evaluated for performance using evidence from stakeholders.
A colour scheme is used; green for a process performing well, red for processes performing badly, and white where there is little or no information about performance. The arrangement of green, white and red leads to its colloquial label of an Italian Flag. For each process that is labelled mostly red there is a clear need to act to improve its performance. For processes that are labelled mostly white then there is a need to find out more about what is happening or what needs to be done. For these ‘issue’ processes options must be developed to address them in order to improve the overall performance of the system. The stakeholders can debate arguments for and against each option, or vote on them, until a decision is made about which options to implement.
Thus, a group is able to work through the process of deciding a transformation and how it might be achieved leading to an ‘action plan’. It is expected that this methodology is adopted as a continuous and ongoing process whilst the transformation is underway,
rather than just used once at the start; the action plan being updated to reflect tasks completed, learning – which would lead to changes to the structure of the system model, and revised evidence about performance e.g. tasks completed should lead to processes becoming ‘green’. The approach can be implemented using the conventional props of flipcharts and post-it notes in face-to-face workshops. An experimental online system is available for working groups to continue developing system models and
action plans (so-called same-time/different-places workshops) (SmartSTEEP, 2019).
WHY?
A couple of reasons make this TO DO necessary. Firstly, if this alignment does not take place, potential synergies with other objectives, plans and policies might go undetected and thus unexploited. In the worst case, the intended smart city or low energy district strategy and/or policies, might even counteract other policies. The opposite case, where other policies overlap to some extent with the intended smart city and low energy district strategies and/or policies, offers great opportunities for mutual collaboration, but if this collaboration is not taking place, it may lead to less efficient processes and a waste of financial and human resources. Now the strategy and/or policies per objective have been defined, it can be more actively pursued to identify and exploit potential synergies and mutual benefits following from specific choices, not only on solutions but also on organisational aspects.
TO DO 4: JOINTLY PRIORITISE ROUTES WITHIN EACH STRATEGY AND POLICY
by selecting and ranking routes
After the specific roles and responsibilities of city administration and key stakeholders have been agreed upon and public-private collaboration loosely organised earlier at the stage of DECIDE & COMMIT, the time has come to make the strategies and/or policies more concrete by bringing all of the different stakeholders together toward one or more common goals, shared understanding and collective agreement on the routes or pathways to follow. This can be done by organising a couple of repeating cycles, where each time the same steps are made to arrive at a list of prioritised “routes” within each strategy or policy, agreed upon by the key stakeholders. The main criteria for this first selection and ordering of these “routes” are usually the current situation, expected impact, financial aspects, and maturity and expected feasibility of the proposed route(s).
It might occur that the lack of incentives or the existence of disincentives for specific sectors of city administration or for key stakeholders, hampers this process of achieving collective agreement. In many cases a smart city project is attempting to tackle a problem which is for the public good, but it may go against the self-interests or profitability of stakeholders, for example existing service providers. The proposed strategy and policies can change current value chains of businesses, and can pose threats or opportunities. By giving a voice to key stakeholders, and engaging them in co-designing and co-producing the eventual solutions from the viewpoint of their own interests, the city administration ensures public support for the actions per strategy or policy ultimately proposed.
Different solutions can help to provide better incentives for different stakeholders, such as adjustment of existing business models, for example for energy network operators, through diversification, or offering new services in neighbourhoods. Other solutions are to increase the size of the market through agreements with the collective sector and facilitation of grass roots initiatives, such as collective ownership by citizens of wind turbines or solar plants.
EXAMPLE: WHOLE-BUILDING LOW ENERGY RETROFIT AND CONNECTION TO THE DISTRICT HEATING NETWORK
“The existing approach (the old way) is that the city provides grants and each owner had to do all the work, coordinating everything themselves with both the city and the private contractors and providers. The new way involves a tie-in between the administration and the private companies. So the government pays for the retrofitting action, and then the building owner pays back the government. This provides peace of mind – by dealing with the government and not a private (for-profit) company, by not dealing directly with businesses. For building owners, the #1 challenge is the complexity of the process, with no guarantee of results. They need to do everything themselves, and then connect to a network provided by a private company. This also involves cultural issues – the distrust of the unknown, fear of change and loss of control, of something going wrong (risks of innovation). The government backing provides security and peace of mind. It also forces the city government and public administration to rethink energy and heat supplies. It moves the concept from being about private companies selling a product, to supplying a service” (Interviewee #7,
2017).
EXAMPLE ALTERNATIVE BUSINESS MODELS TO SECURE ENERGY SUPPLY
“…energy suppliers are adopting alternative business models that secure energy supply to a customer while implementing renewable generation technologies. Examples are utilities supporting homeowners with loans for small scale PV and wind installations. Firms however must use alternate means to finance renewable energy projects without direct help of public energy utilities “ (R2CITIES, 2014).
WHY?
It should be realised that in most of the situations where smart city and low energy district plans want to make changes, there are already actors in play for whom the most advantageous scenario is continuation of the business-as-usual scenario. This also includes the dilemma of service providers and increased efficiency – whereby for example a successful energy efficiency project results in a change in demand, and a resulting decrease in supply (and loss of profit) for the energy provider. “Most of the major energy companies are publicly owned, causing an unresolvable conflict of interest between profitability and pursuit of political benefits through popular, social pricing policy” (BEEM-UP, 2014). Whether public or private, these energy retailers have a clear conflict of interest (and disincentive) to help their clients reduce their energy consumption (R2CITIES, 2014).
“… it is also the energy company - of course they participate in all this innovation, but if it is to save CO2 there’s also a conflict of interest - they need a new business model for their business ... they need to investigate a new business model, so sometimes companies are not so open and I understand this... they are not so transparent because it might be their future business model, and we as a city would like to have figures and numbers and evaluation and sometimes they say “well, data is our future, our
business model” maybe, so sometimes it’s a little bit difficult for us to evaluate those new technologies” (Interviewee #5, 2017).
In other cases, the incentives may be less obviously problematic, but may still provide challenges to the implementation of smart city and low energy district projects, such as the UK tax code, which prioritizes new construction over renovation of existing residential buildings (EFFESUS, 2017).
TO DO 5: ALLOCATE RESOURCES FOR THE PREPARATION OF PLANS
by city administration and stakeholders, at this stage mainly capacity
The next TO DO entails allocation of resources by the city administration and each key stakeholder for further development and elaboration of plans: at this stage mostly capacity. It is not yet about finances for the implementation itself, but for preparation.
EXAMPLE: PUBLIC AUTHORITY AS A CATALYSER
Integrated planning, in parallel with the co-production approach developed in the STEEP project, makes it possible to enhance public investments by acting as a catalyser for private investments in cities (STEEP, 2015). This co-production approach, based on system thinking methodology, has also been used in the Horizon2020 SCC- 01 REPLICATE project. The City of Florence, one of the main partners in STEEP and REPLICATE, developed a smart city plan a few years ago (City of Florence, 2015). The city administration experienced that the sustainability of the plan is mainly based on two coordinated actions: direct sustainability and derivative sustainability. Direct financing is linked to the spending power of the city administration under the new provisions on harmonised budgeting and reinforced financial reporting, as well as to the spending restrictions imposed by the so called “Stability Pact”, so that only very few significant infrastructures can be actually built and implemented. For example, the construction of the new tram lines inaugurated in February 2019 prevents the simultaneous development of other works, and this virtually eliminates the possibility of obtaining significant results in energy efficiency indicators associated with a reduction of emissions and polluting agents. A combination of funding using regional ERDF has appeared to be an innovative mechanism.
The use of indirect financing may be the answer to the “economic limits” of the City and a guarantee for achievement of pre-set goals. If, for example, pricing policies can be a tool for maintaining and developing strategies, also to convey and reinforce the meaning of the choice made, the decision of a private entity to invest in the actions proposed by the city administration with calls for tenders is the result of a careful assessment of the opportunities offered and the consequent implications both in terms of economic attractiveness (PPP/ESCO) and of result and visibility (crowdfunding).
In addition to the investments for the actual implementation of the action, i.e. the physical construction or renovation of an infraestructure (tramway), and political strategies with a direct impact on citizens/residents/tourists/city users (eco-road pricing policies, town planning), there are equally significant choices made by the city administration which directly affect the city administration itself and are good practices. For example, the Smart City Plan can be seen as a container for collecting the suggestions of other European countries that can also be used in Florence, essentially by the city administration. This should be the objective of Green Public Procurement (GPP), the policy of environment-friendly buying and the increasing activity of analysis and assessment of the opportunities offered by EU programmes and funds for regional development directly linked to the theme of smart cities.
WHY? Preparation of plans for smart cities and low energy districts is time-consuming
To be able to draft the plan, it must be clear which resources can be committed to this, not only by the city administration, but also by involved stakeholders. For example, several interventions show the potential of partnerships in buildings retrofitting (through energy saving companies-ESCOs) or transport (with OEM’s), etc. But it is also true that PPP’s are not always the only answer. For instance, in many cities, municipal companies are playing the role of investors and operators in energy projects and managing the city’s broadband networks and transport infrastructures.
TO DO 6: FORM INTERNAL AND EXTERNAL TEAMS
by engaging diff erent departments, creating an institutional framework and fi nding vehicles for capacity building
This step focuses on setting up the team(s) which will prepare the plans for smart city and low energy district projects. Usually each key stakeholder puts together a small team which has a specific mandate for the preparatory phase (external teams). Due to its normally central role, the city administration will often set up a larger team consisting of staff from different departments (internal team). Citizens and local businesses can participate individually, send representatives or organise themselves in a more formal structure, for example by establishing a neighbourhood or user association, or a business community. Common activities at this step are engaging different departments, formalising interdepartmental collaboration to breach the siloes, and create an institutional framework and vehicle for capacity building in public-private partnerships. The latter can be done by creation with stakeholders of a joint smart city “brand”, a specific, connective approach to smart cities and low energy districts, geared to the city needs, and often in the form of a PPP.
During this step, one repeatedly encounters the problem of siloes, not only in governments, but lso in businesses. Projects on smart city and low energy districts are often managed by vertically structured departments (silos) in the local government or similarly, sectors in businesses. Other project stakeholders, including local businesses, solution providers, and universities, are frequently siloed as well. Since no single department or sector has the full mandate (or ability) to implement a holistically designed project, this can lead to long negotiations, and delays or postponement of implementation of the project.
Within the city administration, internal collaboration issues can be prevented by the clear definition of a person or entity (a system integrator) in charge of horizontal co-ordination with sufficient responsibilities and mandate. Successful co-ordination would require the establishment of truly multi- or inter-disciplinary teams. This approach will need to be adapted to each instance, as there is no standardized organisational structure for municipalities or their agencies. Some approaches to overcoming siloes initiated by cities include:
● Installing cross-sector departments (New York City);
● Creating “special staff units” reporting directly to the politicians (Ludwigsburg);
● Installing informal interdepartmental working groups (Freiburg);
● Outsourcing this task to semi- independent project management companies (Vienna).
Another approach is to collect and aggregate the different city infrastructure data streams and control operations in a single structure - an operations centre. Co-located services and employees from different departments, working together, may act as a “nerve centre” to facilitate co-ordination and communication, breaking down some of the walls of administrative silos (ECOSOC, 2016).
The problem of siloed organisations can be aggravated by differences in work place culture and organisational structures. This may cause conflicts and challenges for a smart city project, especially with the ad hoc sort of organisation developed specifically to bring together a wide range of partners for a temporary project. Such incompatibilities in workplace culture differences, should be handled with strong project management before they become important issues that can compromise the project. Ground rules should be set regarding expectations and defining the project work culture, including risk management, contingency planning and rules for escalation. Further, staff training in the field of smart cities and low energy districts, next to the development of a common language and thinking, e.g. by a glossary, can help establish a level playing field within a project team, especially when project members come from highly diverse disciplines. Engagement of other parties in triple or quadruple helix collaboration can help to foster a joint (work) culture, to stimulate a higher quality in co-design and co-creation, and to harvest local knowledge of the area to be transformed. And last but not least, many successfully implemented smart city and low energy district plans have paid ample attention to social activities, in combination with educational, training and work activities, physically located in the plan area.
EXAMPLE: ONE PHYSICAL WORKSPACE AND IN-HOUSE HIGH-LEVEL EXPERTISE
“Bristol in the U.K.” has “given senior executives a broad smart city mandate. Bristol is also breaking down silos between different departments in the municipality. To save money on real estate and improve co-ordination, the local authority is planning to co-locate nine teams in one space, which should help the city adopt new sensing technologies on a citywide scale. Bristol is also making sure it has high-level expertise in-house, primarily to ensure it doesn’t become heavily reliant on a single vendor
or systems integrator. ‘The local authority has been astute enough to hire people with quite sophisticated technology and procurement backgrounds,’ said Paul Wilson, managing director of Bristol Is Open, the smart city unit for Bristol. ‘We know our
strategy and we will go to vendors to fulfil aspects of our strategy. We have the intelligence to know what our plan is, and we are in charge. That is very important for a city or it will be blown around in the wind of vendor games.’” (Pringle, 2016a).
EXAMPLE: APPOINT A CHIEF TECHNOLOGY OFFICER FOR THE CITY
“In March 2014, Amsterdam created the role of chief technology officer (CTO). The role is responsible for breaking down silos across the city government, setting overall strategic direction, providing a consistent face to external stakeholders and helping to
navigate a complex political landscape” (Gibson et al., 2015).
EXAMPLE: OVERALL BUDGET LINKED TO OVERALL OBJECTIVES INSTEAD OF PER SECTOR
“At the moment we are establishing an overall strategy for the city that is linked with budget and that is very new - before we were sectoral - we had a sectoral approach mobility was a certain budget, and built environment was another budget, and now
we are trying to have an overall system of objectives and goals, that everybody can decide on” (Interviewee #5).
EXAMPLE: COHERENCE BY SHARED PROJECT PLANNING TOOLS AND PROXIMITY
“Shared project planning tools go some way to bring coherence to interaction between staff that rarely work together but an enabling structure is required in the management of projects that facilitates this joined-up working” 8. “Regarding silos and getting
people to work together, physical proximity can be very helpful” “Get people working together by actually working together - in proximity to each other” “Communication is key” (Interviewee #1, 2017).
EXAMPLE: CLARIFY THE EXPECTED CONTRIBUTIONS AND ACCOUNTABILITY OF DEPARTMENTS
“Clarity of contribution and accountability of effort – SE(C)APs set specific targets but are rarely parcelled into the districts that municipal staff feels are manageable for district interventions. If departments’ contributions were set out and their distribution
of efforts were clarified, then staff and management in particular would feel less aggrieved that certain projects draw on resources that are likely already stretched” (Rivada et al., 2016).
EXAMPLE: TEAM STRUCTURE AND LINKS TO RELEVANT PARTS OF THE ORGANISATION
“The administrative structure of the team is also an important success factor. A team leader with adequate empowerment, and members with clear visions about their responsibilities will make it easier. The team members should also have links to relevant organisational structures (strategic planning, spatial planning, transportation, etc.)” (Interviewee #2, 2017; Stacey et al., 2016b)
EXAMPLE: INTERDEPARTMENTAL VEHICLES TO BRIDGE AND PREVENT SILOES
“It is basic and simple decision-making, definition of goals and the achievement of those rely on an exchange of knowledge. Consequently, strong efforts have to be made to create an environment of trust and mutual understanding, which is the most
important prerequisite for a well-functioning and transparent knowledge transfer. In Bolzano as well as in Innsbruck exchange of knowledge is well coordinated and documented. The core of knowledge sharing in both demo cities is represented by the district teams, consisting of all local internal stakeholders. These local teams meet on a regular basis with a focus on knowledge exchange between the internal stakeholders” (SINFONIA, 2015).
WHY?
“De-siloed” inter-departmental city internal co-ordination and communication are needed to address the multi-sectorial, interdisciplinary character of most smart city projects. This means that for a well-functioning local ecosystem, not only external
collaboration has to be organised, but also internal communication within cities.
The difficulty of getting different departments working together is a common problem experienced by many interviewees. The lack of horizontal co-ordination, co-operation, and collaboration, or acceptance between vertical departments is a well-known issue in organisations and projects, and a common problem in the implementation of smart city projects (OECD, 2016; BEEM-UP, 2014; R2CITIES 2016; ECOSOC, 2016). During implementation of integrated strategies and plans in siloed organisations, no department generally has full mandate for achieving the targets. This can lead to long negotiations, delays or even postponement of the implementation of the project. In addition, siloed organisational structures can involve many issues that complicate the implementation process itself later: information islands, the lack of an overall strategic vision, task fragmentation, and overlapping or blurred responsibilities. All of these can be a direct result of a lack of co-ordination and communication between departments.
“…it’s an effort and an initial obstacle ... maybe in the beginning, for a city that is new to, or is working for the first time in this way. So, I think that it is necessary to follow this process and also compulsory to work in a co-ordinated way between all the municipal departments and to have this governance structure or co-ordination quite clear” (Interviewee #8, 2017).
Furthermore, the administrative structure and working culture may provide a source of conflict and present issues for the progress of the project. Variations and incompatibilities between structures and administrative interaction (hierarchical structures vs. flat structures) as well as supervisory and management styles (e.g. democratic, autocratic, teamwork, micro-management, etc.) are a common source of conflict in organisations, especially the ad-hoc sort of organisation developed for a temporary project. The administrative structure may also have a higher authority (i.e. funding agency) with which they may have to report progress or provide deliverables – which can present issues depending on perceptions regarding management style, as well as the frequency, type, and magnitude of reporting. Differing work cultures can also create conflicts between project members and within project teams, causing issues for the advancement of the project. These may be related to differences between personalities, or specific corporate cultures, to the variability between regions and cultures within Europe. One interviewee mentioned the difference between industry and research partners as an example of cultural differences. While composing the plan, the research partners want to be able to do research, and to have open information and access to property rights, while the industrial partners want to be
able to sell solutions, the investment partners don’t want to have anyone damaging their intellectual property rights and to prevent any infringement. This led to lengthy negotiations (Interviewee #6).
BERND KLASSEN, PROJECT COORDINATOR MUNICH
One of our big learnings from Smarter Together also was to experience that it makes sense to combine topics such as energy, mobility and technology within one project in order to prevent silo thinking and bring experts together. Most of the time a silo mentality does not derive from ill will but from lack of possibilities to work together. In the context of smart cities, exchanging ideas across these topics has proven very fruitful for us.
TO DO 7: EXPLORE DIFFERENT FINANCIAL SCHEMES
in terms of preconditions and possibilities
This TO DO entails a first exploration of suitable financial schemes and possibilities, with the aim of having a realistic understanding of the viability of the plan in terms of finance. Financing instruments are a key part of integrated planning and management. Instruments, and more specifically financial instruments, enable the realisation of smart city plans. Financial instruments foresee finance during integrated planning and management of smart city projects in various ways:
● Early-phase exploration of financial aspects of the plan;
● Risk assessment and feedback on financial feasibility during the preparation phase;
● Advice on financial models, and securing finance, when concretising the plan;
● Procurement, contracting, establishment of Public Private Partnerships (PPP’s) or other Collaboration
forms, which enable implementation;
● Monitoring of financial performance of the plan during implementation;
● Evaluation of financial performance after implementation;
● Recommendations on finance and possible adjustment of the chosen financial model.
The economic viability of smart city and low energy district plans can be improved in several ways (EIP-SCC 2013, 2014; eeef 2017). Foremost, demand should be bundled in order to create more attractive business cases. However, this upscaling is closely related to standardisation of smart city solutions. Standardised solutions provide better business cases as the potential markets are larger. Subsequently, novel business models, mixed funding and crowd funding can help to tap into previously unused sources of finance, in particular when firmly rooted in the local ecosystem of smart city partners, including local businesses, citizens and NGOs. Investments in smart assets can be used for lowering operational expenditures and other costs for partners, and investments from different stakeholders can be combined. Sometimes this requires the adjustment of the regulatory and legislative framework. PPP’s can provide the structure for such mixed-financing investments (Placidi et al. 2016). Further, more innovative and faster procurement procedures with less uncertainties makes investments more attractive. And lastly, possible investors and funding resources should be involved from the concept phase of any smart city plan and project. Requirements need to be addressed together with the project scope and before structuring any call for tender and concession documentation, in particular with respect to the minimum investment size, blending options, and the financial maturity function of implemented measures (eeef 2017).
Further, many residents may be unaware of financing options or opportunities which may exist to help them with the financial costs of implementation of smart solutions or measures to save energy and use more renewable sources of energy. Therefore, promoting awareness of financial opportunities should be one of the first activities covered during project scoping. Opportunities for external help with private financing should be one of the mandatory activities in project planning. The project team should
collect and evaluate those specific opportunities that apply to the project and target market. The project group should bundle, simplify, streamline, and support the application process for the target market.
In addition, several portals and digital catalogues need to inform about financing opportunities for cities at European level, see for example the financial guides of the Covenant of Mayors for Climate and Energy and the EIP-SCC Action Cluster Business models. Most regions and countries have helpdesks which provide information about loans and grants, for example the Managing Authorities for European Structural and Innovation Funds. At local level, more and more cities have implemented the one-stop shop concept for information on energy saving measures and clean energy production and offers for implementation. The Chambers of Commerce can play a role in advising local businesses on these matters.
EXAMPLE: INTERACTIVE FUNDING GUIDE OF COVENANT OF MAYORS FOR CLIMATE AND ENERGY
Within Europe, there is a wide range of regional, national and European financing and funding possibilities for smart city and low energy district plans. Figure 2-4 gives an overview of the financing and funding possibilities within Europe.
Further, the EIP-SCC Funding Guide provides clear and practical information, about the opportunities that European Funding Programmes offer to enhance the development of smart sustainable solutions both in cities and regions. It has been developed by the Action Cluster Business Models in collaboration with the Covenant of Mayors and targets all the stakeholders in the smart cities arena.
This interactive tool gathers relevant information about the main European funding initiatives such as the European Structural Investment Funds, the European Investment Bank’s financial instruments and several programmes managed by the EC and Member States. By using the different filtering options, the user will be able to identify the most appropriate opportunities for their project ideas. More information can be found on: http://eu-smartcities.eu/funding-page. In addition, the Covenant of Mayors interactive
funding guide gathers information in 23 languages on the funding initiatives for local climate and energy actions managed by the European Union, the Member States and key financial institutions, see https://www.covenantofMayors.eu/support/funding.html.
EXAMPLES: ONE-STOP SHOP FOR BUILDING OWNERS
In the Netherlands, 25 municipalities in the Rijnmond and Haaglanden Regions around Rotterdam and The Hague collaborate on more sustainable housing in the one-stop shop WoonWijzerWinkel. At the physical location of the shop, building owners are
informed about a wide range of measures, their costs and subsidies. Special meetings and tours are organised on specific technologies. At low costs, interested building owners can get general advice, a technical check of the building, detailed tailormade
advice for the building, and quotations from more than 150 companies for its realisation. Specific (subsidised) actions for districts aim to bundle demand and lower the price per building (WoonWijzer Winkel, 2019).
WHY?
Many cities and other urban stakeholders have difficulties in securing finance for smart city and low energy district plans (EIP-SCC 2013, 2014; eeef 2017) as the economic viability of the plans is not always self-evident for various reasons.
Local
government and other local public bodies usually have a limited budget. In addition, aging infrastructures and buildings might need renovation while new systems, devices and networks can be costly. In addition, the demand is still scarce and fragmented. Singular tailormade plans are relatively expensive, thus not attractive to the financial sector. What is more, policy uncertainty can be a prohibitive factor for potential investors, as are long public procurement processes, subject to several uncertainties as well. Finally, the fact that funding is usually considered as the last step and often comes on board when the plan is about to be implemented and just lacks the finance, does not help either.
Government support may also vary throughout the duration of the project. Many municipalities have a budget planning timeline that runs on a different scale than the project itself, making longterm planning challenging. Finance and funding mechanisms also may run on a different timeline scale than both the municipal budgets or the project investment, “creating a quickly changing funding landscape” whereby financial and funding schemes change often - even annually (EFFESUS, 2017). This is often visible in, for example, the negotiation of an annual budget when trying to include long-term investments in retrofit, renovation, or refurbishment (Di Nucci 2010; Rivada et al., 2016). As insufficient external financial support and funding for project activities may hinder or even stop the process (Mosannenzadeh et al., 2017), exploration of financial schemes at an early stage is mandatory. What is more, different schemes come with different preconditions and responsibilities, so their exploration needs to be completed in time before the actual plan is made. For all these reasons, if possible, city administrations and other government levels, have to make a long-term commitment to a stable funding landscape in order to build trust.
More specifically for citizens and local businesses, for financial instruments available to them, such as rebates and subsidies, there may be many opportunities for both upfront and longer term financial help available, but citizens and businesses are often unaware of them, due to the fragmented, inconsistent, or unclear nature of their source, conditions and marketing. In addition, the large amount of different subsidies, premiums, tax rebates, etc., each with their own conditions, often confuses consumers (HERON, 2016; R2CITIES, 2014).