How?

The first TO DO is to define milestones and concrete, effective targets for the strategy and/or policies per objective from the DECIDE & COMMIT stage. Subsequently, within the city’s administration and the wider stakeholder network, a division or roles has to be arranged, making specific departments or staff positions responsible for achieving particular milestones and targets (“Who does what”). This is usually done by internal meetings and workshops, and informal consultation with stakeholders.

The second TO DO is to explore, make overviews of, and study the state-of-the-art in relevant methods and technologies, which might be contemplated for the action plan. These methods and technologies must be assessed on their appropriateness for the local situation in terms of densities, building or infrastructure characteristics, mobility patterns, legislative context, and so forth. Specific preconditions for contemplated solutions need to be checked as well, for example with respect to GDPR. This can be done by the city administration itself, if competences are present, by internal and external pre-consultation of experts, engineers, consultants, research organisations on technologies and methods the city wants to deploy.

After the exploration of suitable methods and technologies in the previous TO DO, the next step is to actively continue and renew the communication with the key stakeholders. The purpose of these meetings and workshops is not only to hear the opinion of the key stakeholders on the outcomes of the exploration of possible solutions of the key stakeholders, but also to start a dialogue about which solutions would suit the stakeholders’ interests.

Normally stakeholders have already been engaged for specific TO DO’s in earlier stages, however, as the “routes” prioritised earlier become more narrowly defined and worked out in more detail into actions, it is of utmost importance to keep the stakeholders engaged and (re)connect with them on a regular basis.  A mistake made often, is to engage stakeholders at the start of the preparation of plans, but not anymore at a later stage, what might lead to a less positive attitude towards the plan. 

City administrations should consult all local stakeholders, including citizens and local businesses, in a proper way by keeping in mind that:

• Stakeholders might not be aware of specific issues deemed important by the city administration, or might have other priorities

Energy efficiency might not be the main concern of stakeholders and users of buildings and urban infrastructure, however, expected savings on energy costs are often an important motivation for agreement to plans for smart city and low energy district projects. For example, when buildings are refurbished to increase their energy efficiency, savings on the energy bill with the added benefits of more indoor comfort and a better condition of the building, are an important motive to consent to the proposed actions (R2Cities, 2014). 

Motivation is also important for later use of the refurbished buildings, infrastructures or new services. For example, Yoldi (2017) stresses that user behaviour is a key issue for the eventual result of energy efficient buildings, because if end users are not willing or being able to use the technologies properly, this will lead to lower energy performance values. Communication, raising awareness and the training of the tenants or other users is considered as probably the most important factor to success.

Realising that stakeholders might have different priorities than energy efficiency of their building, means that city administrations should also develop a specific approach towards households suffering from energy poverty or increased costs of clean mobility as part of the plan.

• Win-win situations must be created by including other benefits from the envisaged actions than savings and reduction of GHG emission in the plan, such as less air pollution, or enlarging the scope of the envisaged actions, such as better quality of the public space; 

For instance, the narrative of energy efficiency investments should include those attributes that the homeowner is likely to value, and be tailored in order to emphasize the direct co-benefits of the measures – including a higher living standard, increased comfort, improved aesthetics, enhanced lighting quality, healthier ventilation, and better acoustics, among others (City-zen, 2016; EASEE, 2012; Ferreira et al. 2015). Or, as one of the interviewed key players in the field of smart cities put it, "To engage with citizens, you need a compelling argument - not just what you do, but how you do it. You need to create a dialogue and answer the question: what's in it for me?".

As “co-benefit” refers to any positive impact or effect that exceeds the primary policy or project goal, regardless if intentional or not. Communicating the broad range of expected co-benefits creates a positive attitude and makes it possible to include the wishes and hopes of many stakeholders, including those who are sceptical about climate-energy issues (Bisello and Vettorato, 2018). 

• Allow some flexibility to adjust the potential solutions and envisaged actions;

As stakeholders might have different preferences, there should be sufficient room for adjustment of the plan to stakeholders’ preferences. 

• Create joint ownership of the plan 

One interviewee explicitly mentions  that a top-down approach should be avoided as it does not create joint ownership of the plan: "One important point is that I would rather not start a top-down initiative but I would take the people along before - maybe at the same time. So citizen participation helps to create ownership for the project, to make what’s possibly visible - why is a smart city useful to them - it's not just technological gadgets but it is supporting their quality of life " (Interviewee #5, 2017). 

Regarding awareness and motivation of stakeholders, the decision of whether or not to invest in smarter solutions and plans for low energy districts, is driven by many factors besides economic reasons. More factors are in play, other than simply cost reduction. Energy efficiency is often a minor factor, with a "low priority, simply because households (even the environmentally aware ones) are much more attracted to other attributes of the products (be it dwellings or vehicles), such as thermal, visual and acoustic comfort, aesthetics, health and safety " (City-zen, 2016b; HERON 2016a). In interviews of homebuyers, none of the owners had considered energy use in their purchasing decisions, while those customers that had installed efficiency measures stated that both thermal comfort and aesthetics were important drivers in addition to reduced costs (EASEE 2012; Tuominen et al., 2011). "Energy is regarded more as a public service than a valuable resource, which is difficult to change unless this implies a tangible improvement in the standard living " (BEEM-UP, 2014).

Motivation is also fed by the source of information - and the trust involved: "Even the best advice of the most competent professional will not be accepted, if it is not corroborated by the opinions and experiences of relatives, friends, [or] colleagues" (HERON, 2016a).

The abstractness of concepts such as sustainability and energy efficiency, may also hinder awareness and motivation for such plans. Research by Mörn et al. (2016) found that the engagement of residential tenants and their interest in visualised individual energy data for their households, depended upon how much information was presented and if this was easily understandable: “It could, for example, be difficult for many people to relate to individual kWh figures to understand the impact of their energy behaviour. Possibly, a larger focus on which effect the energy savings have on consecutive fossil fuel savings, or that certain savings correspond to 10 avoided hot showers or one avoided 10-mile car drive, could alter the tenants’ energy behaviour more".

Lastly, stakeholders often have to co-finance specific investments. Lack of awareness or motivation might preclude private investments in solutions for smart cities and low energy districts, especially when proposed solutions are insufficiently aligned with their respective interests. Including co-benefits in the plan, plays a central role in overcoming this barrier. 

After consultation with the stakeholders, the next TO DO is to include more spatial details in the envisaged actions in terms of neighbourhoods or building blocks, by making a geographical refinement of the specific challenges identified in the VISION stage. What is more, the potential impact of actions must be shown with the help of dashboards, urban platforms, etc. Such tools, for example based on Building Information Models (BIM) or Geographical Information Systems (GIS), can visualise specific local challenges and the potential impact at neighbourhood level. Information about the impact of contemplated solutions, might influence the choices to be made in the next TO DO. ICT tools showing the state of the current built environment with its energy and transport infrastructures, and analysing the suitability of various smart city solutions for specific areas, can help to develop a “common operational picture” and prepare for collective agreement later.

With more information what can be done where, the next TO DO is to create a comprehensive list of relevant on-going and possible new projects in transport, energy efficiency and RES, infrastructures and ICT, for instance, as included in the Sustainable Energy and Climate Actions Plans developed under the Covenant of Mayors for Climate & Energy. This is done together with the stakeholders. Plans are becoming rather concrete at this stage.

Indeed, the integrated approach – or cross sectorial approach – needs a complete overview of on-going/planned projects, in order to make the right decisions. Especially keeping a permanent holistic view on the different projects in different sectors, will contribute to an optimised alignment of the timelines, that will lead to saving time, money and resources, as well as ensuring the appropriate design/characteristics of future equipment/systems. 

A few typical examples:

• Developing new roads/streets and integrating other equipment when digging the ground (i.e. installing fiber optics, water supply pipes, district heating grid, gas distribution, electricity supply);
• Implementing a district heating/cooling grid and anticipating future retrofit of existing buildings (improving energy efficiency) and/or extension of the built zones, and/or installing solar thermal equipment on all buildings for hot water supply for instance, that will impact on the design and operational characteristics of the district heating equipment;
• Developing pedestrian zones and bicycle lanes in the city center, anticipating future mobility schemes (i.e. tramways, no traffic in city center, new shared/green squares).

In the DECIDE & COMMIT stage, exploration of the possibilities and conditions of different financial schemes have already taken place. Now, this TO DO focuses on making final choices for the financial models during implementation of the plan. Different groups of activities are part of this. 

Firstly, a detailed elaboration of costs and yields needs to be created for the projects on the list resulting from the previous TO DO. This means calculating key financial parameters such as capital expenditures (CAPEX), operational expenditures (OPEX), return on investment (ROI), profitability and so forth.

Many solutions for smart cities and low energy districts, have high initial costs and a questionable profitability. Cities' and investors' initial perception is of prohibitively high costs, whether upfront costs, initial costs, or overall costs, are a common issue facing projects at different stages of development and implementation. Factors affecting this perception include the methodologies for determining return on investment (ROI), including internal and external rate of return, as well as assumptions about interest and discount rates. Different ways to deal with high costs are:

• Public-private partnerships (PPPs) can often help overcome other challenges facing smart city projects, including lack of initial funding, lack of staff capacity, lack of technical capacity to develop and manage innovative projects. The PPP may transfer to the private sector a large share of the responsibility for developing, managing, and completing the project. But the private sector may only be willing to engage in a PPP if the "partnership structure assures a competitive rate of return compared with the financial rate of return they could get from alternative projects of comparable risk" (Stacey et al., 2016c);
• Bundling highly profitable project investments with less profitable or unprofitable elements can be a method for expanding the project while retaining profitability;
• Mixed financing from various sources and types of investors, and innovative business models where operational cost savings finance higher investments, or a longer time horizon for return on investment is accepted because of other advantages;
• Revolving funds, green bonds, crowd funding, pre-financing and subsidies;
• Sustainable procurement including environmental externalities. By monetarising environmental disadvantages of fossil energy use, sustainable projects are higher valued. 

However, also citizen stakeholders may have a perception of prohibitively high investment costs and prohibitively long payback times as a common issue facing projects where citizens co-finance the investments. This is often related to their socio-economic status and access to capital, motivation, problems organizing collective agreement and action, and lack of awareness of financing opportunities. Apart from stressing the direct co-benefits of the plan (Ferreira et al., 2015), the timing of investments can also provide an opportunity for less costly investments with shorter payback times. For instance, timing the integration of smarter technologies to replace an existing intervention (e.g. substituting PV roof tiles instead of normal planned roof replacement) to reduce additional costs can help alleviate some of the financial burden (R2CITIES, 2014). Usually, the “price” and the “location” are the most important criteria in the choice of a residential property when renting or buying, while the energy efficiency of the building and the energy costs, are considered of minor importance. Real Estate Agents tend to underestimate the role of energy efficiency as a factor in the total price, and attribute the higher value of a new property entirely to its newness. Possibly, this is the result of their extensive experience with trading existing properties, which have usually poorer energy efficiency. However, more and more studies at European level depict an emerging market for high-energy performance buildings, gaining a price premium, ceteris paribus, near 5 to 10% compared to low class rated properties, although this differs between the rental and selling market  (Pascuas et al., 2017).

Secondly, this information is used to assess the suitability of possible financial schemes. This entails also a proposal for sources of finance and funding. A wide range of possibilities  from within financial and funding schemes exists, see section 2.3. A financial readiness check can be instrumental to prepare requests for funding (see 3.3 Inspiration). Split incentives are a commonly encountered issue in smart city and low energy district projects, which is partly related to sources of finance (see Bird et al., 2012). It means that the actors financing the project, often a real estate developer or building owner, and the actors benefiting from the project, usually the tenants, are different. For these reasons, a fair division of costs and benefits must be part of the plan. It can be achieved by users contributing to the costs of the investment, ESCO’s, mixed financing business cases, sharing of profits according to investment, or energy-neutral rents (consisting of rent and energy costs together, where energy savings finance the refurbishment of the buildings).

Lastly, finance and funding organisations will ask for more information about the real and perceived risks associated with the projects on the list. Generally speaking, conventional solutions are often preferred by stakeholders in order to avoid unknown problems with innovative solutions, such as flaws in construction work or inadequate maintenance (HERON, 2016a). New or innovative solutions are considered to carry with them a higher implicit risk, and this leads to apprehension from many stakeholders, including public entities, private enterprise, the public, and financial lenders. Small-scale projects can provide a low-risk way for public entities to support test-beds for innovation; raise familiarity and skill levels by involving local partners in the project; reduce apprehension by verifying and validating the project claims; and alleviate unfamiliarity through public exposure and participation. Other ways to deal with innovative solutions perceived as too risky, are organising a better exchange of knowledge, and a a better integration of technological and financial economic knowledge e.g. investors and solutions providers. Ideally, possible risks should be roughly identified before negotiations with the preferred sources of finance and funding can start. Risk mitigation, contingency planning, and guarantees on performance of smart city and low energy district solutions help to make the envisaged solutions less risky.

In the end, this TO DO results in a choice for a financial model, i.e. a revolving fund, loan, grant, or mixed financing, and a (sub)plan for mitigating risks. 

One of the causes for this is the fact that the social and environmental costs of energy use are not included in the price. This reduces the value of saved energy, while increasing the relative price of renewables compared to conventional sources (R2CITIES, 2014), making it difficult to classify energy-saving measures within the standard financial models and valuation procedures used in finance (City-zen, 2016). 

Energy saving aspirations may provide net benefits to the city or the community, but will likely add costs that are difficult to finance through conventional mechanisms that do not value non-monetary benefits (Stacey et al., 2016a). In short, "the payback period for companies is too long and the risk too high" (Rivada et al., 2016). For citizens, this payback time may not be an issue from a true economic viewpoint - if the net present value over the lifetime of the investment exceeds the investment cost – but the lifetime of the investment may exceed the expected occupancy time of the homeowner. In this case the homeowner may move before their investment is recovered, and the selling price may not be expected to properly reflect the investment (EFFESUS, 2017). There may also be a perceived (or actual) negative effect on the value of a property due to project intervention (Di Nucci et al., 2010). This can include value or appraisal based on architectural features, such as the covering of external brick features due to the application of external insulation (and then stucco, paint, or another "lower value" covering).

Regarding split incentives, they reduce the attractiveness for the Real Estate Developer or landlord  of a prospective investment in a project or smart, energy-efficient solutions which do not provide many financial benefits (HERON, 2016b; City-zen, 2016; Rivada et al. 2016). Legislative frameworks play a role as well in this: In some cases the building owner is not allowed to reflect the investment in the rental price, and thus has no way to recoup the investment. In other cases, bilateral contracts can "easily arrange the transfer of money, [but] they do not solve the transfer of risks" (City-zen, 2016a).

New or innovative solutions are generally unproven and unfamiliar, and often considered to incorporate more implicit risk. This risk can manifest itself in apprehension from public entities to support innovative projects, hesitation from private enterprises to get involved in projects where they lack experience, unwillingness for public consumers (end-users) to support unproven projects, and increased costs (or outright refusal) for funders to back innovative projects. Innovative processes are inherently unproven and generally do involve increased risk of failure; especially compared to the existing approach or business as usual.

Public entities have several concerns, including fear of making a bad decision with public money and fears owing to lack of clear knowledge on costs and benefits, lack of experience combined with risk-aversion, fears owing to lack of clear knowledge on costs and benefits, and the fear of unforeseen or long-term risks emerging after project conclusion, which may trigger a loss of confidence and backlash against innovative projects (Rivada et al., 2016; EASEE, 2012). Private enterprise, including private partners in PPP, cite the public lack of demand and lack of internal awareness (esp. among architects and engineers) of innovative solutions (Rivada et al., 2016; EASEE, 2012). With respect to public consumers, the public may be reluctant to adopt, convert to, or invest in more innovative solutions due to scepticism, unfamiliarity, expectations of unpredictability, and concern over the reliability of new technologies (HERON, 2016a; MEnS, 2015; BEEM-UP, 2014). They may also lack willingness to try new things, or be comfortable in their routines and unwilling to behave differently or have to learn new skills. Regarding financial lenders: With the increased risks come increasing costs, and an increasing difficulty to secure funding. Much of this is due to the larger uncertainty inherent to the approach, leading to difficulty in properly characterising the financial situation within an acceptable range of certainty. Banks may be unwilling to finance innovative projects due to lack of knowledge and lack of experience" (Rivada et al., 2016; EASEE, 2012; BEEM-UP, 2014).

Now the financial for the envisaged projects is clear, the next TO DO is to reach agreement with the key stakeholders about which projects should be short-listed. In meetings and workshops with stakeholders, proposed projects on the list drafted for TO DO 5 have to be ranked according to their viability. Comparable to the DECIDE & COMMIT stage, where “routes” to solve the problems where prioritised, this is done by taking into account factors such as: 

• Maturity of the proposed project;
• Financial feasibility;
• Risks (not only financial, also other ones);
• Potential impact;
• Consistency with targets in general, overall city plan or vision.

After the ranking, the most viable projects must be selected. Usually, a couple of iterations is needed to come to an agreement about which proposed projects should be selected.  Co-design of the content of plans with other stakeholders, often in a couple of iterations, contributes to establishing the basis for collective agreement. 

After the best and most satisfactory project proposals have been selected, this choice must be approved by the politicians in the city administration, while key stakeholders should support this selection as well. They must approve the proposed projects and commit themselves to their realisation in future. This buy-in of the city administration and the key stakeholders, helps to secure budgets and human resources for realisation later. 

As mentioned earlier, in the field of smart cities and low energy districts, a common situation is fragmentation among a large number of different actors and a "lack of co-ordination/co-operation between multiple stakeholders and their interests" (Rivada et al., 2016). This situation is most commonly encountered in projects that involve renovation or retrofitting of multi-ownership buildings. In many countries, property owners within residential multiple ownership properties commonly (or are legally required to) establish an owners' association, condominium agreement, or housing cooperative to manage common building maintenance and utilities (EFFESUS, 2017; LEAF 2016). As part of these systems, owners generally make monthly or annual payments into a communal fund (and have a collective debt), to pay the costs of regular building maintenance, and cover unforeseen or future repairs. Existing management and funding systems also provide a vehicle for the organisation of collective action and for collective investments in smart city projects, such as energy efficiency and performance improvements. In the absence of an existing collective agreement, professional property management companies can also fill the gap and "be used as an organisational and financial vehicle for energy-related retrofits in the absence of building owners’ associations" (EFFESUS, 2017).

Organising collective agreements among the distributed owners and different actors in multi-owner buildings adds an additional layer of complexity to an already comprehensive process, owing to the diversity and divergent interests of the stakeholders (EASEE, 2012; EFFESUS, 2017). This challenge is often intertwined with the split-incentives issue, as "…owners are rarely a homogeneous group, but a mix of owner-occupiers and short- and long-lease landlords, and of different age groups and household forms" with "often different and opposing interests on how to develop their properties" (EFFESUS, 2017).

For most smart city and low energy district projects, the city administration is in a central position. Therefore leadership and political approval go hand in hand, and are crucial for a successful start and the realisation of the project. Besides, the buy-in of key stakeholders is needed: the proposed projects alter their living environments, and from a legal perspective, their approval could be even mandatory. What is more, stakeholders might have to bear a part of or the entire the financial burden. For all these reasons, stakeholders should be explicitly asked for approval, support and commitment, next to the city’s administration.

Now the most viable project proposals have been selected, preparation of the monitoring process can start. Usually this happens at interdepartmental city level with the help of sectorial experts. 

Monitoring is a necessary step for action plan and project management and permanent improvement. In the case of smart and sustainable cities and communities’ projects with a holistic approach, monitoring helps in achieving a consistent and systematic evaluation process:

• It clarifies programme objectives; 
• It links activities and their resources to objectives; 
• It translates objectives into performance indicators and sets values for targets; 
• It routinely collects data on these indicators; 
• It compares actual results with targets;
• It reports progress to managers, authorities and citizen; 
• It alerts them to problems. 

Translating objectives into performance requires an appropriate set of indicators, known as KPIs. These KPIs are characteristic indexes to be measured. They can vary enormously: from number of people using public transportation, temperature in buildings, number of public consultations, number of green areas and total surface, number of KWh produced by renewables, annual weight of residual waste per inhabitant, share of the population with internet access, annual GHG emission, number of e-vehicles in self-service, to air quality, noise levels,  etc… KPIs can be either quantitative or qualitative. 

At this stage, KPIs are considered which reflect progress, not only on the targets as defined early during the PLAN stage, but also capture co-benefits other than reduced fossil fuel consumption or less GHG emission: additional benefits, not only for citizens and other stakeholders (e.g. improved public spaces, less energy poverty, less air pollution), but also for the city administration itself (e.g. lower operational expenditures, smoother inter-departmental collaboration).

That the gathering of data for monitoring of smart city and low energy district projects, can easily lead to issues in the field of data privacy, was confirmed in interviews conducted for this guide. Smart city and low energy district projects often focus on data as a way to track activities, measure consumption, learn about usage patterns, and optimize solutions, but maintaining the trust of public and private entities with regards to privacy is of paramount importance in order to further these concepts. The project should be transparent about its data collection and use policy. One key player recommends that every dataset includes privacy considerations in its design and implementation. Privacy needn't dominate the discussion or lead the conversation astray, but it should be treated with the respect and importance that it deserves. Another key player stresses that open data should always be aggregated data and under no condition contain private information.

A standardized approach to data privacy could help resolve some of the apprehension and resistance to sharing information, but this "would need to be quite complex, since privacy within a dataset can be compromised by comparing data from other datasets", according to an interviewed key player. Other possibilities are application of technical measures as encrypting and improved security of for instance smart meters. During hackatons security of planned or deployed technology can be tested, and subsequently improved.

Some projects have found that not only are regulations concerning "data usage, protection, gathering and re-use of public sector information" inadequate, but existing regulations suffer from issues of noncompliance (Interviewee #1, 2017; Interviewee #2, 2017; Stacey et al., 2016a). Main concerns regarding data privacy shared by the interviewees are as follows: 

"Maintaining privacy of data while promoting interoperability is an issue" as are: "Property rights and privacy regarding prototypes" "Protecting the data itself" and "Gathering enough information, while remaining with the law regarding the profiling of people – which is forbidden by law".

"…every new dataset needs to consider privacy…never-ending but not enormous. It needs to be discussed and resolved with every dataset." "Privacy shouldn't be a showstopper…but it shouldn't dominate the discussion. It can lead the conversation astray" "Give the issue of privacy its proper place…not ignored but a showstopper…don't let the concern get out of hand and hinder progress on the issue".

"…the ones who are really concerned about privacy – including the project promoters and managers…so some of these are internal obstacles that are welcome in a way – you want to put out a good product that doesn't compromise security/privacy".

"Need to maintain trust…accept the concerns of the public/private…Worry about losing the trust of the public".

"Standardisation of approaches to privacy within datasets could resolve some of the resistance or conflict" "…but this would need to be quite complex, since privacy within a dataset can be compromised by comparing data from other datasets".

"on one hand, you want to collect a lot of information to make a smart city...on the other hand you don't want to infringe on people's private information".

The last TO DO for this stage is to start preparing contracts, public procurement, and public-private partnerships. Cities often have in place existing practices for procurement (the public purchase of work, goods or services from companies), but these are often incompatible with innovative solutions. They are based on an existing model of provision, and therefore support the business-as- usual situations better.

One approach to promote innovative solutions is to tender calls for solutions instead of specific products or services – in this manner the solution provider is allowed a wide range of options to meet the guidelines of the tender, and may develop new solutions outside the expectations of the tender (Stacey, 2016). Another approach is to include criteria for sustainability as energy efficiency, re-use and clean energy production in public procurement. 

Existing procurement models discourage innovation in both products and services by having a rigid model of providing for the specifications required (Stacey, 2016). Municipalities have little experience with alternative approaches, such as Public Procurement of Innovation Solutions (PPI) and Pre-Commercial Procurement (PCP), and therefore are unaware of the potential benefits (Rivada et al., 2016). "Public bid procedures can be very time consuming" (Interviewee #1, 2017). Regarding procurement – there is not really a specific actor tied to the obstacles, but more a problem of untangling the complexity (it's too difficult) (Interviewee #2, 2017).