THINK Smart Cities

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Smart Cities Initiative:

How to Foster a Quick Transition towards

Local Sustainable Energy Systems

http://think.eui.eu

Final Report

January 2011

Project Leader: Eduardo de Oliviera Fernandes

Research Coordinator: Leonardo Meeus

Research Team: Vitor Leal

Isabel AzevedoErik Delarue

Jean-Michel Glachant

Project Advisors: Christian von Hirschhausen

Pantelis CaprosTHINK is nancially supported by

the EUs 7th ramework programme


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http://think.eui.eu 3

Smart Cities Initiative: How to Foster a Quick Transition towards Local Sustainable Energy Systems

Contents

Acknowledgements 5Executive Summary 7

Introduction 9

1. Energy in cities: undamentals 10

1.1. Cities as energy systems 10

1.2. Cities as energy actors 12

2. Likely elements needed or energy in smart cities 16

2.1. Smart City concept 16

2.2. Building stock opportunities 17

2.3. Transport and mobility opportunities 21

2.4. City management opportunities 24

3. Key barriers and diculties 27

3.1. Market ailures 28

3.1.1. Economic type o barriers 28

3.1.2. Inormation and behaviour type o barriers 30

3.2. Institutional ailures 32

3.2.1. Not in my term 32

3.2.2. Not my business 33

3.3. Identication o the energy actions and respective potential barriers 33

4. Overcoming diculties with a local approach 33

4.1. Overcoming market ailures with a local approach: three levels o city smartness 33

4.1.1. First level o city smartness: leading by example 35

4.1.2. Second level o city smartness: governing the private urban actors 36

4.1.3. Third level o city smartness: integrated approach 37

4.2. Overcoming the institutional ailures o a local approach 38

4.2.1. City authoritys internal incentives 38

4.2.2. City authoritys external incentives 39

4.3. Limitations o a local approach 404.3.1. Institutional boundary conditions 40

4.3.2. Potential caveats o a local approach 42

5. Organization o the Smart Cities Initiative 42

5.1. Supporting a portolio o smart cities 42

5.1.1. Why to create a portolio o smart cities 43

5.1.2. How to support this portolio o smart cities 44

5.2. Guidelines or organization o the call 45

5.2.1. Reporting requirements 45

5.2.2. Rewarding perormance and innovation 46

5.2.3. Criteria to take into account when selecting winners 46

Recommendations 47

Organization o the Smart Cities Initiative 47

Increasing the impact o the Smart Cities Initiative 47

Reerences 48

ANNEX I: List o EU instruments, initiatives and partnerships mentioned throughout the report 54

ANNEX II: Industrial Council Meeting Summary 56

ANNEX III: Comments by Project Advisors at the Scientic Council meeting 58

ANNEX IV: Public consultation conclusions 61


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Acknowledgements

Tis work has been unded by the European Commission FP7 project HINK. Tis report has gone through

the HINK project quality process (http://think.eui.eu), but the conclusions and remaining errors are o course

the ull responsibility o the authors.

Te authors acknowledge the contributions by the chairmen and participants o the two meetings where dras

o this report have been presented and discussed.

First, the Industrial Council meeting, 6th o September 2010 in Brussels, chaired by Ronnie Belmans, where

the robustness o the preliminary results has been tested, with special thanks to expert panel consisting o

invited experts Alexis Robert and Roberto Pagani and project advisors Christian von Hirschhausen and

Pantelis Capros (Annex II). Tanks also to the members o the Industrial Council that contributed to this

meeting: Bart Boesmans, Christophe Bonnery, Armin Braun, Christiaan De Groo, Peter De Laet, Tierry

Deschuyteneer, Dario Garoalo, Georg Brodach, Isabelle Favier, Hubert Lemmens, Johannes Herold, Jean-

Marc Roudergues, Joost Van Roost, Joze Sannen, Marc rotignon, Magali Smets, and Paul ummers.

Second, the Scientic Council meeting, 14th o October 2010 in Brussels, chaired by William Dhaeseleer

where the rst dra o the report has been discussed, with special thanks to project advisors Christian von

Hirschhausen and Pantelis Capros to act as discussants o the report at this meeting (Annex III). Tanks

also to members o the Scientic Council that contributed to this meeting: Ronnie Belmans, Pantelis Capros,

Eduardo de Oliveira Fernandes, William Dhaeseleer, Drte Fouquet, Jean-Michel Glachant, Pter Kader-jk, Franois Lvque, Ignacio Prez-Arriaga, Pippo Ranci, Jorge Vasconcelos, Nils-Henrik M von der Fehr,

Christian von Hirschhausen.

Te authors also thank Serge Galant or organizing the public consultation (15th November 15th December

2010), and acknowledge the contributions by consultation respondents (Annex IV).


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Executive Summary

Cities represent simultaneously a challenge and an opportunity or climate change policy.

Chapter 1 introduces the undamentals o energy in cities, distinguishing between cities as energy systems and

energy actors. Cities are the place where most energy services are needed because urbanization is closely linked

to high population densities and concentration o economic activities and production (energy demand). Cities

are ultimately also responsible or the use o energy resources so that they increasingly pose a challenge to the

environment and to the quality o lie.

Chapter 2 discusses the likely elements needed or energy in smart cities, including: 1// opportunities within

the building stock (such as thermal retrot o the envelope and the use o solar thermal or domestic hot water);

2// transport and mobility opportunities (such as the shi rom individual to collective modes o transport);

and 3// city management opportunities (such as the shi among energy carriers).

Chapter 3 explains why the sustainable measures and technologies rom Chapter 2 have not yet been imple-

mented in every city, distinguishing between market and institutional ailures. Te main market ailures are the

economical, inormational and behavioural ailures that prevent cities as public actors and private urban actors

to act towards a local sustainable energy system. Te main institutional ailures can be simplied into not in

my term and not my business and apply to city authorities as institutions.

Chapter 4 investigates how the diculties and barriers rom Chapter 3 can be overcome with a local approach,distinguishing between three levels o city smartness. City pioneers have emerged thanks to a combination o

local circumstances and interventions by higher levels o government, and that a local approach also has its

limitations.

Chapter 5 proposes an organization o the Smart Cities Initiative based on the evidence collected in the previ-

ous chapters. A portolio o smart cities should be created and that the cities in this portolio should be given

the institutional exibility (i.e. the necessary human and nancial resources) to conceive and implement

concepts o city smartness, ocusing on the third level o city smartness, i.e. an integrated approach. Guidelines

are provided or the organization o the call that the European Commission intends to organize, including re-porting requirements, rewarding perormance and innovation, and criteria to take into account when selecting

winners.

Te report concludes that city smartness essentially stands or integrating concepts o sustainability in every

policy decision that is made on the local level (where timing is also o crucial importance) so that cities will be-

come institutions that accelerate rather than slow down the uptake o sustainable energy measures. Te report

nally provides recommendations or the organization o the Smart Cities Initiative and recommendations to

increase the impact o the initiative.


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Introduction

Te objectives o the European Union (EU) or the

year 2020 in the context o its program Climate Ac-

tion: Energy or a Changing World are to reduce en-

ergy consumption by 20% with respect to the 2020

business as usual orecast, to reduce greenhouse gas

emissions by 20% with respect to 1990 levels, and to

have 20% o total energy consumption in 2020 ob-

tained rom Renewable Energy Sources (RES). On a

longer time rame, even more ambitious objectives

will be required to go towards a near-zero carbon

energy system by 2050 (Jones and Glachant, 2010).

Te role o cities in achieving these EU energy policy

targets ollows rom 1// the need or collective action,

2// the relevance o an energy demand side approach,

and 3// the need or innovation in sustainable tech-

nologies and measures.

First issue is the need or collective action. Currently,

about our out o ve Europeans live and work in a

city, with the share o energy use in cities being aboutthe same (Eurostat, 2009). A global solution or cli-

mate change, even i achievable, would rely on the

participation o these citizens so that it is essential to

have policies at multiple levels, including at city level

(Ostrom, 2009)1.

Second issue is the relevance o the energy demand

side approach. With such an approach, the matching

o energy needs and energy options or supply (quan-titatively and qualitatively) at the local level can lever-

age the overall energy eciency o all energy systems

lowering the pressure on energy resources, bringing

local environment benets and, overall, ghting cli-

mate change.

1 Ostrom (2009): I the only policy related to climatechange was adopted at the global scale, it would be particularlydicult to increase the trust that citizens and rms need to havethat other citizens and rms located halway around the globe

are taking actions similar to those being taken at home.

Tird issue is the need or innovation in sustainable

technologies and measures. Teir development rom

research to demonstration and wide-scale deploy-ment is hampered by a combination o market and

institutional ailures. Recent theoretical advances

supported by empirical evidence, indeed emphasize

that innovation is a process where technology and

institutions co-evolve accumulating learning efects

so that the institutional setup is typically adapted to

and thereore avoring the old technological system

(Foxon, 2003; Geels, F, 2002; Lundvall et al., 2002;

Mytelka and Smith, 2002; Unruh, 2000)2

. In this re-spect, the role o city authorities is twoold as they are

both local energy policy makers that can be subject

to institutional ailures and energy actors that can be

subject to market ailures.

Te contribution o this report is to apply this analyti-

cal ramework to the Smart Cities Initiative to derive

recommendations or the organization o the initia-

tive (European Commission, 2009a and 2009b). Te

EU has already been successul in voluntarily com-

mitting city authorities to reduce their CO2 emis-

sions by at least 20% by 2020 (Covenant o Mayors).

Te EU Smart Cities Initiatives ambition is to speed

up this transition towards local sustainable energy

systems by supporting pioneering cities (European

Commission, 2009a and 2009b). Te EU is thereore

subscribing to the international trend o local gov-

ernments becoming more involved in climate change

policy-making and national governments supporting

this trend. Tis report then also builds on studies ana-

lyzing these experiences, such as Deangelo and Har-

vey (1998), Kousky and Schneider (2003), Betsill and

2 Foxon (2003): Following the evolutionary approach,much learning take place in connection with standard economicactivities, or routines, including learning-by-doing, increas-ing the eciency o production operations through experiencegained (Arrow, 1962), learning-by-using, increasing the ecien-cy o use o complex systems through experience (Rosenberg,1982), and learning-by-interacting, increasing eciency o the

system through user-producer interactions (Lundvall, 1988).


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Final Report - January 2011

Bulkeley (2006 and 2007), Bulkeley and Kern (2006),

Aall et al. (2007), Kern et al. (2007), Rabe (2007),

IEA (2008a and 2009a), Satterthwaite (2008), OECD(2010), Dodman (2009), Sippel and Jenssen (2010),

Croci et al. (2010), WEC (2010) and CEPS (2010).

Te report rst introduces cities as energy systems

or clusters o energy systems and, also, as political

entities, as truly energy actors o the overall energy

system, mostly ocused on the energy demand side

management (chapter 1: Energy in cities: unda-

mentals). Te report then discusses the most prom-ising technical measures or energy use and manage-

ment in the urban environment (chapter 2: Likely

elements needed or energy smart cities). Conse-

quently, the report elaborates on the market and in-

stitutional ailures that might prevent the wide-scale

implementation o these measures (chapter 3: Key

barriers and diculties), ollowed by an assessment

o the experiences with city authorities overcoming

these ailures (chapter 4: Overcoming the barriers

and diculties). Finally, this allows proposing an or-

ganization or the Smart Cities Initiative based on the

evidence collected in the previous chapters (chapter

5: Organization o the Smart Cities Initiative).

1. Energy in cities: undamentals

Cities represent simultaneously a challenge and an

opportunity or climate change policy. So, it is crucial

to clariy what is the role o cities within the worlds

energy systems and its relation with the climate

change issue and, then, what are the specicities that

make city level an appropriate level to act.

1.1. Cities as energy systems

It is estimated that currently more than hal o the

worlds population is living in cities, and urbanization

is expected to continue worldwide or the coming

years (United Nations, 2008; OECD, 2010). Within

the EU, high levels o population density and urbani-

zation are common characteristics in most countries,where over 70% o the population lives in cities. Tis

number is projected to continue growing to 80% by

2030, though the EU population is not expected to

increase in the ollowing decades (IEA, 2008c). Ur-

banization is closely linked with concentration o

economic activities and production (OECD, 2010).

ogether with the act that all resources aim directly

or indirectly to reach people, the natural dynamic is

that a large share o the available resources necessaryto the development and well being (such as energy,

water, ood, etc) converge to cities. Tus, cities are re-

sponsible or the bulk o the worlds energy use and,

consequently, or a signicant share o the worlds

greenhouse gas (GHG) emissions. Within the Euro-

pean Union, cities are responsible or about 70% o

the overall primary energy consumption, and this

share is expected to increase to 75% by 2030 (IEA,

2008c).

Cities expanding in size and population pose in-

creased challenges to the environment, o which en-

ergy is part as a natural resource, and to the quality o

lie. Nowadays, most cities have already understood

the importance o sustainability, both at their local

scale as in terms o their contribution to sustainabil-

ity at higher geographical scales. A trend exists to en-

courage cities to establish an inormal accountability,

e.g. through rankings o CO2 emissions per capita per

year. Tis accountability is likely to be rened in the

uture. Te act that cities gather a large share o the

population makes them responsible or also a large

part o the CO2 emissions and thereore makes cities

crucial elements to achieving the EU energy policy

targets. As stated in the An Energy Policy or Eu-

rope (European Commission, 2007c), the EU energy

policy is ocused on the three pillars o sustainability

(economic, social and environmental) aiming at tar-


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gets such as security o supply, reduction o energy-

related CO2 emissions and, additionally, the creation

o jobs and the promotion o entrepreneurship andinnovation.

Cities are the place where most energy services are

needed and are thereore ultimately responsible or

the use o energy resources. Even though these re-

sources are natural, i.e. part o the environment, they

are not all o the same nature neither do their uses

have the same impact on the environment. Some are

available locally or within the traditional city hinter-lands, while others are taken rom large distances;

some are o renewable nature and others are o ex-

haustible nature and usable through pollutant pro-

cesses, such as the combustion o all ossil uels. Tis

context prompts the prime relevance that shall be

given to the exercise o matching energy supply and

demand in cities. It requires the perception o a city as

a complex and dynamic ecosystem, an open system,

or cluster o systems, where the energy as well as the

other natural resources is transormed to satisy the

needs o the diferent urban activities (Oliveira Fer-

nandes, 1997, 2008). Tis ecosystem concept o the

city helps to understand how the inputs and out-

puts o this metabolic process are highly depend-

ent on specic characteristics o the city, such as its

physical, economic, social and cultural elements. In

act, buildings (including residential and services)

and transportation generally represent most o cities

direct energy demand, i.e., between 60% and 80% o

the overall consumption. Te amount o energy de-

manded rom both sectors is strongly linked to char-

acteristics, such as the climatic conditions, the urban

density and morphology, the practices o the building

construction, the main economic activities and cul-

tural habits, which are particular or each city (Ken-

nedy et al., 2009). Yet, there are substantial diferences

in nature as most o the nal energy consumed in

transports is ossil uels through combustion while in

buildings most o the nal energy is electricity still

obtained rom ossil sources also through combus-

tion.

Buildings, both residential and services are usually

inuenced by the local physical and social conditions.

Characteristics such as shape, typology, and solar ex-

posure and insulation levels cannot be the same all

over Europe. Instead they are adapted to particular

actors such as climatic and morphology conditions,

etc, to reduce heating and cooling needs. For exam-

ple, the optimal thermal insulation depends on ac-tors such as the outdoor temperature and solar radia-

tion. It is thereore natural that the optimal solutions

are not the same across all Europe. Also, some social

characteristics, such as the preerence or detached/

single amily vs. multi-amily buildings, amily size,

average income, and dwellings sizes, have an impor-

tant inuence on the energy demand rom buildings.

In Europe, there are signicant diferences on the av-

erage size o dwellings, creating diferent pressures

on energy needs or lighting, heating and, eventually,

cooling. Besides, buildings in cities make streets and

squares and modiy the climate in the urban environ-

ment contributing to the creation o microclimates

o higher polluted ambient air and with the so called

heat island, a local increase o the ambient tempera-

ture that can go up to 10C, compared to the tem-

perature on the periphery o the city. Tose phenom-

ena together with the street noise may lead to tighter

buildings and the adoption o heavy mechanical sys-

tems or climatization, representing an additional and

somehow unsuspected burden regarding the contri-

bution o the building stock to climate change.

In terms o transport, the energy demand is also

strongly linked with the specic characteristics o a

city (urban mobility). Urban density and CO2 emis-

sions tend to have a direct, inverse correlation: in gen-

eral, the lower the density o a city, the higher its emis-


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sions rom the transport sector (Figure 1), suggesting

that more compact cities are more energy-ecient re-

garding transport. Tis may be both because compactcities require inhabitants to travel lower distances but

also because compactness is essential to create critical

mass or ecient collective transport systems. Urban

planning and its impact on the urban tissue is thus a

key actor in the demand or transport. Furthermore

the planning is responsible by zoning diferent ser-

vices and conditions the movement o people and,

consequently, also the need or transport. Moreover,

the suitability o diferent mobility modalities, suchas walking and cycling, depends on the morphology

and dimensions o the city. Hence, the management

o energy demand benets rom being done at a city

level, which allows a tailored choice o the specic set

o actions to undertake based on the local character-

istics and expertise.

Furthermore, the possibility o coordinating urban

planning with the energy management should be

seen as an opportunity to link the needs o energyservices and the supply possibilities through a cus-

tomized approach considering the optimized use o

natural gas, as the cleaner transitional ossil uel, in

co- or tri- generation based urban networks and, also,

the locally available renewable resources, namely,

rom the sun and biomass.

1.2. Cities as energy actors

From an historical point o view, many European cit-

ies evolved rom medieval towns, according to the

human and physical actors that surrounded them.

Tus, though having diferent characteristics asso-

ciated to their own specicities, European cities are

usually compact. Te urban orm o these cities is

Figure 1. Relation between urban density and transport-related energy use Energy spending per habitant, in tonnes oil equiv-

alent per year (horizontal axis) vs density o the urban zone, in inhabitants per hectare (vertical axis) (Newman and Kenworthy,

1989)


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strongly constrained by their past, which in terms o

orm has positive consequences on their energy de-

mand when compared, e.g., with American townsthat grew essentially aer the spreading o the auto-

mobile led by cheap oil.

Major events such as the First and Second World War,

that afected all o Europe, also strongly inuenced

the current tissues o cities. Various cities were dev-

astated and a large share o the existing building stock

was destroyed. Tis prompted to the construction o

entirely new city blocks and the complete renovationo large urban areas during the 50s and 60s. Many o

these buildings and open spaces were not signicant-

ly modied until today. Meanwhile many other cit-

ies ollowed a similar path while planning new urban

extensions in the 50s and in the 60s. Tus, the histo-

gram o the age o the existing building stock within

European cities is very particular; there was not a nor-

mal evolution o the stock turnover, implying that a

large share o the built environment is about 50 years

old (about the middle o its lietime), presenting poor

thermal conditions as energy was extremely cheap

in that era. During these two decades, there was also

a boom o social housing constructions, both in the

ormer Western and Eastern Europe, oen without

proper urban planning and with very low thermal

perormance.

In act, building thermal regulations were introduced

only rom the 60s, e.g., in Germany and France with

more consistency aer the oil crises o 1973 and 1979.

Te current best practices already allow or new or

retrotted buildings heating needs below 15 kWh/

m2.year in Central Europe. Yet, the needs o energy

to heat buildings over 50 years old are oen above

200 kWh/m2.year, and even those complying with

the rst enorced regulations are oen still above 100

kWh/m2.year (IEE, E-Retrot-Kit). Tus, European

cities ace great challenges in terms o energy needs

when acing the renovation o the existing building

stock, challenges that are very similar among them.

Te difusion o best practices could thereore ben-et rom those similarities. Te recent recast o the

Energy Perormance o Buildings Directive (91/2002

EC) constitutes a promising ramework or the over-

all perormance assessment o the EU building stock

regarding energy and environment, including indoor

air, a source o many recognized negative health e-

ects. Without stating the limits or the perormance

levels or the diferent Member States, the trend is

most probably that buildings end up by having, overtime, the same levels o energy consumption with

diferent levels o insulation, the payback justiying

e.g. over 20 cm thicknesses in the Northern latitudes

against 5 to 10 cm in the Southern.

Furthermore, there are governance issues that prompt

the city level as an appropriate level or action (aer

all, energy is oen also a city based commodity), see

Figure 2. Local authorities have responsibilities re-

garding land-use planning and management o re-

sources (such as soil, water and waste) that interere

with the main activities in a city, its urban orm and

the use o resources (Dodman, 2009). As previously

seen, it inuences directly the needs or transporta-

tion and establishes a pre-condition or the potential

o energy eciency o buildings. Te municipalities

are typically in charge o the buildings licensing.

Tey are at rst instance responsible or checking i

the new and retrotted buildings comply with inter-

national or local requirements, and in some cases they

may even require perormance levels or new build-

ings stricter than the national standards and create a-

vourable conditions. Regarding the transport sector,

they can have an important role in their management

too. For example, cities oen manage directly the bus

and tram eets, they decide on corridors or buses

and other collective or so transportation modes, etc.

Cities may also condition private trac, e.g., through


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paid parking and entrance ees or vehicles coming

rom outside the citys boundaries. Tereore, since

city authorities directly afect the sectors responsi-

ble or the largest share o energy use (buildings and

transportation), their responsibilities must also in-

clude the management o the energy demand.

Moreover, city authorities are themselves energy us-

ers, through buildings and municipal eet ownership,

public lighting, street semaphores, etc. Tis consti-

tutes an opportunity or environmental responsible

public procurement leading by example. For instance,

local authorities can adopt the best lighting practices

in their oce and other institutional buildings reduc-

ing their energy demand and prompting other citi-

zens to ollow their example. Additionally, cities are

the administrative level closest to people. Tis allows

or a better understanding o the social and cultural

dynamics, avouring the adaptation o the city and its

energy services to the population needs.

Nevertheless, it is important to consider that city au-

thorities have to act within the boundaries o policies

dened at higher levels. For example, the rules o the

emerging EU energy market (electricity and natural

gas) and the national energy policies can condition the

perormance o a city by namely afecting energy price

signals. I the price o some energy carriers (e.g., elec-

tricity), does not reect their carbon content and other

environmental loads, city authorities may have great

diculties on persuading their citizens to use the most

sustainable solutions through the proper choice o en-

ergy vectors. Additionally, the electricity mix is meas-

ured at a national level, and so, two diferent cities, one

belonging to a country whose electricity is mainly pro-

duced rom ossil uels and other with electricity mostly

generated rom hydro, with the same level and patterns

o energy use may end up with very diferent levels o

CO2 emissions per capita. Tat would require that due

account o the primary energy balance or each coun-

try or city must be considered, in line with the balance

o the CO2 emissions and in parallel with the balance

Figure 2. The role o cities as energy actors


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o the nal energy. Te non clarication o this issue is

also a barrier to the establishment o proper policies

and to the adoption o the most suitable practices orthe sustainable use o energy.

Te concentration o people and economic activities

as well as the high level densities that characterize ur-

ban areas constitute an opportunity to the innovative

orms o organization o energy supply and demand.

One good example is the implementation o local co-

or tri-generation with district heating and/or cooling

(CHP) to supply energy. When it is possible to ndclients or the heat (and/or the cold) nearby, this way

o co-generating electricity is overall more ecient

than the large-scale centralized power plants, where

the produced heat is dissipated in the environment.

Additionally, cities can also work as a test market or

certain innovative technologies and/or policy actions

(Alber and Kern, 2009). Cities have the competences

and authority needed or the implementation o dem-

onstration projects in order to test the social response

to certain technologies, such as electric vehicles and

smart metering. Te analysis o the outcome o such

projects might help in the creation o strategies or

the wide-scale deployment o innovation technolo-

gies. Furthermore, this suitability is also valid or

testing the political response o innovative regulatory

and policy actions (Lutsey and Sperling, 2007).

Besides their key role through the ecient manage-

ment o energy demand, cities can also act to promote

the use o locally available renewable energy resourc-

es (RES), even i the issue o on-site renewable energy

sources is not specic or urban areas. Yet, in some

cases, some ambiguity may rise when using the words

supply/demand or decentralized RES. Solar panels

or domestic hot water production, or instance, sub-

stitute the supply o electricity or gas (supply energy)

while reecting the expression o a decision rom the

demand side. oday there is a vast set o renewable

technologies, some clearly suitable or urban areas,

such as solar thermal or hot water, and others thatbenet being installed outside cities boundaries,

such as large-scale solar PV and thermoelectric or

wind arms or electricity generation. Te suitability

o these technologies also depends on the resources

available locally or within the city hinterland. For

example CHP running on biomass may make sense

only i there is biomass grown nearby. Nevertheless,

there are still plenty o opportunities on local renew-

able energy resources that shouldnt be underesti-mated at all. Solar passive (e.g. using the control o

solar capture to decrease articial lighting, heating

and cooling needs), or example, is an efective way o

using natural energy resources to reduce the building

needs o conventional networked energy services or

lighting and heating and cooling comort. Another

implementation o the use o RES with high potential

in cities could be the solar thermal or domestic hot

water. Te amount o energy used or heating water is

signicant in cities, at least in some climatic zones. A

large share o it could be provided in a cost-efective

way by solar thermal collectors. Regarding the use o

solar radiation to supply electrical energy photovolta-

ics will become suitable or use in cities as prices o

the technology go down, in particular, when taking

into account the integration o PV panels in build-

ings as a substitute o other materials in the envelope.

Tat way it is possible to achieve a win-win situation

reducing the use o material resources and increasing

the use o RES without contributing to congestion in

the electricity grid. Tis is thereore one o the areas

where the public procurement role o city authorities

may be very important. Yet, giving the lasting transi-

tion period rom ossil uels, it is wise not to devalu-

ate the relevance o all eforts towards the reduction

o the energy needs or each building or activity, be-

ore one starts designing and sizing renewables to be

added on the energy providing systems.


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2. Likely elements needed orenergy in smart cities

2.1. Smart City concept

Te term Smart City has been used in academic re-

search and also as a marketing concept used by com-

panies and cities, but a denition has not yet been

established (Caragliu, 2009). Tere are three main

characteristics that seem to be common to most uses

o the expression, which are i) riendliness towards

the environment; ii) use o inormation and commu-

nication technologies as tools o (smart) management

and iii) ultimate goal o sustainable development.

Te European Smart Cities Initiative is ocused on

the sustainability issues o the cities and, more spe-

cically, on their energy systems (European Commis-

sion, 2010a). In this case, a Smart City is implicitly

dened as a city that improves the quality o lie and

local economy, through moving towards a low carbon

uture. Investments in energy eciency and local re-

newable energy, with consequent radical reductions

o primary ossil orms o energy and o CO2 emis-

sions, are seen as tools that help achieving sustain-

ability and quality o lie in a city. A prospective Smart

City is thereore considered as a pioneer city that

undertakes innovative measures, also at the energy

demand side level (involving energy networks, build-

ings and transport) to strongly reduce the use o ossil

uels and CO2 emissions by reaching targets statedor 2020 and beyond and boost its economy through

the use o energy under a sustainable approach.

Each city has specic characteristics regarding its

physical and human geography. Also, cities in di-

erent countries and diferent regions receive energy

rom diverse nature and quality. Tis act generally

results in cities having diferent perormances regard-

ing the supply and use o energy, and thereore, the

most appropriate set o measures to improve their

perormances also difers. Nevertheless, a set o core

technical energy measures that more oen leads to alow carbon uture and towards a sustainable supply

and use o energy can be identied. Te term techni-

cal energy measures is used here to reer to the meas-

ures o physical nature, to separate them rom the

policy measures or promotion mechanisms that

intend to put the technical measures in place. How-

ever it is not limited to the introduction o technolo-

gies, but includes also management strategies with

an expression in the physical world, e.g. the shi opeople rom individual to collective transportation.

Tese measures might be combined in diferent ways,

i.e. not all the measures are a good option or all cit-

ies in all latitudes, in order to adapt to the specici-

ties o the citys energy system prole. Nevertheless, it

is expected that the set is varied and comprehensive

enough so that the main technical energy measures

or actions that any city needs to adopt in order to sig-

nicantly improve its energy perormance is included

in this set.

Te elements listed below are grouped in three cat-

egories o opportunities: i) the building stock; ii) the

transport and mobility; and iii) the city management

opportunities. Te order by which they are listed

bears in mind some rationality in terms o priority

o intervention versus its impact on the objectives o

energy eciency and/or CO2 reduction. Te exploi-

tation o renewable sources doesnt appear necessarily

to be an upront rst priority or cities, given the limi-

tations o the urban context and also their cost and

less assimilated technology and culture. As a matter

o act, while the EC targets o 20% less CO2 and 20%

more energy eciency are reachable as a result o

the direct efort, or most cities, the target o 20% o

renewable energy only seems to be reachable in the

short/medium term as a consequence o the national

policies. However, independent o the technology,


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promotion and development o renewable should not

at all be dismissed, as its development, in principle,

contributes to both objectives above.

2.2. Building stock opportunities

In the building stock, a city o today may have to con-

sider three major universes with specic aspects to be

addressed. First group are the new and great rehabili-

tated buildings, o institutional, oce and other ser-

vices character. All those cases may need, depending

on the climate, ull climatization and other special en-ergy intensive eatures thus ofering a wide spectrum

o challenges or innovative energy technologies to

reduce the energy needs and the demand rom the

energy networks (net zero energy building concept)

as well as or reduction o CO2 emissions. Te second

group are the new residential buildings, where pas-

sive and other solar derived technologies can be used

to approach energy needs as low as 15 to 30 kWh/

m2.year almost everywhere in the EU. Te third

group presents the existing housing buildings, to be

retrotted. Tis is a major task or Europe, where so-

lutions must be somehow in between those relating to

the other two groups, i signicant energy and CO2

reductions are to be reached without jeopardizing

comort and healthy environment indoors.

When reerring to energy use in buildings all energy

used is commonly attributed to buildings not dis-

tinguishing between the energy used by buildings to

ulll their unction as structures to behave as shelters

(lighting, heating, cooling and, in general, good in-

door environment) and the energy uses related to the

activities in the building (appliances, kitchen, media,

computers, etc.). Yet, when addressing the building

perormance it is meaningul to be able to separate

the building abrics, structure and architecture (ori-

entation, openings, orms, claddings and color solu-

tions) rom the systems added on or comort, be it

just heating or ventilation or ull air conditioning.

All the above makes up a wide spectrum o issues and,even wider, o solutions drawing on benets rom

the progress in knowledge (technologies and other

tools). At the same time, barriers o being innovative

are aced by the actors o the commercial and techni-

cal proessions on the eld, not prepared to consider

those innovations as more than just devices (gadget

culture), i.e., as opportunities or systems with a per-

ormance that can be assessed and monitored.

Thermal upgrade o the envelope o existing

buildings

A building has a typical lie span o over 50 years,

while it is considered that a complete stock renova-

tion under natural circumstances would take about

100 years (Philibert, 2002). Note urther that about

75% o the buildings stock that will still be around

in 2050 has already been built today (Urge-Vorsatz,

2007; Ravetz, 2008). Tereore, in order to obtain

quick results, besides increasing the level o demand

on perormance or new buildings, there is also the

need to consider the improvement within the existent

building stock. In act, the built environment repre-

sents a great opportunity or reductions in the energy

demand, as there is a substantial diference between

the energy perormance o buildings built some dec-

ades ago and current practice, and there are already

techniques available to retrot existing buildings to

the passive house level (IEE, E-Retrot-Kit, 2005).

aking into account that buildings are responsible or

about 40% o the whole nal energy use in the EU

(IEA, 2007c) and that about 50% o this value corre-

sponds to the demand or space heating and cooling

(IEA, 2008d), thermal retrotting can lead to signi-

cant reductions in the energy demand. Te losses o

heat through the envelope o existing buildings may

be reduced by thermal improvements regarding es-

sentially walls, glazing, windows and doorrames.


18/65



Tere are also measures that can complement the

improvement o thermal insulation and contribute to

the reduction o cooling energy needs. Te control othe impact o the solar radiation by shading the win-

dows and other glazed suraces to reduce the cooling

needs is one o the most efective.

From an energy system perspective, and even ac-

counting that the best-practice level cannot be

achieved in all existing buildings due, e.g., to limita-

tions o the building architecture, a massive upgrade

o the thermal perormance o the existing stockmight correspond to a reduction o at least 50% o

the energy demand or heating and cooling in cities,

which in turn would correspond to between 10% and

20% reduction in the overall energy demand in cities.

Upgrade o lighting in buildings

Te technology and design practices regarding energy

eciency o articial lighting has improved dramati-

cally over the last 20 years. Tereore, lighting ecien-

cy is a demand-side measure that must be considered

when the aim is to reduce the energy demand in a city.

Compact uorescent lamps (CFLs) are ar more e-

cient than incandescent lamps, and additionally there

is the promising LED lighting technology.

Besides the change o incandescent lamps or other

more ecient types, there is also the possibility o

catching properly the light o the sun in order to de-

crease the need or articial lighting during daytime.

Nowadays, there are commercially available automat-

ically controlled lighting systems that increase and/or

decrease the articial light intensity according to the

natural light available. Appropriate lighting controls

can yield substantial cost-efective savings in energy

used or lighting purposes.

Considering that in some commercial buildings the

energy used or lighting purposes can represent al-

most 50% o the overall energy demand, a huge re-

duction can be achieved just by perorming lighting

improvements.

Solar thermal or domestic hot water

Domestic hot water is one o the main energy uses

in all residential buildings and in many non-residen-

tial buildings as well. Since there is no need or high

temperatures, there are relatively simple and mature

technologies in the market which can provide exactly

the same service as conventional energy carriers such

as electricity or gas. Because solar radiation may notbe enough during some days o the year, it is still nec-

essary to have a conventional source with an auxil-

iary system. Although recently many systems or this

purpose with biomass boilers (especially pellets) or

ecient air-water heat pumps appeared on the mar-

ket, the shi to solar thermal or hot water produc-

tion can result in a reduction o 40% to 90% o the

energy demand or domestic hot water, depending

on the climate. Considering that domestic hot water

typically accounts in the EU or about 15% to 25% o

the primary energy use in a residential building that

already has an ecient heating system, this option

would represent a reduction o around 10% to 20% in

the overall primary energy use o a household.

Such type o a decentralised thermal solar system that

has been already installed in some countries by mil-

lions o square meters (Austria, Germany, Greece, Cy-

prus, etc.) is denitely a must in every housing unit,

at least o the Southern and Central Europe. Never-

theless, it must be taken into account that, depending

on diferent local conditions, the cost-efectiveness o

this solution is not always obvious; there are certain

actors, such as climate, typology o buildings, cost o

conventional energy and, o course, initial investment

cost in the market that lead to diferences in the tech-

nical and economic perormance o the technology

rom city to city, i.e. rom region to region. Even so,


19/65



the use o solar thermal or domestic hot water is in

most cases already cost-efective.

Boilers (biomass and condensing) and chillers

(absorption chillers)

Energy used or heating and cooling purposes rep-

resents or the whole European Union a large share

o the nal energy consumption in the building sec-

tor. Tereore, all the equipments that are commonly

used or these purposes should be optimized in their

dimension and their use taking advantage o the en-

hancement o the thermal quality o the buildingenvelopes in order to reduce the overall energy con-

sumption.

In terms o space heating, there are several technolo-

gies available on the market with better perormance

levels than the conventional boilers (running on

natural gas). Biomass boilers, e.g., are available on

the market rom 2 kW onwards; and these can be in-

stalled during a buildings reurbishment, in substitu-

tion o ossil uel boilers since the heat distribution

installation and radiators are the ones used with the

previous installation. Condensing boilers can also

be an option. Teir advantage is that they are able

to extract more energy rom the combustion gases

by condensing the water vapor produced during the

combustion, achieving a uels eciency higher than

conventional boilers. Also, in this case, the replace-

ment o a conventional boiler by a condensing one

does not imply major changes on the rest o the heat

distribution installation; and the price o a condens-

ing boiler is not signicantly diferent rom that o a

conventional one.

For cooling purposes, the technology o absorption

chillers might be a good option. Te electricity con-

sumption associated to the use o absorption chill-

ers is almost negligible; in a simple efect absorption

chiller e.g., the energy can be provided by solar ther-

mal collectors or residual heat and the sink o energy

can be a cooling water tower or a lake. Since these

devices are available or power classes rom 5-10 kWto hundreds o kW, they can be used to produce cold

or industry, buildings and/or the tertiary sector.

Heat pumps

Heat pumps are a very well known solution or heat-

ing and cooling purposes. Tey are composed by two

heat exchangers: in winter, the heat exchanger located

outdoors will absorb heat rom the environmental air,

transerring it to the indoor exchanger to heat the in-door environment; and, in summer, the role o each

part is inverted. Tese devices can be used to produce

heated and cooled uids with particularly high e-

ciency rates.

Heat pumps perormance depends on both indoor

and outdoor air temperatures; the smaller the di-

erence between those two values, the higher the e-

ciency o the heat pumps. Tereore, it is convenient

to reduce the diference between them as much as

possible to increase their perormance. A possible so-

lution to increase typical perormance value is to use

the ground or ground water as a source in winter and

a sink in summer o heat, since at a certain depth the

ground temperature doesnt sufer signicant uctua-

tions throughout the year. Te electricity consump-

tion in this case could be 25% lower than the case o

an air-water conventional heat pump (able 1). Tis

reduction is higher than the case o an air-air cycle or

which general data is not available.

Mechanical ventilation with heat recovery and

ree cooling

With mechanical ventilation, it is possible to ensure

a certain air ow and to decrease or even eliminate

uncontrolled inltrations o air through the envelope.

Tis oen allows lower average air exchange rates

than with natural ventilation, resulting in lower de-


20/65



mand or thermal energy or comort. Furthermore,

i both air supply and exhaust ducts exist, it is possible

to install a heat exchanger (heat recovery) between

them. Te use o mechanical ventilation with heat re-

covery can signicantly decrease the heat losses, and

thereore, the energy demand or heating purposes.

Yet, this ventilation system requires additional elec-

tric energy or operating the ans. Tereore, the e-

ectiveness o this system in terms o primary energy

is not guaranteed under all conditions: it tends to

render positive results in cold but neutral to negative

results in mild climates.

Free cooling is a process that can also be linked to

mechanical ventilation but with cooling purposes.

Within this concept, the air ow is increased, by elec-

tric ans, when the indoor environment needs cooling

and the outdoor air temperature is relatively low. As

or heat recovery, a trade-of is needed to be assessed

i the energy saved by the decrease o cooling needs

compensates or the additional energy used by the

electric ans.

Ecient electrical appliances

Another key issue regarding the decrease o energy

use through demand-side management measures is

the exchange o old electrical appliances or new and

more ecient ones. In residential buildings, the share

o electrical appliances in the overall consumption has

been rapidly increasing, corresponding to 21% o the

nal energy demand3. Tereore, the improvement o

their eciency represents signicant potentials or

energy demand reductions. For example, in case o

rerigerators, the energy demand o one labelled A++

is typically less than hal o one labelled B (Figure 3).

For commercial buildings and some service build-

ings, such as bars and restaurants, the impact o elec-

trical appliances on the overall energy demand can

be even larger, and thereore also the importance o

their eciency.

Figure 3. Table with the energy consumption index o rerig-

erators, according to their labelling (Europes Energy Portal,

2010)

Passive buildings

Te building sector is considered by the IPCC as the

one with the highest CO2 mitigation potential as well

3 2005 value or countries within IEA19 (IEA, 2008b)

Table 1. Comparison o the perormance (in terms o primary energy) o a conventional boiler, a condensing boiler, a heat pump

and a ground heat exchanger to generate 1 kWh o nal energy (Covenant o Mayors, 2010)

TechnologyFinal Energy

(kWh)

Performance

Ratio1COP2

Primary Energy

Factor

Primary Energy

(kWh)

Primary Energy

Saved (%)3

Conventional Boiler (natural

gas)1 92% - 1 1.08 -

Condensing Boiler

(natural gas)1 108% - 1 0.92 -14.8%

Heat Pump (electricity) 1 - 3 0.25 0.5 1.32 0.66 +22% to -38.8%

Ground Heat Exchanger

Pump (electricity)1 - 5 0.25 0.5 0.8 0.4

-25.9% to-62.9%

1 Based on the Lower Heating Value (LHV)

2 (Coecient o Perormance) This ratio is a unction o the outdoor temperature or ground temperature.

3 (-) is saving and (+) is wasting in comparison with the rst case o the table.


21/65



as the one with better results or lower investment lev-

els (IPCC, 2007), i.e. most o the technical measures

to reduce CO2 emissions within the building sectorhave a negative cost, indicating a net benet to the

economy over the liecycle o the measure (see Fig. 6).

New buildings typically last between 30 to 50 years

beore a major reurbishment is carried out; so, the

choices made at the initial design and construc-

tion have a crucial impact on the buildings energy

demand or a long period. Meanwhile, with current

knowledge and materials, it is possible to achieve analmost 100% passive level or new residential and

many non-residential buildings in most o the range

o European climates4. Passive buildings are build-

ings that maintain indoor comort temperature with

only very little energy needs (e.g. less than 15 kWh/

m2.year or heating). Yet, i this represents nowadays

the best practice, its spreading under the market con-

ditions could be very slow, rst o all because o the

act that most o the building stock is already built

and, also, because the proper good practice that a-

vours its generalization is not yet in place. Tereore,

the enorcement o higher perormance standards

through building codes or new buildings, i.e., stricter

than the ones at the EU level (European Commission,

2008), has a very important role on the reduction o

energy demand within the building sector. Besides,

this could contribute to promote innovation and cre-

ate new jobs related to the integration o new tech-

niques in buildings design and the development o

new materials and also in existing buildings.

Smart metering

Te implementation o advanced meters or smart me-

4 For low energy buildings the additional upront costhas been estimated in a range o 3-10% or the United Kingdom,France, Portugal, Spain and Italy and 4-6% or Germany, Aus-tria, Sweden and Switzerland where more o these houses havealready been constructed (Attali and Pindar, 2007; European

Commission, 2009c).

ters, which are capable o collecting interval data and

remotely communicate with the meter agencies, can

be designed to be also used as tools to improve loadmanagement, avouring a smarter use o energy.

Tese metering technologies would allow the adop-

tion o active demand response strategies, enabling

end-users to control the use o their appliances, e.g.

according to price signals. Possible efects can include

lowering system peak-load levels or lowering overall

demand, by inorming consumers about the cost o

electricity (Olmos et al., 2010). Smart metering can

urther be useul to manage micro-generation andlarge-scale generation rom RES, avoiding network

congestions and optimizing the balance between sup-

ply and demand.

Yet, it is important to mention that smart meters

alone do not necessarily cause a decrease o the en-

ergy demand. In order to achieve this it is necessary

to also incorporate mechanisms to make customers

aware o their (in)eciencies and/or o controlling

automatically some equipments. Nevertheless even

i not coupled with overall reduction o energy use,

load management alone already brings some advan-

tages such as ensuring security o supply with a small-

er capacity margin.

2.3. Transport and mobility opportu-

nities

Te transport sector is, aer the building sector, the

second main originator o energy consumption and

cause o CO2 emissions in a city. It is somewhat more

challenging than the building sector in the sense that

most o the measures that can signicantly diminish

their consumption o ossil energy implies measures

that take long time to produce efects, changes o at-

titudes or introducing technology that is not yet ully

mature.


22/65



Lowering the mobility needs

Te rst measures to consider when aiming at the

reduction o energy use within the transport sectorshould be the reduction o the transportation needs.

Tere are several actors that inuence these needs:

some are social characteristics, such as populations

age, average income and wealth; others regard physi-

cal specicities, such as climate conditions and citys

topology; others, such as the distribution o diferent

activities among the territory and citys density, are

mainly linked to urban planning issues.

Among these actors, urban planning is currently

done at the city level; city authorities are usually in

charge o the land-use planning within citys bound-

aries, and the inuence o urban planning issues in

the demand or transport is unquestionable. Tere

is a undamental relationship between transporta-

tion and land-use, because the distance between ones

origin and destination will determine the easibility,

route, mode, cost and time necessary to travel rom

one place to another (Wegener, 1995). For example,

in a compact city where residential areas are devel-

oped at a walking distance rom acilities such as

hospitals, schools, commercial stores, the demand

or transport would be highly reduced. Additionally,

an integrated planning including both land-use and

transport may lead to strong reductions on travelling

needs, as illustrated or a specic example in able 2.

Shit rom individual to collective transportAdditionally to the reduction o the demand or

transport, it is possible to reduce the energy inten-

sity associated to transportation, i.e., to reduce the

amount o energy needed to perorm a certain jour-

ney. Concerning passenger transportation the shi

rom private to collective transportation modes

seems to be the most efective in achieving this goal.

Within the EU, 73% o the annual passenger.kilome-

tres are rom individual road transportation, i.e. in-dividual vehicles, while 8% and 6% are, respectively,

rom collective road and rail transport and only 1%

is attributed to metro and tram passengers (Euro-

pean Commission, 2009d). However, the energy in-

tensity per passenger.kilometre (pkm) o most types

o collective transportation is much lower than or

individuals. For example, in Western Europe, collec-

tive transports have, in average, less than hal o the

primary energy intensity per passenger than that as-

sociated to individual transports (Figure 4); and, in

Eastern Europe, this diference is even more evident

(Kenworthy, 2003).

Besides the decrease in energy use or transport

purposes, the increase on the number o citizens

choosing collective modes o transport instead o in-

Table 2. Travel impacts o Land-Use Design Features (VTPI, 2005)

Design FeatureReduced Vehicle Travel

(%)

Residential development around transit centres 10

Commercial development around transit centres 15

Residential development around transit corridor 5

Commercial development around transit corridor 7

Residential mixed-use development around transit centres 15

Commercial mixed-use development around transit centres 20

Residential mixed-use development around transit corridors 7

Commercial mixed-use development around transit corridors 10

Residential mixed-use development 5

Commercial mixed-use development 7


23/65



dividual motorized vehicles might also lead to an im-

provement in the quality o lie. Firstly, the decrease

in emissions o pollutants related to transport would

improve air quality in the city and the avoidance o

congestions would contribute to decrease the average

time o journeys.

Diferent modes o collective transport might be suit-

able or diferent cities, or even diferent groups o

people within a city (Kenworthy, 2003). For example,

rail is good or long distance journeys that are com-

mon to a large number o people, such as the daily

pendulum movements in-and-out o town, while

metro and bus are more suitable or journeys within

the citys boundaries. In case o journeys common

just or ew citizens, car-pooling, i.e. the sharing o

individual cars among people that intend to do the

same or a similar journey, might be the best option.

Additionally to the shi rom individual to collective

transport, there is also the opportunity to improve

the eciency o the latter. Tis could be achieved by

the use o IC inrastructure to predict journeys and

common movements within the city, leading to a bet-

ter balance between supply and demand. Besides be-

ing an improvement by itsel, this could also work as

a motivation or people to shi to collective modes o

transport.

Sot modes o transport

Enabling the use o so modes o transport, such as

cycling and walking, within the city is a way o im-

proving quality o lie whilst reducing air pollution.

Tese are individual modes o transport, i.e. they still

have the independency o route and schedules o the

individual vehicles, but, at the same time, they do not

require ossil energy and are not harmul to the envi-

ronment.

Due to the cities density, there are several short dis-

tance journeys that could easily be travelled without

the need o any motorized vehicle. Obviously, the

Figure 4. Energy intensity o dierent modes o transportation in Western Europe (Kenworthy, 2003)


24/65



suitability or walking and cycling is inuenced not

just by the distance between origin and destiny but

also by other actors, such as the existence o specicpaths, the topology o the city, the travellers condi-

tions. Nevertheless, i the citizens are aware o the

benets o choosing these modes o transport instead

o others with higher energy intensities and city au-

thorities are able to provide the necessary conditions

or them to walk and to cycle, it is possible to make

these as the primary modes o transportation within

the urban context. For example, in Zurich, there are

several hills and the weather is not the most attractiveor people to cycle during winter, and still the share o

passengers using the bicycle as their main transporta-

tion mode is very signicant. Additionally, both cy-

cling and walking can also be used as an intermediary

mode to reach/exchange between mass transporta-

tion modes, such as train or metro, promoting inter-

modality and the use o diferent modes o collective

transport. With the use o an integrated approach

between transport and land-use planning, it would

be possible to develop routes matching most citizens

daily journeys that would only include the use o col-

lective transportation modes and small walking and/

or cycling travels to link diferent modes.

Integration o electric vehicles in the urban en-

vironment

Electric vehicles are conceptually seen as a key-in-

strument to decrease the pollution within cities and, i

coupled with urther promotion o non-ossil energy

based orms o generation o electricity, may also lead

to a signicant decrease o the CO2 emissions. Te

large-scale deployment o electric vehicles in cities is

a subject that has been largely discussed and there are

already some pilot projects in European cities. Teir

suitability or the city scale is mainly explained by the

limited battery storage capacity, which constraints the

use o this type o technology or long-distance jour-

neys. One should, however, also take into account that

in a city the number o residents having access to a

parking spot where the vehicle can be charged during

the night (e.g., a garage), might be limited. Within amedium-size city, however, the daily journeys o most

drivers do not exceed 50 to 80 km. Tereore the rst

generations o electric vehicles are capable to provide

this service without the need o being charged during

the day.

2.4. City management opportunities

Shit among energy carriersTere are several orms o bringing energy or provid-

ing energy services to the end-users: electricity, gas,

heated or cooled water, solar radiation, etc. Tese are

the so-called energy carriers or orms o nal energy.

However, these carriers must be produced rom pri-

mary sources available in nature, or harvested rom

renewable ows sometimes with relatively low e-

ciencies as in the case o conversion into electric-

ity. Tereore the eciency o the conversion rom

primary to nal energy (and then to useul energy)

strongly depends on the energy carrier used. I the

resource is a uel, the ineciency means pollution

burden at all environmental scales and, i the re-

source is renewable the ineciency may represent

just a (temporary) barrier to its economical easibil-

ity. A system approach requires the search o the best

match between energy service and energy carrier, and

oen this is achieved by shiing to the most suitable

vector to provide a specic end-use. As examples, so-

lar thermal collectors bring heat rom solar radiation

(rom both direct and difuse radiation) into domes-

tic hot water at a temperature close to conditions o

use while PV installed in a house produces electricity

rom direct solar radiation at a quite low eciency

and can be linked to the grid and may be orced to

inject all its production into the grid. Combined heat-

ing (and cooling) and power production, is another


25/65



type o way or converting a uel, nowadays, mostly

biomass or natural gas into electricity, a universal car-

rier, plus hot and cold water or heating and coolingpurposes (see below). In most cities, there are (or can

be developed) distribution networks or several o the

energy carriers, thus enabling the opportunity o such

shis.

Te energy needed or heating purposes, e.g., is one

o the biggest opportunities to the shi among car-

riers e.g. by shiing rom electricity to natural gas

or even solar thermal. Cooking, or example, is oneo the energy uses where ewer energy comparisons

have been made; in countries where more than 30%

o the electricity is generated rom thermal power

plants, gas has an advantage over electric plates or

cooking purposes.

Upgrade o street and trac lighting

As or articial lighting indoor buildings, technology

or street lighting has evolved considerably in the last

years and this area ofers signicant opportunities or

improvements. Furthermore, some improvements

such as the use o more ecient ballasts or adequate

control techniques are also suitable to avoid the ex-

cess o electricity consumption.

Meanwhile, the replacement o incandescent halogen

bulb trac lights by more energy ecient and dura-

ble LED yields a signicant reduction on the electric-

ity consumption with this purpose. Besides the sig-

nicant reduction in electricity consumption, there

are also reductions on the maintenance costs, due to

the higher durability o LED. Te management o the

street lighting inrastructure is typically exclusive o

city authorities, which increases their ability to take

measures.

Combined heat and power with district heating

and cooling

Te undamental idea o combined heat and power(CHP), also known as cogeneration, is to produce

electricity in places where there is demand or the

heat generated during combustion (that cannot be

transormed into work, due to thermodynamic and

technological limitations), which is dissipated to the

environment in conventional power plants. Trough

a district heating network, the recovered heat can be

used to provide several heating services in buildings,

being domestic hot water and ambient heating. Con-sidering that only a small raction o the heat released

in the combustion cannot be used, due to technology

limitations, CHP can generate heat and electricity in

an exergetic more ecient way compared to separate

generation. Understandably, the economic viability o

CHP has been higher in the Northern climates, where

the need or heat is more expressive.

Nevertheless, besides the use o heat or domestic

hot water and ambient heating, the increasing de-

velopment o absorption chillers technology made

it possible to use heat also or delivering cold water

and thereore provide cooling. In this way the district

heating and cooling (DHC) networks coupled with

tri-generation may be options or a wide range o cli-

mates.

Te eciency o CHP depends on the efective use o

the recovered heat, so this implies that in a city CHP

must be linked to a network o DHC. Due to the com-

pactness and density o cities, the city or neighbor-

hood scales seems to be the right geographical level

or this type o networks. Since there is a signicant

demand or energy or acclimatization within a small

area, the heat and cold produced do not have to travel

long distances rom the plant to the user, avoiding

high losses to the environment (Figure 5). Te overall


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lowering o ossil energy enabled by this technology

can be even better i the uel used is renewable, such

as biomass or waste.

Electricity generation rom renewable sources

in the urban environment (Micro-generation)

Te generation o electricity rom renewable energy

sources (RES), which usually occurs in develop-

ments outside cities such as dams in river basins or

wind arms in the countryside, may also occur in the

urban environment. In buildings, or example, solar

PV panels can be integrated in the building surace

or sometimes even replacing other envelope materi-

als and the electricity generated can be used locally

or injected the distribution network. Te same tech-

nology can also be used or supplying electricity to

street lighting and trac lighting, substituting the use

o electricity rom the grid. In what concerns wind,

there are many commercial micro-turbines available,

although the act that wind within cities is oen ei-

ther weak or has poor characteristics, creates di-

culties or integrating wind micro-generation in the

urban environment.

Te suitability o RES micro-generation thus strongly

depends on the citys conditions, both climatic and

morphologic. For example, the typical annual solar

radiation and the solar exposure o most buildings are

characteristics that rmly inuence the efectiveness

o installing solar PV on buildings tops or aades.

Currently the mid and large size generation units out

o the citys boundaries involve technology that are

more mature and a larger scale avours eciency and

lowers operational and maintenance costs. Te cost-

efectiveness o renewable generation still tends to be

avourable outside the urban environment, especially

i close to already existing power transmission or

distribution lines. o conclude, the uptake o several

RES technologies in the urban environment might be

hampered because o two main reasons (Coenraads

et al., 2007; Ragwitz et al., 2007; European Commis-

sion, 2007a and 2007b; IEA, 2008b; Martinot et al.,

2009). A rst issue is that RES is not so easy to in-

tegrate in the urban environment because o its low

energy density (at least compared to ossil uels). Te

second issue concerns the act that RES technologies

oen require connection and access to the existing

local energy networks that are oen congested (e.g.

electricity grids (Meeus et al., 2010)) or simply miss-

Figure 5. Sankey diagram comparing conventional power plant with combined heat and power technology (IEA, 2008e)


27/65



ing (e.g. district heating and cooling (Constantinescu,

2006; IEA, 2007b)).

Development o smart grids

Te possibility o large-scale integration in the distri-

bution networks o electricity generated in the urban

environment, e.g. rom RES micro-generation and

micro-CHP, requires management capabilities that

the current distribution networks do not have. How-

ever models and demonstration projects o such grids

have been developed and can be considered as being

in a pre-commercial stage. Besides enabling a higherintegration o micro generation, smart grids may also

enable better quality o service, e.g. quicker rebound

aer occasional interruptions. Tey may also be im-

portant to enable the best strategies or the charg-

ing o electric cars i the number reaches signicant

shares in the vehicle stock.

Inormation and communication technologies (ICT)

Many o the technical measures explained so ar can

have their efects maximized i managed in an e-

ective (smart) way through the use o inormation

and communication technologies. Examples are the

possibility o collective transport customized in real

time according to the demand, the management o

electric appliances inside buildings and the operation

o smartgrids. IC could also play a key role in the

dematerialization o citizens daily lie, substituting

high carbon products and activities by low carbon

alternatives. For example, one o the largest opportu-

nities identied within dematerialization is telework-

ing, where people work rom home rather than com-

muting everyday into an oce, reducing signicantly

the needs or transport. Furthermore, the role o IC

on raising the awareness to climate change problems

should not be disregarded. Tese technologies pro-

vide the opportunity to measure and inorm private

citizens as well as businesses on their own ootprint

and their contribution to GHG emissions. Tis could

be important to mobilize people to be more active on

reducing their energy needs. Regarding these IC

possibilities, the EC is engaged in a orum towardsthese aims, i.e., the IC or Energy Eciency orum

(IC4EE).

Still, it is important to reer that IC is not a techni-

cal measure in itsel in what regards the energy e-

ciency o cities. It should be considered as a useul

tool to enable or optimize the technical measures pre-

sented previously. Its integration in diferent sectors

and activities might be very helpul to reduce energydemand. However, one should also bear in mind that

IC in itsel can become (and even already is) a major

consumer o electricity (Koomey, 2007), with poten-

tials or higher eciency in itsel.

3. Key barriers and diculties

In general, the implementation o the technical energy

measures or actions outlined in chapter 2 have been

acing diculties and barriers o diferent natures,

which explains why the wide-scale implementation

o most measures is not in place yet. Te barriers are

not the same or all the technical options (depending

also on the actors involved) and are urther common-

ly interrelated, i.e. with the cumulative occurrence o

some diculties others may become more relevant.

Tis chapter rst discusses the key diculties corre-

sponding to the uptake o technical energy measures

by urban actors (market ailures). Second, the causes

and proles o the disincentives o city authorities to

move towards sustainability are identied (institu-

tional ailures).

Note also that increasing the uptake o energy ecient

technologies does not necessarily reduce, or not in the

corresponding proportion, the use o energy because

there is a so-called rebound efect, i.e., the money sav-

ings rom a higher eciency can also increase the de-


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mand or new or upgraded energy services (Brookes,

1990). Tis efect can be signicant (Greening and

Green, 1997; Binswanger, 2001; UKERC, 2007).

3.1. Market ailures

A possible way to categorize the barriers designated

market ailures is to divide these into two categories

according to their type or character i) economical;

and ii) inormational and behavioural. Te ollow-

ing sections address the main diculties and barriers

aced towards the wide-scale implementation o thetechnical energy options previously presented. Tis

analysis is based on academic research as well as on

previous experiences rom pioneer cities.

3.1.1. Economic type o barriers

Economical actors are believed to be very inuen-

tial on the success or ailure o the wide-scale imple-

mentation o most o the technical energy measures.

Te economic viability o measures is very relevant

or the wide-scale implementation o certain meas-

ures. Oen, this implementation can occur naturally

without the use o promotion mechanisms other than

inormation, i the cost-benet analysis is clearly a-

vourable, the upront cost is low and the return-on-

investment period is short. But the usual situation is

not that simple and transparent.

Price distortions

For various reasons, there are situations where the

price or certain energy carriers or services does not

reect their actual cost. Price distortions are not ex-

clusive or the energy sector but in this specic sub-

ject they can raise important barriers to some o the

proposed measures. Tese distortions can result in

prices being articially low. Tere are diferent pos-

sible causes or the later: it may derive rom an in-

complete internalization o the externalities into the

prices at the end-user level, e.g. neglecting environ-

mental costs; or, it may also be a consequence o sub-

sidies or other nancial support at the national level.For example, in Portugal, the national government al-

lows the electricity sector to accumulate a debt to the

tarif in order to keep the electricity prices lower than

their due supply cost. So, under this scheme, electric-

ity may be cheaper during some periods o the day or

o the week than natural gas or, at least, with such low

price diferences that there is no stimuli to shi rom

electricity to natural gas or heat services.

Meanwhile, the prices or energy services can also be

kept articially equal across time and space, though

it is known that there are signicant diferences in

the supply costs at diferent times o the day or even

between urban and rural areas. One o the possible

causes is the partial regulation o most energy ser-

vices which creates a regulated tarif, applied at a na-

tional level. Also, since most energy services are con-

sidered as a primary need, it is common to consider

a unique price or all national territory to promote

equity and avoid disparities. Finally, this articially

uniormity also derives rom the lack o real time me-

tering, i.e. especially small-scale consumers typically

pay uniorm prices not reecting actual supply and

demand conditions.

Cost-eectiveness perception

Te possibility o recovering the amount o money

invested within the lietime o the technologies in-

volved is one o the most relevant actors when de-

ciding whether to invest or not. Indeed, some o the

measures reported in chapter 2 are not cost-efective

at the current energy prices, while or others the cost-

efectiveness is not always obvious or not enough at-

tractive to mobilize (Figure 6).

Tere might be diferent causes or a technology or

management measure not being clearly cost-efective.


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Tese are oen divided between issues o technology

maturity and o market uptake.

Issues o market uptake reer to products that can be

economically competitive but only i sold with signi-

icant scale. Tis seems to be the case o solar thermal

collectors or triple glazing; these solutions are com-

petitive in markets where it has become largely adopt-

ed, but they remain uncompetitive in markets where

the numbers sold are very low and thereore require

the xed costs to be distributed amongst low num-

bers o units sold. Issues o technology immaturity

reer to cases in which, even i sold in high numbers,

the manuacturing cost is higher than that o com-

petitor technologies (e.g. current PV technology). Yet

there are recent experiences by which national pro-

grams to stimulate the difusion o solar thermal col-

lectors ended up by increasing signicantly the price

o the equipment and the cost o the installing and

banking services. All intermediary were claiming to

be entitled to take a share on the subsidy (Solar Ter-

mal Program, 2009).

It must however be noted that most cost-efectiveness

studies are perormed at current energy prices, even

or projects whose lie-span or efect in time are some

decades. Tis is somewhat questionable as it is largely

anticipated that energy prices in the uture tend to be

higher than today. And, certainly, in the uture a more

rigorous accounting o the environment externalities,

such as CO2 emissions, will impact more on some

energy costs.

Figure 6. Global cost curve or greenhouse gas abatement measures (McKinsey, 2009)


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High-risk o investments

Investments with high-risks involved are usually re-

lated with measures that involve extremely variablecosts/prices, or with technologies that are not su-

ciently tested to have predictable perormances. Most

actors are not willing to cover that risk, requiring that,

in order to invest, some other entity covers the risk.

High upront costs

Te requirement o high upront investments is very

common when dealing with energy ecient and RES

technologies. Oen such up-ront investment capital isnot available and cannot be obtained rom nancial in-

stitutions, even i these investments allow or an inter-

esting return in the uture. Many actors typically preer

the opposite when purchasing an appliance, acility or

inrastructure (Jafe and Stavins, 1994; European Com-

mission, 2006; Schleich and Gruber, 2008; Eichham-

mer et al., 2009; IEA, 2009b). For example, in many

countries the investment in micro-generation is highly

subsidized and, co

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