Jack Eisenhauer

In my last post, I discussed the need to build more resilient urban infrastructure. But why are U.S. cities so important and why should we make them smarter?

In 2010, 82% of the U.S. population resided in cities, and it is increasing 1.2% per year. What’s more, 85% of GDP is generated by the largest U.S. cities and McKinsey projects these cities will account for more than 10% of global GDP growth in the next 15 years. This economic opportunity places additional needs and stress on existing—and often aging—infrastructure.

Smart Cities take advantage of the convergence of key infrastructures—principally electricity, transportation, water, buildings, information and telecommunication systems—to provide more sustainable, clean, resilient, and economically robust communities. The backbone of these infrastructures is an intelligent power grid that enables the two-way flow of electricity and communications from generation to customer. Smart grid and other intelligent infrastructures will also generate a wealth of user data that can be analyzed to deliver better government services, optimize response and recovery during emergencies, and offer new commercial services to customers.

Investment in intelligent infrastructure appears to be paying off. Take Chattanooga, TN. The city-owned Electric Power Board (EPB) invested $300 million to install fiber optic cable to all 170,000 homeowners and businesses. It was the first city in the nation to offer ultra high-speed internet service that is an astounding 200 times faster than the average broadband service. That investment supported EPB’s smart grid plan to reduce the impact of power outages. EPB received a $112 million Recovery Act grant from the Department of Energy, matched it with its own funds, and began installing 1,500 smart switches and sensor equipment for 164 distribution circuits.

When the June 2012 derecho storm hit Chattanooga, 30,000 customers—rather than an estimated 80,000 customers—lost power and the duration of the outage was cut by 55%, all due to EPB’s smart grid. Savings from this one storm was estimated at $1.4 million. EPB estimates that increased reliability from its smart grid investments will save businesses $35 million per year. Even more importantly, Chattanooga leveraged their super-fast internet and more reliable electric grid to attract new businesses, including Amazon and Volkswagen, and generated more than $400 million in new business investments and 6,000 new jobs.

In addition to Chattanooga, smart grid projects in Austin, TX and investments in smart water and communication infrastructures by IBM in South Bend, IN and Google in Kansas City, MO are showing that smart cities can also improve the social and economic well-being of its citizens.

Getting smart grid and smart cities right will take massive investments over long periods of time but the payoff for the nation, cities, and the public will be enormous. Smart move!