Make The 'Smart City' Vision A Reality With Innovative Self-Funded Financing

By Fritz Feiten

“Smart city” technologies are on the minds of cities everywhere today. There’s no shortage of networks, end-point devices, software applications, and services to help cities upgrade infrastructure to conserve water, save energy, reduce costs, and improve efficiency. While the siloed nature of city government has historically impeded cooperation among different departments, the increasing proliferation of networks of street lights, water meters, and other devices is encouraging mayors, city managers, chief information officers, and other city leaders to remove barriers to collaboration so their cities can leverage a single network for multiple smart city applications.

One example of this is leveraging the same wireless network the water department needs for their advanced metering infrastructure (AMI) deployment for the municipal electric or gas utility’s smart meter project, the street department’s smart street light project, and to connect a variety of other smart city devices and sensors. To identify these opportunities, city and municipal utility staff, working with industry vendors, are beginning to define their joint vision of a smart city. All too often, however, the scope of these ambitious efforts is reduced, the timing extended, or the efforts are shelved entirely due to funding restrictions.

In the 2018 State of the Water Industry report, the American Water Works Association (AWWA) identified renewal and replacement of aging infrastructure and financing for capital improvements as the top two issues facing the water industry. The good news for cities and utilities with important capital improvement projects is that there are several innovative budget-neutral financing options available, including energy savings performance contracts (ESPCs) for projects that reduce energy and water consumption and power purchase agreements for solar and other renewable energy projects. An ESPC enables a city or municipal utility to upgrade their infrastructure and use guaranteed cost savings generated by the project to pay for it over the financing term. At the end of the financing term, the city or utility continues to enjoy the savings and other benefits, freeing the savings dollars for a reduction in operating budget or additional upgrade investments. 

Does A ‘One City, One Network’ Approach Make Sense? 

Will one network serve all a city’s needs? Probably not; network requirements can vary a lot from one application to another. Yet, there are many smart city applications that do not require high-bandwidth, low-latency networks. These include AMI for water, electric, and gas meters, street light monitoring and control, a wide array of environmental and other sensors, and even video applications where processing is done at the edge. By breaking down internal silos, defining the needs of different departments, and creating a “one city, one network” mindset for common low-bandwidth applications, a city can avoid the cost of purchasing and maintaining more networks than they need. In addition, leveraging a single network across multiple applications offers the opportunity to create a project that solves many problems under a single turnkey contract, while at the same time expanding the available funding options.

For example, a city that operates a water, electric, and/or gas utility, and owns its streetlights, can deploy a wireless network that supports AMI, along with leak detection and other capabilities, and provides monitoring and control of light-emitting diode (LED) streetlights. Often, the energy and maintenance savings from installing LED streetlights and the increased revenue from more accurate water meters can fund the project.

The City of Anadarko, OK, illustrates the benefits of this approach. Utilizing an ESPC with Ameresco, a large national energy services company, the City implemented a project that deployed a Sensus FlexNet network, installed 2,750 solid state water meters (300 with remote disconnect) and 2,515 electric meters with remote disconnect, and converted nearly 1,000 high-pressure sodium (HPS) streetlights to control-ready LED lights. In addition, the project automated the City’s billing system, reducing the burden on City staff and potential for human error, addressed accessibility issues for hard-to-access meters, and provides web-based customer access to water and electric accounts. Financed over 20 years, the project generates annual savings (in year one) of $254,508 with financing and AMI software-as-a-service (SaaS) fee costs (in year one) of $239,926 for a net annual savings of $14,582. This is just one example among many of AMI and smart LED streetlight solutions reducing the overall operating budgets of the respective city departments while facilitating future upgrade investments or investments in other areas needed within the city.

Additional benefits from deploying a multipurpose wireless network include the ability to deploy additional field devices and sensors that use the same wireless network for communications and data collection. The water utility could deploy pressure sensors to monitor the pressure throughout its distribution system (not just critical points), enabling the complete optimization of its pumping operations and further reducing energy costs while improving service to the community. Other examples include sewer overflow sensors that offer real-time monitoring to decrease response time, improve service, and reduce potential fines and penalties.

Thanks to the proven financing solutions available today, capital budget gaps don’t have to reduce the scope of your smart city project or delay its implementation. It makes sense to appoint a staff member or team to investigate financing options just as they would investigate available technology solutions. No matter the size of your city, there are self-funded project options you can utilize today to make it operate more efficiently and to provide its citizens a better quality of life.

Fritz Feiten, National Director, Smart City Solutions at Ameresco, works with Ameresco regional staff across the U.S. and Canada to identify, pursue, and capitalize on opportunities to implement smart city applications.