Smart Cities market to reach $1.565 Tr by 2020

Sydney, Australia

According to reports from Frost & Sullivan, the global smart city market will be valued at US$1.565 trillion in 2020. Over 26 Global Cities are expected to be Smart Cities in 2025, with more than 50% of these smart cities from Europe and North America.

By 2025, it is expected that around 58% of the world’s population or 4.6 billion people will live in urban areas. In developed regions and cities, the urban population in cities could account for up to 81% of total population. This will pose serious challenges for city planners, who will have to re-think how they provide basic city services to residents in a sustainable manner.

According to Mr. Ivan Fernandez, Industry Director for Frost & Sullivan Australia & New Zealand, Governments of smart cities are transforming from a traditional model of a silo-based organisation to a more collaborative, integrated service delivery model. Cities will collaborate with each other to drive smart city innovation by entering into partnerships with each other.

"Technology and ecosystem convergence, collaboration and partnerships between stakeholders from different industries, such as energy and infrastructure, IT, telecoms and government will also expedite the delivery of integrated services,” he states.

Smart cities are cities built on ‘Smart’ and ‘Intelligent’ solutions and technology that will lead to the adoption of at least 5 of the 8 following smart parameters—smart energy, smart building, smart mobility, smart healthcare, smart infrastructure, smart technology, smart governance and smart education, smart citizen.

Smart is the new green. There are significant opportunities to raise efficiencies in managing cities to make them smart cities. Smart Energy is the fastest growing market segment within Smart Cities and will be driven by the large scale adoption of smart grids and intelligent energy solutions. Smart Energy will make up 24% of the total global smart city market in 2025, growing at a CAGR of 28.7% from 2012-2025.

Mr. Fernandez continues, "In the last ten years, distributed energy generation is estimated to have more than doubled. Strong growth is expected to 2020, corresponding to nearly half of the increase in total electricity use. The game-changer will be electricity storage; it will help manage peaks, drive renewable energy uptake, support EV infrastructure.”

Miniaturisation, wireless-enablement and interoperability of sensors are key industry drivers that have allowed sensors to be part of building management systems. In 2012, the global market for sensors used in building automation systems was US$1.75 billion. This is expected to rise to about US$2.7 billion in 2016.

Smart Buildings will make up 7% of the total global smart city market in 2025, growing at a CAGR of 4.1% from 2012-2025.

Smart Infrastructure will make up 11% of the total global smart city market in 2025, growing at a CAGR of 12% from 2012-2025. Key parameters of Smart Infrastructure include sensor networks as well as digital water and waste management.  In Australia, 48% of all waste goes to landfill; in Sweden, that number is 1%.  "Sweden actually imports 80,000 tonnes of rubbish every year to meet their energy requirements. And they are paid to do it!” Mr. Fernandez says.

"Governments of cities should create a Smart City Stakeholder Group, encourage open collaboration and build digital infrastructure such as eServices and mHealth,” Mr. Fernandez recommends.  He continues, "The private sector on the other hand, should evaluate their role in the smart city market; build a ‘City as a Customer’ Strategy; identify potential partners, business models and consortiums; develop capabilities in data analytics and cloud-based services; and develop services as a business model.”

"For smart cities to work, begin with the end in mind. Tailor the technology solution to the DNA of the city; not the other way round,” concludes Mr. Fernandez.

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