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

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.

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Fritz Feitien, June 5, 2019