Smart cities are coming, and electric utilities should become partners in ushering in this new era. A smart city connects the basic infrastructure of diverse neighborhoods and communities to drive operational excellence, revenue potential and sustainable customer lifestyles. Utilities are in a better position to benefit from this wave than telecom companies or big technology companies such as Google and Amazon. But utilities need to stake their claims now, or their natural advantages will fade.

Electric and gas utilities already have inherent advantages in enabling smart cities. High-capacity broadband is a fundamental part of a smart city. So, while utilities are developing new private networks and advanced technologies to meet the demands of more distributed energy resources, they can position themselves for smart-city opportunities. The formula for this approach can be expressed as distributed energy resources equal distributed generation plus demand-side management plus demand response plus storage.

Why should utilities consider helping to develop smart cities? Consider the following trends.

Operational Excellence Is Key

There are many smart-city projects currently underway, focusing on a specific application, from transportation and streetcars to parking sensors, EV charging stations, street lighting and high-speed internet access. All these projects need to be supported by smart utility infrastructure that promotes operational excellence.

Utilities already incorporate advanced technologies for mapping, meter reading and SCADA systems. These systems can be deployed to support smart-city applications by aggregating data and sharing system maintenance and forecasting. Smart-city data architecture will need to focus on common standards and communication protocols. This approach most likely will consist of a combination of local area networks, with take-out points connecting to a larger-fiber and microwave point-to-point backhaul network.

New Revenue Potential

The current model for how utilities earn on their investments will inevitably change. Traditional rate-base return on investment for “steel in the ground” will change. Electric utilities have the potential to become the center of smart cities with a new model to create shareholder value.

New rate structures and the ability to pursue new sources of infrastructure-related revenue will be fundamental. Some of those revenue sources are as yet unknown. Utilities today are well positioned to build out the necessary smart-city infrastructure, but they need to move quickly to beat their competition to market.

Sustainable Lifestyles

Consumers are increasingly interested in the concept of being a good steward of the environment, and utilities have a great opportunity to support sustainable lifestyles. They can gather and analyze data, helping to turn this usable information into sustainable action. From charging networks for electric vehicles to irrigation sensors for public green spaces, the possibilities are limitless.

The main challenge is that our legacy buildings and urban areas are not easily updated for today’s smart-city applications. Planning and designing a greenfield smart city would be less complex. Transitioning legacy buildings and infrastructure into the smart cities of the future will require creative solutions and innovative engineering.

Why Utilities Are the Most Logical Candidates

No one knows city infrastructure better than the local electric utility. For one thing, it already has a relationship with its customers. Further, it has a longtime focus on safety and reliability. Finally, local electric utilities own the rights-of-way and have franchise agreements as well as the equipment and crews necessary to deploy, operate and maintain smart-city technologies.

Utilities should start small, without losing the drive to think big. Pilot projects to plan and develop innovative smart neighborhoods should be developed in partnership with public-sector agencies and departments. By keeping the focus on easy-to-understand issues such as operational excellence, revenue generation and sustainability, smart utilities and smart cities will find more common ground. But someone must lead. Today, smart electric utilities have the best opportunities.

Mike Beehler is a vice president with Burns & McDonnell and has written and presented extensively on reliability-centered maintenance, program management and the smart grid. Meghan Calabro is an electrical engineer and assistant department manager. She has planned, designed and managed installation of complex system improvements for clients throughout the U.S.