Spanish IoT maker Libelium, author of sensors and gateways for smart solutions, is a mainstay in the smart energy and smart cities spaces. Enterprise IoT Insights caught up with the company’s chief executive, Alicia Asín, to discuss dominant and emerging business models in the market. The interview forms part of the wider narrative in a new Enterprise IoT Insights report on smart city funding models, titled How to buy / sell a smart city – procurement models to make every city smart. The full report can be found here ; a webinar on the same subject can be found here.
How can medium / small towns get smart, ultimately – so it’s not just about megacities?
The size of the city does not matter, the problems are the same: pollution, traffic, mobility, safety, management of public resources. IoT technology allows any municipality to improve the use of public resources and explain to citizens why it is necessary to take certain policies such as restricting traffic in the city centre, selective waste collection or reducing energy consumption.
At the end, everything is a matter of measuring to have objective data and share information with citizens to create more liveable cities. Greater transparency and better democracy are the great legacies that the IoT will leave in this new era.
How easy is it to fund smart city solutions – generally, and versus tech in other verticals / environments?
Cities are increasingly using collaborative formulas for public/private financing, but we have to be realistic. Investments in IoT technology for cities have to come mostly from public funds because the return on that investment in most cases generates savings in the management of consumption and public resources that benefit the City Council and citizens.
Is it getting easier to make the business case? Is it easier to secure funding? Why / why not?
Nothing is easy in the business of smart cities. The important thing is to make public managers aware about what objectives they want to achieve with technological projects. The objective is far away from filling cities with devices to look good with citizens and simply say that they are ‘smart’. What is really valuable is to bet on projects that improve people’s quality of life and add value to the management of public resources.
Is this different by region? Is smart city building in Europe and the US different, and different again to Asia, Middle East, Africa? How?
Our customer experience tells us that the biggest investments are taking place in Asian cities. But the way projects are tendered is very different because political systems have nothing to do with every continent.
Are procurement and scalability the biggest barriers for smart cities now? Is the tech proven?
Libelium’s technology is more than proven and working in many cities. However, it is necessary for public managers to take the leap and expand pilot projects that they have already seen work for smart parking or water management or air quality index solutions and scale up the project throughout the city. This is the only way to ensure that the information is coherent and that the benefits reach all citizens.
Is a PPP / 3P arrangement essential for cities, or are they able to make the funding / investment alone? Are there disadvantages either way?
Public-private financing models run the risk of choosing proprietary technologies that make it difficult for projects to be compatible and scalable with future developments that want to be integrated into cities. However, there are solutions that do lend themselves to this model and can be very successful for both parties.
For example, in the case of smart parking, private management of public parking spaces could avoid a city council the initial disbursement of the technology in exchange for the management company assuming that cost for a long period of operation that allows it to obtain returns on investment through the consumption of users.
What is your experience of energy savings performance contracts (ESPCs) as a business model for smart city apps?
There are many applications of wireless sensor network technology in energy and water savings. An example is one of our projects developed to improve the efficiency and safety of water use in the city of Madrid, a project funded by the European Union. Cities are currently investing in improving their water distribution infrastructure including metering devices, being this one of the main applications in Smart Cities.
Do you offer cities a way to recover investment through advertising / marketing of data?
We are currently in discussions with a large outdoor advertising agency that is working with city councils in several European cities to offer the installation of sensor devices in marquees in exchange for advertising sites. So if it is a new model that could be implemented soon.
How are smart city projects being funded from the ground-up, through development and collaboration?
In 2011 we had the experience of designing affordable geiger counters for citizens in Fukushima, right after the tsunami that provoked the nuclear leak. After sending the first batch for free to a couple of ‘hacker spaces’, we observed how citizens were getting organised and publishing their data in an open map in the internet: they were creating and mainteining a live independent radiation map of the era.
That really showed us the way citizens want to be involved in their cities today. We have also seen nice projects in several Scandinavian cities were municipalities are sharing in Open Data format the data gathered by the city sensors in order to be more transparent and argument the decisions their made accordingly or even ask citizens what to do.
Which smart-city applications provide the clearest (‘hard’) ROI? What is their ROI / business model – was is the investment case for cities?
Smart lighting and smart parking are the most direct solutions to visualise the ROI. The first for the direct savings produced by the correct use of public lighting; the second for all the products and services associated with the parking nodes that can be deployed.
Which smart-city solutions provide the best additional (‘sof’t) ROI? How is this calculated?
Smart parking, since it allows instant monetization of the use of the service. The smart irrigation solutions that can be used in parks and green areas of the urban environment are also very profitable in order to have control of the state of the gardens and be able to optimize the consumption that irrigation entails. In average, they save up to 30 per cent of water supply.
Is there any question / doubt that cities should build a centralised platform to unite all its myriad data streams into a single data management engine?
There is no doubt it should be like this. And the same goes for hardware. City councils prefer to use the same hardware provider, instead of hiring one for each application. In this way, they avoid having to learn about different hardware platforms, different technologies, incompatibilities due to interoperability problems etc.
Since no one can provide absolutely everything, the challenge is offering interoperable solutions so that municipalities can run them as a single system, scalable and resilient to adapt to new technologies. Interoperability is one of the main goals for Libelium as well as provide anti-vendor blocking systems.
How are cities progressing with this? Is the ROI clear?
The return on investment of the technology that Libelium offers for smart cities can be measured from three different points of view: in terms of saving public resources, such as water, electricity, free parking spaces; in terms of new revenue opportunities for the municipality; and in compliance with current legislation, such as with environmental regulations.
With smart parking technology a city council can reduce traffic and gas emissions while providing the user with quick information on where to park, thus reducing energy consumption of fuels and stress levels of drivers. In addition, by knowing how to occupy the city’s parking areas, parking spaces reserved for the disabled, loading and unloading or taxis, you can foresee a better use of these urban spaces and thus obtain higher incomes.
And at the same time, it can favour new business models of companies that launch mobile applications so that users can reserve these spaces and link them to the advertising of the shops in the area.
Who owns the data from smart city solutions?
Cities usually own the data of the installed devices but citizens also have a great role in the contribution and management of the data generated in the cities. The increase and exchange of data provided by individuals and companies contributes to generating new business models in cities.
How should cities use / monetise this data?
By providing services that matter and reduce their costs – and hence, using that money into improving improving citizens lifes. Data can be easily transformed in a business case when information is transformed into something valuable for people.
Does the technology industry need to find a new way to sell to cities?
Probably. Normally the decision-making processes of public bodies are too long, sometimes as long as 2 years, during which time the technology has changed.
Do cities need to re-define their needs, and how they want to buy smart cities?
The public managers of the cities must have a greater awareness of what the investment in smart cities means. The purchase of devices and/or applications is not reduced to a single initial outlay, but to maintenance and renewal over time to ensure updated, quality data and continued over time. The data history is important and basic for decision making.
This is the full version of an interview that contributes, in part, to a wider Enterprise IoT Insights narrative on smart cities funding models, titled How to buy / sell a smart city – procurement models to make every city smart. Read the report here, and the webinar here. Sign up to the Enterprise IoT Insights newsletter here.
