Planning Tomorrow's Smart City

By Marketplace Editorial
EIP-SCC news

Planning Tomorrow's Smart City by EEBI Magazine, Energy Efficiency in Industrial Processes (EEIP)

The EIP-SCC Matchmaking Initiative is a tool to accelerate investments in the Smart City Panorama, which means improving services and infrastructures for a better quality of urban life.

As urban population increases but budgets are tight, the pressure for cities is now high. They need to turn quickly into smart cities, which means improving services and infrastructures for a better quality of urban life. Smart cities are featuring the European policy landscape since 2012 when the European Innovation Partnership on Smart Cities and Communities (EIP-SCC). Such Partnership is now becoming a major market-changing undertaking bringing together cities, industries, SMEs investors, researchers and other smart city actors. To better promote social and economic sustainability in cities across the European Union, during the General Assembly of June 2018, the EIP-SCC launched a new initiative onsite matchmaking programme to stimulate civic improvements by bringing together cities, industry representatives and motivated investors.

What is Matchmaking?

The matchmaking is designed to facilitate interactions between urban developers of smart initiatives on one side and the financial sector on the other, through one-to-one discussions. In such a programme, smart city project promoters are at the core of smart urban development plans and often are the players that bear the costs of such projects. Through the matchmaking, promoters can learn from the beginning about the opportunities to receive financial support and they become aware of all the conditions that financial institutions apply. Additionally, promoters can obtain productive feedback on their projects and can be supported in the identification and management of main risks. In other words, the matchmaking aims at giving participants a chance to create long-term relationships that can ultimately lead to actual financial support to the project. On the financiers' side, this programme is a great occasion to expand investment opportunities and a way to get in touch with relative players in the smart city project panorama. It allows investors to support projects from their very beginning and permits to choose the ones that fully meet the standards set by those investors.

What is the challenge being faced by project promoters?

At the current stage, two main problems are constraining the realisations of new projects in Europe. Firstly, it frequently occurs that projects developed without sufficiently considering the financial aspects from the early design phase tend to fail and public authorities can hardly intervene. This is due to financial constraints that usually make it either not possible or less efficient for public entities to sustain the investment cost of smart city projects with public debt only. Investments usually require high upfront capital expenditures, which would require diverting resources from other expenditures that municipalities have to sustain.

Secondly, despite the availability of EU funds being quite high now, a rather limited number of projects is eligible for funding. That is mainly due to three reasons: lack of standardisations in projects presentation, uncertainty about returns on investment and mismatch between projects' size (usually very small) and available funds.

In this regard, the matchmaking becomes the right place where projects that are currently being designed can be unveiled to several financiers and eventually meet the right investor. Financial institutions involved can play a key role for several reasons. They can anticipate economic resources in exchange for a long-term repayment schedule. They may be aware of schemes and opportunities to have private capital sustaining entirely or in part such cost ( i.e a pension fund involved in the matchmaking has just applied this business case for smart lighting in even small municipalities). In some cases, financiers can also choose to make a direct investment in the project ( i.e equity or quasi-equity), therefore bearing some of the costs themselves and not simply anticipating them.

It is clear that the range of opportunities is indeed very vast, and, most importantly, the matchmaking enables to create relationships between project promoters and financial institutions that can accompany the development of the project until its actual implementations, ensuring a successful financial support. 

An answer to the challenge - ICP

To further improve the matchmaking and to support project promoters and investors to solve the challenges identified, the EIP-SCC has started to collaborate with the Investor Confidence Project (ICP). The ICP is addressing the lack of standardisation and linked uncertainty about returns by providing protocols to standardise the project development process. These protocols, covering buildings, street lighting, energy supply and industry, are developed by European experts and equip project promoters with a best practice-based process alongside the entire project. From baselining to measurement and verification. Finally, a vetted 3rd party certifies correct application providing the IREETM (Investor Ready Energy Efficiency) Certification.

These are two key benefits for project promoters to use the ICP protocols

1. Access to the ICP investor network representing 1,4 billion EURO

2.Trust amongst their clients, the cities, that projects will deliver against promises

And there is free training and even free certification available until mid-2019 (ICP is an EU-funded project under the H2020 programme). Representatives from ICP will join EIP-SCC for the entire three days in Barcelona to explain the concept in more detail and to support EIP-SCCs matchmaking programme.

More investment in urban projects in Europe

The 2018 General Assembly provided a unique opportunity for smart city actors to meet, network, learn, shape views, develop plans, exchange best practices, present projects, find partners and stimulate discussions to help achieve the ambitious goal of reaching  1 billion EURO worth of smart city project investment s in 300 European cities by 2020. We are confident that our next event will result in an even greater success. It will take place during the Smart City Expo Wolrd Congress (SCEWC) in Barcelona, Spain, November 2018. The SCEWC is the perfect occasion to facilitate business interaction among smart city project developers and investors because it always succeeds in attracting thousands of smart city actors in a few days conference.

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