Cities and Urbanization

Here’s how to build energy infrastructures fit for the future

Solar system installer Thomas Bywater adjusts new solar panels on the roof of a house in Sydney August 19, 2009.  REUTERS/Tim Wimborne    (AUSTRALIA ENVIRONMENT ENERGY) - GM1E58J163L01

Smart, local energy networks can optimize local electricity supplies in urban areas. Image: REUTERS/Tim Wimborne

Cedrik Neike
Member of the Managing Board, Siemens
Our Impact
What's the World Economic Forum doing to accelerate action on Cities and Urbanization?
The Big Picture
Explore and monitor how Cities and Urbanization is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Cities and Urbanization

This article is part of: World Economic Forum Annual Meeting

One key characteristic of modern civilization is its dependence on critical infrastructures such as those used for providing power, transportation and water. These infrastructures are becoming increasingly complex, intelligent and interconnected.

Will these advances also make systems more vulnerable to technical risks and external threats? Or could growing technological sophistication actually make these integrated systems more resilient? The example of energy infrastructure reveals evidence of both aspects.

The transformation of energy

The world of energy is undergoing a massive transformation. It is moving away from fossil fuels and a centralized supply provided by a few power plants andtowards renewable energy sources like wind turbines and solar power systems, in conjunction with storage technologies and a distributed structure.

 A massive transformation in the way we produce and consume electricity is underway
Image: Siemens AG

On top of these significant shifts, a broad range of energy consumers are expanding the ways in which they use electricity – for example, in heat pumps, electric vehicles and power-to-X technologies. That’s why people around the world are increasingly talking about the emergence of an “all-electric society.”

This transformation presents us with major technical challenges. Uncoupling energy generation and consumption in terms of both time and space makes systems considerably more complex - and this complexity increases with every new distributed unit that is incorporated into the energy system.

Germany – an energy-transformation pioneer – had about 1,000 large power plants supplying electricity to its industrialized economy in the early 1980s. Today, it has 1.7 million ‘plants’ generating electricity, including many solar-power installations on the roofs of private homes. The resulting rise in complexity makes maintaining stable grid operation costlier and more difficult. In particular, the costs of expanding the grid and managing its capacities are climbing.

The more we know, the earlier we can react

On the positive side, these new assets – which now tend to feature digital connectivity – enable us to gain ever-deepening knowledge of the systems, especially in the case of systems that were not previously equipped with sensors. And the more we know, the faster we can detect problems and intervene with a remedy – or save time and money by performing maintenance or upgrades before a disruption occurs. So end-to-end digitalization and networking will not only offer greater efficiency and transparency, but will also provide a basis for creating infrastructure that’s more robust and more flexible – and thus more resilient.

In many cases, added technical complexity brings the advantage of greater flexibility. This flexibility then enables large, integrated systems to anticipate and prepare for problems and changes, adapt accordingly and rapidly recover from setbacks. In other words, enhanced flexibility translates to enhanced resilience.

Microgrids bring more flexibility

One example of how technological progress can boost flexibility and resilience can be found in New York City, where power was out for days in the aftermath of Hurricane Sandy. Following this disaster, a young startup called LO3 developed blockchain-based innovations for optimizing the local generation, storage and use of electricity.

 LO3 formed in response to the damage wrought by Hurricane Sandy
Image: Siemens

The basic idea was to employ microgrids - small, local networks of electricity consumers - to enhance power-supply efficiency. Today, private homes are generating electricity that their neighbours a block away can also use, thus optimizing local supply channels. This distributed power supply system, controlled through blockchain technology, has proven that this approach can work.

As a next step, LO3 and Siemens intend to ensure that blockchain-based microgrids can even continue to operate during a blackout. On a larger scale, such microgrids could provide a sustainable way to secure a more reliable supply of power for large cities.

Cities as a growth engine

Nowhere is our dependence on smooth-running and resilient infrastructure as clear as it is in cities. The world’s population is growing inexorably. Experts estimate that by mid-century the global population will soar from today’s 7.6 billion to around 10 billion. And that population growth will happen almost exclusively in urban centres. By 2050, 70% of humans are expected to be city dwellers.

The exponential growth of our cities will require smart new energy infrastructure
Image: Siemens

Fueled by this urbanization, the global building sector is growing at an unparalleled pace - and will continue to do so for decades. Over the next 40 years, the world is expected to add 230 billion square feet of new buildings – equivalent to building a new Paris every week.

Consequently, cities are facing mounting pressure. Booming urban populations are driving steady growth in demand for resources such as energy, clean water and healthy air.

Cities as a data engine

One key to mastering this voracious demand can be found in the enormous amounts of data generated by urban infrastructure. Today, this data is used only in silos limited to narrowly defined purposes. Much of their value goes unmined, because real benefits are only created when this ‘big data’ is converted into true ‘smart data’.

Data must be gathered and analyzed to produce information that can improve urban life. But continuous integration of urban data won’t be possible until individual infrastructure units – power grids, trains, traffic systems and intelligent buildings – connect to the digital world.

 Harnessing the data generated by smart cities technology could be transformative
Image: Siemens

We’re already moving in this direction. Yet the steps being taken towards digitalization are often still limited to domain-specific data integration. What’s missing is across-the-board infrastructure networking – a form of connectivity that would yield genuine improvements and enhance the efficiency of urban systems.

Such smart city applications offer vast cost-cutting potential. The McKinsey Global Institute projects that savings for cities worldwide by 2025 could be as high as $1.7 trillion. An important factor for deploying such applications through the networking of urban infrastructures is the coalescence of buildings and power grids.

What makes infrastructures smart? Connecting buildings and grids

Buildings are ever-smarter and increasingly benefit from connectivity. Many modern buildings don’t just consume energy, they also generate it using local photovoltaic installations or heat-and-power combined cycles. In addition, they can then store or distribute energy in the form of electricity or heat. And buildings are now being integrated into the power grid by way of energy and data exchanges.

 There's a huge amount of slack to be taken up in urban electricity consumption...
Image: Siemens

The energy system, for its part, is increasingly distributed. The power grid won’t end at an industrial plant or home. Its real terminal points will be the equipment that generates power on one end of the grid or consumes power at the opposite end. So full system optimization must go beyond the grid connection point.

Siemens wants to play an active role in shaping these developments right from the start. As a result, the company is combining its existing business operations in power grids, infrastructure and buildings to form a new “Smart Infrastructure” Operating Company that will open for business on April 1, 2019.

The interplay between power grids and buildings will yield greater efficiency in power generation and greater sustainability. In addition, it will open up new opportunities to develop resilience in the face of rising complexity. These advances will make future infrastructure both more digital and more resilient.

Data resilience to make the digital world more secure

To achieve their full potential, digital infrastructures must also be safe and secure. We at Siemens know this is essential, and we’re committed to making it happen. Ultimately, it’s all about trust.

 16 global companies have signed up to Siemens' Charter of Trust
Image: Siemens

But how can we build trust in the security of data-driven systems? At Siemens, we’ve launched an initiative we call the ‘Charter of Trust’. But fostering trust isn’t something any one company can accomplish by itself. That’s why 16 global players – including Dell, IBM and Airbus – have already joined us in this initiative. Together, the participants are seeking to strengthen protection for individuals’ and companies’ data, prevent harm to people, companies and infrastructures, and build trust in digital technologies.

Protecting smart infrastructure from cyber-attack is not only crucial to the stability of the specific infrastructure, but also to the security of society as a whole. At Siemens, we want to do our part to make the digital world more secure.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Cities and UrbanizationSustainable Development
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

How Kiel became a pioneering Zero Waste City, and what it can teach the rest of the world

Victoria Masterson

April 17, 2024

About Us



Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum