In 2012 I spoke with a Director at a financial consultancy who’d performed a survey of European Smart City initiatives. She confirmed something that I suspected at the time: that the great majority of Smart City initiatives up to that point in the mature markets of Europe and North America had been financed by research funding, rather than on a commercial basis.
In 2013, that started to change. Some cities in Europe and North America started to make investments in the underlying technology platforms for Smart Cities from their own operational budgets, on the basis of their ability to deliver cost savings or improvements in outcomes. For example, investments in "Smart Parking" schemes have been made on the basis that they reduce the cost of collecting enforcement revenues whilst reducing congestion and pollution.
I know of many more cities who are now developing their "Smart City" plans and determining how to put the finance in place to carry them out. But in that context, whilst it's great news that the European Union's Horizon 2020 programme and national equivalents such as the UK's Technology Strategy Board are continuing to invest billions of Euros and Pounds into Smart City research and innovation, what we really need in order to fund the widespread development of Smart Cities are new vehicles for investment in infrastructure.
Recent initiatives in Canada, the UK and further afield are starting to show how we might develop those new financing vehicles, and how cities might use them. But there are significant financial and political challenges to overcome before we will be in a position to use them.
I've written an article on my blog that explores these issues, and would be interested in your comments, or to hear your experiences of securing financing for Smart Cities.