13.3.4.1 Financing
The considerable costs of innovative high-tech equipment and the high sums
required for Smart City infrastructure make it very difficult to fund Smart hightech Cities solely by classic municipal funding (Smartcities.com 2016; Maddox
2016). A combination of different financing tools may help (Smartcities.com
2016), although the high technological risk of untested or scarcely tested technology,
uncertain return on investment (ROI), and regulatory challenges often deter potential
investors (Spedding et al. 2013; Maddox 2016).
Every continent and nation has their own challenges and priorities in financing
Smart Cities:
In Europe, EIP-SCC (The European Innovation Partnership on Smart Cities and
Communities), an EU financing tool convening industry, cities, and citizens “. . .
to improve urban life through more sustainable integrated solutions” (European
Commission 2017a) deals with city-typical issues from various policy fields, e.g.,
mobility, transport, energy, and ICT (European Commission 2017b). The HighLevel Group for Smart Cities and Communities helps to identify key problems to
be solved by the lighthouse projects (SmartsCities.com 2016). Significant funds
can be reaped from Horizon 2020, “. . .the biggest EU Research and Innovation
programme ever with nearly € 80 billion of funding available over 7 years (2014
to 2020). . .” (European Commission 2017c). Horizon 2020 is politically
supported by members of the European Parliament and European market leaders
as “. . .an investment in our future...” (European Commission 2017c) in the center
of “...the EU’s blueprint for smart, sustainable and inclusive growth and jobs”
(European Commission 2017c). Further EU financing instruments include
JESSICA (Joint European Support for Sustainable Investment in City Areas),
ELENA (European Local Energy Assistance), and Crowd-Funding, a financing
tool with small contributions from numerous persons via an electronic platform
(Hinterberger et al. 2015).
In the USA, sources for funding Smart Cities include government and municipality
funding, private entity funding, private enterprise, private placement bonds, the
private equity market, banks, corporate bonds, money market, and academia
(Maddox 2016, with further references). In September 2015, the White House
had announced an investment of US$80 million for Smart Cities. The National
Science Foundation provided US$60 million for its Smart Cities Initiative
(Maddox 2016). President Trump plans to invest over US $1 trillion to modernize
America’s infrastructure, to bring business opportunities to the Smart City movement, and to create new jobs (Eastwood 2017; Guerra 2017). Companies like
Cisco work with cities on technology projects, facilitating a cooperation between
financiers, banks, and pension funds (Maddox 2016).
In Canada, The Smart Cities Challenge, a Canadian-wide competition for municipalities, Indigenous communities (First Nations, Inuit, and Métis), and regional
governments, (Infrastructure.GC.Ca 2018) motivates communities to use data,
connected technology, and innovation via a smart cities approach by financing
Smart City projects. The prizes range from Can$5 million to Can$50 million,
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O. Schwarz-Herion
The considerable costs of innovative high-tech equipment and the high sums
required for Smart City infrastructure make it very difficult to fund Smart hightech Cities solely by classic municipal funding (Smartcities.com 2016; Maddox
2016). A combination of different financing tools may help (Smartcities.com
2016), although the high technological risk of untested or scarcely tested technology,
uncertain return on investment (ROI), and regulatory challenges often deter potential
investors (Spedding et al. 2013; Maddox 2016).
Every continent and nation has their own challenges and priorities in financing
Smart Cities:
In Europe, EIP-SCC (The European Innovation Partnership on Smart Cities and
Communities), an EU financing tool convening industry, cities, and citizens “. . .
to improve urban life through more sustainable integrated solutions” (European
Commission 2017a) deals with city-typical issues from various policy fields, e.g.,
mobility, transport, energy, and ICT (European Commission 2017b). The HighLevel Group for Smart Cities and Communities helps to identify key problems to
be solved by the lighthouse projects (SmartsCities.com 2016). Significant funds
can be reaped from Horizon 2020, “. . .the biggest EU Research and Innovation
programme ever with nearly € 80 billion of funding available over 7 years (2014
to 2020). . .” (European Commission 2017c). Horizon 2020 is politically
supported by members of the European Parliament and European market leaders
as “. . .an investment in our future...” (European Commission 2017c) in the center
of “...the EU’s blueprint for smart, sustainable and inclusive growth and jobs”
(European Commission 2017c). Further EU financing instruments include
JESSICA (Joint European Support for Sustainable Investment in City Areas),
ELENA (European Local Energy Assistance), and Crowd-Funding, a financing
tool with small contributions from numerous persons via an electronic platform
(Hinterberger et al. 2015).
In the USA, sources for funding Smart Cities include government and municipality
funding, private entity funding, private enterprise, private placement bonds, the
private equity market, banks, corporate bonds, money market, and academia
(Maddox 2016, with further references). In September 2015, the White House
had announced an investment of US$80 million for Smart Cities. The National
Science Foundation provided US$60 million for its Smart Cities Initiative
(Maddox 2016). President Trump plans to invest over US $1 trillion to modernize
America’s infrastructure, to bring business opportunities to the Smart City movement, and to create new jobs (Eastwood 2017; Guerra 2017). Companies like
Cisco work with cities on technology projects, facilitating a cooperation between
financiers, banks, and pension funds (Maddox 2016).
In Canada, The Smart Cities Challenge, a Canadian-wide competition for municipalities, Indigenous communities (First Nations, Inuit, and Métis), and regional
governments, (Infrastructure.GC.Ca 2018) motivates communities to use data,
connected technology, and innovation via a smart cities approach by financing
Smart City projects. The prizes range from Can$5 million to Can$50 million,
216
O. Schwarz-Herion