Opportunity to join the Morgenstadt Smart City Finance research

Dealing with urban complexity

The Smart City Market - A Beast to tame!

© McKinsey Global Institute analysis

An increasing amount of clean and connected solutions are available to shape the smart city market – a market that is targeted at making cities more efficient, sustainable and livable.

Yet, companies struggle to put sound business models and financing schemes behind these solutions. This is one of the main factors, why the smart city market remains in limbo.

The reason for this lies within the complexity of cities. Smart solutions create both, public value and private returns on invest. The specific distribution of these depends on a variety of context-specific factors:

e.g. How many people stop using their car in Munich as opposed to Milan when introducing a bike sharing scheme?

How much solar potential is there in London as opposed to Zagreb – and how do energy consumption rates relate to this?

How much people benefit from a better distribution of water in the city, and would they pay for it, or would return of investment be intangible? etc.

In light of an unclear return on invest, investments usually do not happen – and the smart city market remains where it is.

In Focus: The wider impact of Smart Solutions

Understanding the impact of urban solutions

By failing to understand the larger urban value that can be created through technologies, datasets and urban solutions, companies lack crucial information to design adequate pricing and marketing models for their offers.

As a consequence, these companies cannot develop fully informed new business models that ought to reflect the full potential of urban data for optimal exploitation.

The Goal: Cost benefit modles fur urban solutions

The Fraunhofer Morgenstadt research aims to solve this problem!

Together with industry partners we strive to measure the social, economic and environmental value of a defined set of smart city solutions within it’s urban context.

Through applying systems dynamics modelling to smart city solutions we aim to create cost-benefit analysis instruments for urban solutions, enabling companies and cities to calculate the greater RoI from Smart Solutions in any given city.