It is recognised that a lot of work has already been carried out at European and international level and that standards already exist in many of the above areas. Therefore, a survey of existing standards will be necessary before work can start on the development of new standards or extensions to existing ones. It needs to be ensured that any standardization activities are guided by the needs of cities, citizens and other relevant stakeholders so that the most critical standards are developed first. Relevant actions under Horizon 2020, Work Programme 2014 – 2015, 10. Secure, clean and efficient energy includes calls like SCC 3 – 2015 92: Development of system standards for smart cities and communities solutions7 need to be taken into account also. Finding the relevant focus areas has to be done in close cooperation between the public and private sector as well as organisations directly representing citizens. 7 http://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/main/h2020-wp1415-energy_en.pdf This list of potential actions is far from exhaustive and many other requirements for standards could be identified in the different priority areas of the OIP. 10.2.1 Potential Action 1: Development of an interoperability framework for smart city standards Context A conceptual interoperability framework (rather than a reference architecture) for smart city standards should be developed to which relevant (existing) standards can be mapped. This would ensure interoperability between smart city systems and entities at many levels, ensuring that data and information can be exchanged at the appropriate level. This would further allow the easier identification of existing standards that are relevant to smart city applications, and also make it easier to identify gaps where new standards possibly need to be developed. A good example of the process that could be used as a basis for this activity is the method by which the Smart Grids reference architecture was developed by the CEN-CENELEC-ETSI Smart Grid Coordination Group. However, an interoperability framework for Smart Cities will be fundamentally different to that for Smart Grids: The Smart Grid reference architecture uses a technically focused model, whereas many of the key issues for smart cities are around strategies and business processes, and about priorities such as: sustainability, wellbeing and socioeconomic development. So we need to start at a more fundamental level than reference architectures do and develop an interoperability framework that would allow a mapping all of the key issues; developing the reference architecture to support this comes only later. Goal The overall goal would be the exploitation of available standards and the development of new ones where gaps are identified. Without an interoperability framework it would be harder to assess whether an existing standard meets the requirement or whether a new standard needs to be developed. Deliverable The following deliverable are foreseen: i. Standards interoperability framework for smart cities Preconditions The needs for smart city standards have to come from the action areas identified in the EIP on Smart Cities and Communities, which involves representatives from all the key stakeholders. These stakeholders should jointly identify the need to set up an interoperability framework for smart cities and communities. CEN, CENELEC and ETSI are the European Standards Organisations (ESOs) (in accordance with the EU Reg. 1025/2012). The ESOs have already set up the Smart and Sustainable Cities and Communities Coordination Group (SSCC-CG), and they can have an important role in identifying who is already active in developing standards on these topics and co-ordinating ongoing smart city standards work so as to ensure that, as far as possible, smart city standards are developed by those standards bodies and other agencies most qualified to undertake the work. This coordination group should jointly investigate the need and the criteria for setting up a reference architecture for smart cities and communities that will enable relevant standards to be easily retrieved by those who need them and enable clear specifications to be drawn up for whatever new smart city standards might be useful. The ESOs would work with all relevant stakeholders to meet market needs, including supporting appropriate agencies, fora and consortia in developing relevant technical specifications and other standards. Methods and details of implementation The interoperability framework could be developed with the involvement of all relevant stakeholders. An example of the process that could be used as a basis for this activity is the method by which the Smart Grids reference architecture was developed by the CEN-CENELEC-ETSI Smart Grid Coordination Group. However, an interoperability framework for Smart Cities will be fundamentally different to that for Smart Grids: The Smart Grid reference architecture uses a technically focused model, whereas many of the issues for smart cities are centred around strategies and business processes. The following process could be used to develop an interoperability framework: . Agreement on a list of reference cities and case studies on which the interoperability framework would be based. . Develop a smart city interoperability framework and use this to: o Identify the systems, functions, applications and services that need to be represented, focusing on the business interoperability layer. o Identify the data sources that need to be represented and the data that will be required to be exchanged. o Identify the APIs and transport protocols that will be needed to meet the data transfer requirements. . Definition of a first interim interoperability framework. . Testing of the interoperability framework against specified case studies and pilots. Does it allow the entities in the case studies and pilots to be represented adequately? Is it clear where interoperability needs to be ensured? . Standardisation of the interoperability framework. The initiatives from relevant international, European and national stakeholders need to mapped in cooperation with standards development organisations at global level (i.e. ISO, IEC and ITU). This action could be carried out in conjunction with above-mentioned Horizon 2020 Coordination and Support Action. Monitoring Pilot testing (e.g. plugtests) events should be set up at different stages in the development of the interoperability framework to ensure that it is robust and sufficiently extensible to meet the needs of future smart city systems and functions. Any correction and maintenance actions could be identified in the process. 10.2.2 Potential Action 2: Standards for City Information Platforms Context This action is a requirement of the 'Integrated Infrastructures and Processes' priority area but would also help to meet the needs of the 'Open Data' priority area. Cities presently hold their data in multiple silos within each department (of each agency) that operates in the city (and indeed those related agencies in regional and national departments as well). This data is naturally of variable quality. It is also inconsistently captured between departments and across agencies. The more progressive cities have started to open up their data sets – some holding specific events (hackathons and competitions) to coax developers to use the data in more innovative ways that add more value. This has led to greater visibility for the 'open data' topic – however it has so far not led to sustainable value at larger scale. Open data alone will not deliver significant value and the opening up of finance data, asset data, etc. needs to be equally considered – data that is normally kept behind firewalls. All data used should be in a format that complies with open standards8 so that it can easily be re- used by other agencies in the city. However, this does not imply that such data needs to come for free. 8 An open standard is one that is developed and maintained through an open and transparent process which means a collaborative, consensus-driven process that is open to participation by all relevant and materially affected parties and not dominated by, or under the control of, a single organization or group of organizations. Goal To develop standards that will allow city administrations and service providers to open up their data to 3rd parties (developing apps, etc.) ensuring that security and privacy concerns are addressed. Deliverable i. New standards or extensions to existing standards that are necessary to meet City Information Platform requirements Methods and details of implementation The following process could be used to identify any missing standards: . Identification of use cases for City Information Platforms; . Identification of standards requirements from the analysis of use cases; . Identification of existing standards relevant to the requirements; . Identification of gaps in standards necessary to meet the requirements; . Development of new standards or extensions to existing standards necessary to meet requirements. All relevant smart city stakeholders must be involved, with methods such as hackathons and competitions being used to encourage the development of new standards requirements. Preconditions The needs for smart city standards have to come from the action areas identified in the EIP on Smart Cities and Communities, which involved representatives from all the key stakeholders. These stakeholders should jointly identify the need to set up an interoperability framework for smart cities and communities. 10.2.3 Potential Action 3: Standards for M2M Data Exchange Context This action is a requirement of the 'Integrated Infrastructures and Processes' priority area. It requires the development of standards for an M2M (Machine-to-Machine) platform that all relevany data can pass over so to provide a ubiquitous data transport capability. A common API to the data transport layer is also needed to obtain maximum interoperability between smart city applications and functions. Goal To develop standards that would enable all smart city data to be passed seamlessly between sensors, applications, databases and other entities, independent of the underlying communications technology being used to link these. Deliverable i. Requirements of Smart Cities for M2M Data Exchange. ii. Extensions to M2M standards that are necessary to implement data exchange in smart cities. iii. Common APIs to smart city functions. Methods and details of implementation The following process could be used to identify any standards gaps: . Identify use cases for smart city data to be carried; . Identify standards requirements from the analysis of such use cases; . Contribute any new requirements to relevant standards bodies including oneM2M. All smart city stakeholders should be involved in the development of the requirements. Preconditions The existing data architecture as developed by ISO and CEN should be taken account of (and preferably form the basis of) any requirements. M2M data exchange standards are being developed in the oneM2M Partnership project, an initiative of seven regional standards organisations worldwide. European aspects, including responses to standardisation mandates, are being implemented in the ETSI SmartM2M Technical Committee. An M2M Service Capabilities layer is being developed which could provide the basis of a common API for smart cities functions. The requirements of smart cities and communities should be identified and incorporated into the work of these bodies to ensure that any resulting platform can support the required data flows. Monitoring Pilot testing (e.g. plugtests) events should be set up at different stages in the development of the M2M standards to ensure that they are able to support the required smart city entities effectively. Any correction or maintenance actions could thus be identified. 10.2.4 Potential Action 4: Standards to support city level energy management and trading systems Context This action is a requirement of the 'Districts and Built Environment' priority area. It includes standards to support smart lighting, heating, cooling and electricity systems and appliances as well as the charging infrastructure for electric vehicles in public and private spaces. Standards should enable the creation of a two-way energy chain that balances demand and supply dynamically between different energy sources. These include renewable and alternative energy sources and traditional (typically hydrocarbon-based) energy sources so that they together can make an appropriate and effective contribution to the energy mix. The ability of smart appliances to be switched on and off in response to energy availability and dynamic changes in pricing should also be taken into account. Standards should allow the exchange of energy management data so to achieve this. Goal To develop standards that will allow all types of energy sources and smart appliances to be incorporated into smart city energy management systems. Deliverable i. Requirements of city level energy management and trading systems; ii. Requirements for smart appliances that will be used in cities; iii. City-level smart appliance conformance specification; iv. New standards to implement energy management in Smart Cities. Methods and details of implementation The following process could be used to identify any missing standards that would be required: . Identify use cases for city level energy management and trading systems, including the sources of energy, the appliances that will be supplied, and the trading conditions (contract terms, pricing, etc.); . Identify the standards requirements from analysis of the use cases; . Identify gaps in standards necessary to meet the requirements; . Develop new standards or extensions to existing standards necessary to meet the requirements. Preconditions Energy-using and -producing Products (EupP, also called Appliances) are responsible for the management of a large part of the energy consumption and production with buildings. To establish a market for energy-efficient systems and services, there is a need to standardise the interface to these EupP so to guarantee interoperability with Facility Management Systems, Energy Management Systems, so-called Energy Boxes and other systems (for example systems linked to home automation). Standards for smart appliances are being developed that will allow conformant EupPs to get a CE EupP Plug-and-Play label so to promote take-up, deployment and installation. 10.2.5 Potential Action 5: Promotion of the use of Standards for Smart Cities Before any of the preceding actions can be effectively implemented it might well be necessary to promote the use of standards, as well as standardisation approaches and processes, to smart city stakeholders. Not all of these may recognise and understand the benefits derived from standards and solutions based on these, or indeed the benefits to stakeholders of being involved in the standardisation process. Initiatives that might help to achieve this include: . Demonstrating the benefits of using and building on common approaches and common solutions by showing how they lower costs and reduce development times; . Promoting engagement and communication with stakeholders in order to demonstrate the benefits of standards in areas where these have not traditionally been used, e.g. in the areas of economic analysis, business modelling, funding and financing, or indeed procurement; . Promoting participation in European standardisation processes as well as the importance of working with international standards bodies to develop standardised solutions that can be deployed worldwide. Goal The overall goal would be to increase the replication and deployment of smart city solutions through more effective use and exploitation of standards, including the promotion of European standards worldwide. Deliverable i. Exemplars on use of standards; ii. Case studies on the effectiveness of standards; iii. Guidelines of good practice to enable easier use of solutions. Methods and details of implementation The following mechanisms could be used to help promote the use and exploitation of standards: . Setting up exemplars that show where standards have been used or are currently being used to create innovative systems and applications; . Setting up a comparative case study where a standards-based approach is used to the development of a function or application, and measure (or at least assess) how this has reduced development times; . Promoting or setting up workshops to educate smart city stakeholders on the use of standards; . Requiring all smart city projects funded by the European Commission to prioritise the support of the development of standards as a key output. One of the most effective ways of ensuring the dissemination of a good practice is to develop that good practice into a standard; . Promoting the use of standards, including through public procurement and relevant EU policies and legislation; . Contributing to international standards including ISO/IEC and ITU-T. Preconditions All smart city stakeholders should buy into the need for this action (even if they remain doubtful of the results). Monitoring The use of standards in smart city systems and solutions should be monitored to see if there is an increase in use as a result of this action. 11 Priority Area 'Business Models, Finance and Procurement' 11.1 Introduction This chapter outlines the business framework to enable economic viability of smart city solutions. Given the breadth of scope of this priority area we have provided an exemplar for each of (i) business models, (ii) finance and (iii) procurement. Each also includes a list of potential implementation actions. Within the SIP the following priorities were identified: . Create new integrated business models with innovative local partnerships (Local Ecosystem) and adapted procurement; . Create a European market for innovation that opens up investments. This chapter outlines the business framework to enable economic viability of smart city solutions. Given the breadth of scope of this priority area we have provided an exemplar for each of (i) business models, (ii) finance and (iii) procurement. Each also includes a list of potential implementation actions. Smart city solutions have to make an impact within Local Ecosystems in which prosumers, local and global industries and governments participate in order to achieve value in the built environment, mobility and other city services. However, in terms of achieving scale, accelerating uptake in the market and securing return on investments this requires multiple implementations on a European or global scale. The right business framework will attract investment to create market ‘pull’ and support market ‘push’ trough innovation and stimulation of the industrial value chains (e.g. production of new materials; new ICT systems solutions; systems to store energy). The approach for the business framework is: • Enable cities to create Local Ecosystems for smart solutions; • Support the replicability of these solutions; • Stimulate an open market across Europe for investments in ICT solutions. Striving for broad uptake across Europe of smart city solutions requires in most cases new investments in combination with a more efficient use of the currently available resources in cities. Citizens’ support is important to get the needed initiatives going and accepted. Innovative solutions will only create jobs and growth if the market-pull from cities leads to a broad activation along the value chain to supply new materials for mobility and housing, new ICT systems to deal with the large amount of data and new energy systems. Combining existing available technologies and solutions is not enough. There is a need for a dynamic system of continuous improvement, creating the European critical mass for innovation uptake within available budgets and leading to sustainable growth and jobs. Our challenges are: • Balance cities’ individual characteristics and requirements with the need for a modular approach which offers economies of scale and therefore cheaper and more broadly available technology solutions; • Balance city/regional requirements and strategies with national or broad EU policy goals (industrial policy); • Ensure long-term planning to build trust for (de-risk) investments. 11.2 Potential Actions Three potential actions are outlined for: business models; finance; and procurement. 11.2.1 Potential Action 1: Integrated Business Models Key Challenge Connecting Local Ecosystems to a European market of smart city solutions to enable the replicability of these solutions and help create smart economies of scale. Context Business models for Smart Cities and Communities have to integrate technologies into a smart city concept in order to maximize their impact on the EU economy. It has to consist of and balance i) Local Ecosystems, which ii) can be used in cities throughout Europe (replicability); and iii) defines a European market for ICT solutions, materials and products. Local Ecosystems are collaborations between industry, governmental bodies and citizens to meet specific local goals (see also Appendix A and B). Goals Local Ecosystem . Define criteria for projects to evaluate conditions to enable local ecosystems; . Define a governance structure for evaluating the project-ideas; Replicability/ Demand Aggregation . Support the collaboration of cities in finding their smart solutions, in order to promote re- use; . Cover the integration of technologies into an overall smart city concept in order to maximize their impact on the whole economy (meeting also the political target of bringing technology leadership back to Europe); Create open European market . Develop a model to aggregate demands, aiming to reduce the variety of solutions, which then allows the supply chain to leverage economies of scale; . Create long term processes to push innovation and create long term market pull (at least 7 years); . Push innovation across ‘valley of death’ by creating projects to test innovative solutions in ‘real life’ environment; . Specific projects (like energy efficiency improvements) must be integrated into a broader package of buildings, streets etc. Implementation Actions Potential actions in order to deliver on the goals include: . Harvest and codify existing successful leading practice examples of business model innovation (see also Appendix B); . Define guidelines on how to create a working governance entity and viable business model (see also Appendix A and B); . Create ‘Catalyst Smart Teams’ (CST) by gathering multidisciplinary experts with the objective of initiating city policies and business modelling. CSTs will work with local banks and financial institutions to design replicable models able to exploit the potentials of distributed ‘small’ initiatives (e.g. energy self-consumption at home level, batteries for electric cars seen as distributed energy storage capacity, etc.) (see 2.1.6); . Enable replicability by creating network of cities to exchange solutions, identify common technology approaches between different solution streams or the major challenges (such as mobility) and a solutions inventory (technology toolboxes) sorted along cities challenges. Impact The potential added value for cities, citizens, the society and EU competitiveness include: . Efficient use of budget (value for investments); . Create sustainable jobs along industrial and service value chains; . Improve private investments in Cities surroundings; . Implementation and broad conceptual approaches by unleashing the innovation potential in Europe along value chains from materials to Cities; . Gain critical mass to lower prices and allow business investments; . Ensure broad impact of lighthouse projects in Europe (replicability); . Definition of business framework to support replication. Monitoring Result based indicators . Viable solutions: Quantity of type of solutions in a local environment with a viable business model, that is used in cities in more than two different countries; . Implementation of solutions: number of times that the solution has been replicated; . European open market: quantity of companies investing in the solution; . European market size: amount of turnover and employees working on a specific solution; Indicators to check the creation of local ecosystems and replicability . Number of cities that have created a local governance entity for energy, mobility or built environment; . The number of cities that participate in a network of cities to exchange solutions; . The readiness of guidelines (check list) and engineering for financial models to combine public-private funding of larger scale projects, structural funds and European Investment Bank for demonstration projects. Indicators to check the development of a European market . Structured dialogue between value chain and cities to develop a ‘technology tool box’ for challenges; . Public-private cooperation in establishing EU wide criteria for tenders and terms of reference; . De-risk investments by long term planning and criteria; . One KPI on use of Local Ecosystems. 11.2.2 Potential Action 2: Financing Key Challenge A key challenge concerns public funding of smart city solutions in Member States at a time when public budgets are under austerity pressures. Context The economic crisis is forcing a major downsize of public funding at both the local and regional level. Infrastructures are getting older and older and need refurbishment. At the same time, roll-out of innovations for smart city performances requires new systems, devices and networks. Investments are therefore necessary but money is often lacking. The organization models of local bodies (e.g. Municipalities, Provinces, Departments, etc.) are often unfit to cope with current challenges posed by technologies and society evolution. Investments availability for new smart energy infrastructures is high though. Innovative bankable business models can be the basis for economic growth. Attractive bankable energy-based business models must rely upon a bottom-up approach involving and integrating clusters of stakeholders. Cities can be seen as one of the stakeholders. By participating in Local Ecosystems cities can use their financial resources more efficient. The financing of smart city solutions depends on the viability of the business model of the Local Ecosystem, the replicability on European level and the open market that is created by aggregating demand and defining a stable long-term perspective for investments in innovation. The basic mechanisms for the business case of smart solutions are: . Investments in assets and as a consequence lowering the operational expenditure, e.g. energy producing building that lower the daily cost of energy; . Combining investments of stakeholders and by doing that lower the total investment, e.g. communication infrastructure used for different types of solutions; . Lowering cost per implementation, by creating a European market for replicable solutions (aggregated demand) and ensure long-term perspective for investments. Goals . Reduce real and perceived risks of the investments (speeding-up procedures and permits, making them schedulable); . Attract long term investors; . Mobilize public funding resources from European, national, regional and local level for smart city solutions; . Develop Stakeholder aggregating mechanisms to create bankable initiatives (need for integrated governance); . Attract private funds through Public-Private Partnership (PPP). Preconditions . Cities must be able to use their planned operational expenditure for investment in assets; . Combined funding models between EC, national and regional funding are required; . Rules and budget for participating in revolving fund and guarantees. Implementation Actions Potential actions in order to deliver on the goals include: . Define evaluation criteria for viable smart city solutions in local ecosystems, including risk reduction. For the approved solutions financing can be done by commercial banks, revolving funds and crowd sourcing; . Define evaluation criteria for replicability of solutions and mechanisms for aggregation of demand to create confidence for long-term investments on a European level; . Develop concept and guidelines for combined funding models for pilot projects (e.g. SET plan, Horizon 2020, EIB loans, structural funding plus private funding to complement); . Develop alternatives to loans (such a specific bonds to finance major investments) (could attract SMEs); . Develop concept and “to do ´s” for crowd funding from small lenders; . Design and implement a series of ‘Stakeholders oriented investment areas’ (SOIA), where many categories of stakeholders (including citizens) are given opportunities to invest money and measure outcomes; . Develop innovative financial mechanisms (e.g. purpose bonds, crowd funding, smart bonds, etc.) as alternatives to loans. This will attract SMEs and enable citizens’ involvement; . Create international and cross border ‘Financial Investigation Teams’ (FIT) -composed by local banks and other financial institutions- to study innovative loans able to fund distributed ‘small’ initiatives (e.g. energy self-consumption at home level). This initiative is worth billions euros at EU level, when combined with energy incentives; . Define approaches to cluster Municipalities to get the right scale for optimization in processes like public lighting, remote heating, etc. Design sustainable business models based upon clusters (Covenant of Mayors may be interested?); . Create rules and budget for participating in revolving funds and guarantees; . Financial contribution to smart city solutions from member states (national and regional funds): i) member states pool financial resources to enable transnational smart city initiatives in line with the ideas of this EIP; ii) member states work on a combination of national public funding for smart city demonstration and structural funding for smart city solutions (e.g. via the Joint Programming Initiative of Urban Europe or the Smart City Member States Initiative). Impact The potential added value for cities, citizens, the society and EU competitiveness include: . Industry, local government and citizens will increase investment but lower operational expenditure; . Cities can do more with less financial resources; . The innovation capacity of the EU will increase; . Risk-reduction in early financing phases. Monitoring . Percentage of leverage of public investments with private funds; . Dissemination and application of combined funding models (e.g. SET plan, EIB, regional and local in cities). 11.2.3 Potential Action 3: Procurement Key Challenge The key challenge is to make a strategic switch from simply procuring solutions which are often implemented din an isolated manner at city level towards procuring solutions which actually address and solve interlinked city issues. Context Given the size of the public procurement budgets, procurement can have the potential to drive innovation along the value chains into smart cities by creating local ecosystems, stimulating replicability and creating a European market. However, procurement procedures are tending to isolated, short term buying of proven technology for specific questions. Goals . Stimulate cities to participate in local governance entities with joint ventures and joint investments; . Cooperation between cities and aggregating targets and requirements across Europe; . Focus on long-term impact (e.g. life-cycle efficiency and sustainability) or on long-term certainty (e.g. innovation implies risk-taking); . Stimulate systematic dialogue between solutions suppliers and Cities as customers or as co- investors; . Bridge scarcity of national public funding and severe delays in payment in several EU member states due to economic crisis. Implementation Actions Potential actions in order to deliver on the goals include: . Define the possibility for cities to participate in an aggregation structure to combine information needs, procurement and solutions (e.g. via PCP/PPI in Horizon 2020 and/or ESIF). The use of the ~12 characteristics models (e.g. EuroCities concept) might be helpful, as well as a set of quality criteria for cities and suppliers for selection of public procurement along 12 key characteristics along cities categories; . Develop a set of tender criteria for ‘innovation procurement’ (e.g. special emphasis on tackling risks); . Explore and exploit the new possibilities foreseen in the revised EU Public procurement directives 9 10, in particular: i) the new criterion on the ‘Most Economically Advantageous Tender (MEAT)’, which allows for full life cycle costing; ii) the “innovation partnerships”, which enable a public authority to enter into a structured partnership with a supplier with the objective of developing an innovative product, service or work, with the subsequent purchase of the outcome; . Define a network of Cities and industry for systematic and structured dialogue; . Information (education) to get smart institutional buyers, e.g. characteristics for position of Chief Technology and Sustainability officer to be created in cities administration; . Deploy training set 11 for procurement professionals on challenges (e.g. mobility, housing, data handling) and promotion of good practice 12 13 for EU added value; 9 http://www.europarl.europa.eu/news/en/news-room/content/20140110IPR32386/html/New-EU-procurement-rules-to- ensure-better-quality-and-value-for-money 10 http://www.innovation-procurement.org/about-ppi/legal-framework/ 11 http://www.innovation-procurement.org/training/ 12 http://www.innovation-procurement.org/exchange/procurement-forum/ 13 http://www.innovation-procurement.org/exchange/experience-exchange/ 14 http://www.buildup.eu/ 15 http://www.innovation-procurement.org/resources/search?resource_id=611 16 http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf 17 http://www.innovation-procurement.org/about-ppi/legal-framework/ 18 http://cordis.europa.eu/fp7/ict/pcp/docs/faq-v9.pdf 19 http://ec.europa.eu/research/horizon2020/pdf/contributions/during- negotiations/netherlands/philips_position_on_the_commission's_proposals_for_horizon_2020.pdf 20 http://cordis.europa.eu/fp7/ict/pcp/ 21 https://www.innovation-procurement.org/ 22 http://cordis.europa.eu/fp7/ict/pcp/docs/pcp-newsletter-201401_en.pdf 23 http://cordis.europa.eu/fp7/ict/pcp/docs/23jan2014-synergies-h2020-esif.pdf . Toolbox for technology solution blocks and cities ratings (having already installed such technology building blocks (EU level portal on some aspects of Smart Cities already exist (e.g. Build-up site 14 and Innovative Lighting 15); . Develop strategy for multiphase tender process o Phase 1 develop and validate, o Phase 2 traditional ‘commercial’ tender, o Phase 3 implementation, o Phase 4 Evaluation (e.g. “Flanders in Action 2020”, learn from EU Lead market Initiatives successes and failures; companies must be allowed to participate at all stages (not only in framing of innovation and then be excluded from later phases); . New tender models to consider value chains, origin of goods (local, EU) – while observing applicable regulations 16 17 – and LCA (Energy reduction in life cycle, solar panels produced from coal or hydropower); . Develop model for licensing (e.g. as in PCP 18) to ensure longer term engagement and covering of costs by private side. Define structures for local markets, based upon licensing instead of procurement. This should lead to flexible solutions in combination with requirements for government /pricing and evaluation models. Cities must be able to invest in these models. . Remove impediments for private-sector involvement in Smart City Calls of Horizon 2020 by seeking clarification on the issues 19 of the applicability of the non-profit principle and the need for public tendering. Impact The potential added value for cities, citizens, the society and EU competitiveness include: . Use of procurement budgets to create innovative solutions; . Increase of investments by governmental bodies and decrease of operational expenditure; . Create economies of scale based on these aggregate demands (at regional level, incl. cross- border macro-regions); . Testing of solutions (materials, solutions, broader solutions in real life at TRL level 6-8 in certain cities environment (target for EU public-private projects, e.g. in Horizon 2020)); . Strengthen ‘innovation’ procurement in relation to ‘traditional’ procurement to increase opportunities for innovative SMEs and big companies by making good use of the possibilities of Pre-Commercial Procurement of R&D (PCP 20) and Public Procurement of Innovative Solutions (PPI 21) (e.g. in Horizon 2020 22 and/or ESIF 23); . Long term articulation of industrial and service value chains for Smart City solutions in a dynamic eco-system. Monitoring . Uptake of individual projects across the EU (replication); . Percentage or numbers of more-than-one country projects to develop and test aggregate solutions; . Percentage or numbers of SMEs and midcaps to participate in tenders and EU public-private projects; . Measurement of impact in cities against policy targets (like) energy reduction (needs baseline at city level to measure success); . Number of cities with SRA score above defined thresholds (introduce assessment capacity for ‘Smart Readiness and Awareness’ (SRA) -at cultural, technical, administrative, organizational and ethical level- to be applied to public contracting authorities and public bodies, resulting in a scoring system to find priorities in terms of success chance (attractiveness for investors)). 12 General Implementation Modes 12.1 Introduction The Smart Cities and Communities EIP's Strategic Implementation Plan underlines the need to accelerate actions; create scale; and deliver demonstrable evidence of the gains of working in collaboration across sectors and cities to develop common solutions. The ambition of this OIP is to help stimulate the next wave of successful initiatives for smart city action to deliver real value across the EU. For context: . ‘Wave I’ EU projects involve fund disbursement on an individual project level, including multiple and oftentimes small projects. . ‘Wave II’ EU projects have successfully established more collaborative solutions that are explicitly focused at EU-wide issues. This includes such vehicles as the Large Scale Pilots (LSPs) under the 7th Framework Programme for Research of the EU. These are still largely financed through public grants and geared towards the early stages of the innovation cycle. . ‘Wave III’ seeks to introduce initiatives that: o Increase collaboration between public and private sectors towards greater deployment of innovative action, and certainly increase the interest and involvement of the private sector. o Increase the level of private co-financing of public funds and trigger private investments (commensurate with the ambition of ’scale’) beyond public sector o Are city-needs-led, more than city-led; so all parties are focused on delivery of the customer’s end needs o Focus on replicability of solutions – indeed aggregation of demand. This does not mean a ’one size fits all’ approach to city building, however it does infer more common logical designs for particularly information-centric elements of the solution, which will help pooling of projects up to a scale where it becomes attractive to private investment sources to engage (greater mass, greater ability to hedge risks), and that can then deliver earlier benefits o Seek to create schemes for funding that makes it easier to plan implementation and decrease bureaucracy (streamlining of rules, reporting, evaluation etc.) The Strategic Implementation Plan for this EIP proposed the concept of “Lighthouse Initiatives” to capture the need for large-scale demonstration and replication at city system level. These can be introduced much more systematically across the EU – the limited financial scope of H2020 and its "Lighthouse Projects" can be enlarged by supporting Lighthouse Initiatives through national funding programmes and systematically attracting private investment sources through the provision of risk guarantees. “Lighthouse Initiatives” have the following characteristics: i. Involve a limited core group (6-10) of progressive organisations working together with the ambition to optimise the extent of common innovation and related design ii. Seek to attract multiple replicator cities –and related (local implementation) partners iii. Seek to rapidly scale up known technologies, as well as support innovation iv. Access funds from commercial lenders; national and city public funds; EC Structural Funds; Industry research / investment resources; research and innovation funds from domain EC Directorates (energy; mobility, ICT), and DG Research v. Will operate with pragmatism according to set of operational principles that will help to reduce administrative burden 12.2 Implementation Tools A number of implementation tools can support those ambitions. These are outlined below; each addressing (i) the context, description and goals, (ii) rationale and method of implementation, (ii) monitoring and sustainability. “Implementation Tools” include: i. Cross-cutting content management ii. Stakeholder coordination iii. Country Smart City Landscaping and Bench-learning iv. ‘Kitemark’ recognition v. Events and Marketing vi. Progress Monitoring vii. Funding These all serve to build a platform for implementation of the EIP 12.2.1 Cross-Cutting Content Management The SIP laid out a 3-by-8 matrix of themes, consistent with the philosophy that better outcomes will be achieved by dealing with the interdependencies between these topics – a change from present ‘incremental actions within silos’. It is recognised that there will be stronger and weaker affinities between these various themes, and there will be other related themes (e.g. public security, healthcare etc.) that can also be logically addressed in association with the (3x8) core SIP content. But utilising such a matrix approach will help city authorities to not lose sight of inter-linkages and inter-dependencies and check how proposed actions link up. Specifically, i. Such a matrix scheme could be made an important part of eligibility criteria for funding schemes, e.g. proposals should be required to utilise such a systemic approach to city planning and management (both the quality of action, and the extent to which they deal with inter-dependencies) ii. A means to articulate the logical synergies and inter-dependencies between city systems, cities should support ongoing activities to develop or adopt standards and protocols (e.g. the emerging urban anatomy work of the City Protocol Society24) to support and inform the above 24 http://cityprotocol.org/ 12.2.2 Stakeholder coordination The example initiatives in this OIP convincingly demonstrate the need to involve multiple stakeholders in the successful implementation of smart city action. The table below provides an indication of this: Actor Key Role(s) European Institutions - Convening action - Setting and supporting policy and regulation where adequate - Supporting standardisation - Providing funds for research, innovation and large-scale deployment through intelligently combining Horizon 2020, COSME, ESIF funds and other financing tools - Promoting awards, competitions, dissemination, learning Member State and Regional Governments - Providing supportive legislative, policy and regulatory environment - Establishing innovation programmes - Supporting (national/regional) city competitiveness / competitions - Providing funds, and supporting the establishment of funding vehicles - Risk management - Market development activities (e.g. international trade missions) Investors - Commercial models that support collaboration and common solutions - Funds that enable the OIP ambitions of early scale