Smart city and the Internet of Things: Digitally connecting urban environments

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  Quantumrun Foresight
• July 13, 2022

Insight summary

Cities are rapidly evolving into smart urban centers, utilizing Internet of Things (IoT) technologies to enhance public services and infrastructure. These advancements lead to improved quality of life, greater environmental sustainability, and new economic opportunities. This shift also brings challenges in data privacy and demands for new skills in technology and cybersecurity.

Smart city and the Internet of Things context

Since 1950, the number of people living in cities has increased over six-fold, from 751 million to over 4 billion in 2018. Cities are expected to add another 2.5 billion inhabitants between 2020 and 2050, posing an administrative challenge to city governments.

As more people migrate to cities, municipal urban planning departments are under increased strain to sustainably provide high-quality, dependable public services. As a result, many cities are considering smart city investments in modernized digital tracking and management networks to help them administrate their resources and services. Among the technologies enabling these networks are devices connected to the Internet of Things (IoT). 

The IoT is a collection of computing devices, mechanical and digital machines, objects, animals or people equipped with unique identifiers and the capability to transfer data over an integrated network without requiring human-to-computer or human-to-human interaction. In the context of cities, IoT devices such as linked meters, street lighting, and sensors are used to collect and analyze data, which is then used to improve the administration of public utilities, services, and infrastructure. 

Europe is the world’s reported forerunner in innovative city development. According to the IMD Smart City Index 2023, eight out of the top 10 smart cities globally are in Europe, with Zurich earning the top spot. The index uses the Human Development Index (HDI), a composite metric that incorporates life expectancy, education levels, and per capita income to assess a country's overall development. 

Disruptive impact

The integration of IoT technologies in urban areas is leading to innovative applications that directly enhance the quality of life for city residents. In China, IoT air quality sensors offer a practical example. These sensors monitor air pollution levels and send alerts to residents via smartphone notifications when the air quality drops to harmful levels. This real-time information empowers individuals to minimize their exposure to polluted air, potentially reducing the incidence of respiratory diseases and infections.

Smart electricity grids represent another significant application of IoT in urban management. These grids enable electricity providers to more efficiently manage energy distribution, leading to reduced operational costs and enhanced operational effectiveness. The environmental impact is also notable; by optimizing electricity usage, cities can lower their greenhouse gas emissions, particularly those stemming from fossil fuel-based power plants. Additionally, some cities are implementing residential energy storage systems and solar panels that connect to the smart grid, alleviating grid stress during peak demand periods and enabling homeowners to either store energy for later use or sell surplus solar energy back to the grid.

Homeowners who participate in energy storage and solar panel programs can enjoy a dual benefit: they contribute to a more sustainable energy system while also generating passive income. This income can bolster their financial stability, particularly in times of economic uncertainty. For businesses, the adoption of smart grids translates to more predictable and potentially lower energy costs, which can improve their bottom line. Governments benefit as well, as these technologies foster more sustainable cities, reduce healthcare costs associated with pollution-related illnesses, and promote energy independence.

Implications of cities leveraging smart city IoT systems

Wider implications of more city administrations capitalizing on IoT technology may include:

• A shift in urban lifestyles towards more environmental awareness, driven by real-time data on local ecological conditions and individual carbon footprints.


• An increase in the adoption of renewable energy sources by homeowners, stimulated by the financial incentives of selling excess solar energy back to the grid.


• The creation of new market opportunities in the IoT and renewable energy sectors, leading to job growth and economic diversification in these industries.


• Local governments adopting more transparent and accountable practices in response to the increased availability of urban data and citizen engagement platforms.


• A shift in urban planning towards more data-driven approaches, improving efficiency in public transportation, waste management, and energy distribution.


• Enhanced civic participation and community engagement, as residents gain easier access to information and services, and more opportunities to influence local decision-making.


• Increased demand for cybersecurity experts and data privacy professionals, as municipalities grapple with protecting the vast amounts of data generated by smart city technologies.


• A gradual reduction in urban sprawl, as efficient public transportation and energy systems make inner-city living more attractive and sustainable.

Questions to consider

• Would you allow a city government to have access to your travel data if this travel data is used as part of traffic optimization efforts?


• Do you believe smart city IoT models can be scaled to a level where most cities and towns can realize their various benefits? 


• What are the privacy risks associated with a city leveraging IoT technologies?