Posted on December 10, 2023
Generating over 80% of global GDP, cities have always been the engines of economic growth and innovation. As the world becomes increasingly urbanized, they are also at the forefront of some of the biggest challenges we face today. From climate change and population growth to ageing infrastructure and resource depletion – our natural and built environments are being tested to their limits. Urban energy systems can play a critical role in supporting resilience and prosperity, enabling cities to adapt to changing circumstances and thrive in the face of uncertainty.
Navigating energy challenges in a rapidly changing world
The energy crisis in 2022 highlighted the impact on European citizens, most notably record-high energy costs. In the US, nearly half of homeowners are concerned about power outages stemming from weather events and cyberattacks on the power grid1.
And, in the UK around 13% of households are ‘fuel poor’2, meaning increased energy costs would push them into poverty if used at adequate levels.
The challenges of energy transition are both complex and multifaceted, and they impact everyone. They also pose the greatest opportunities to change the course of our collective futures.
Climate Change and Decarbonization
With climate change already causing rising sea levels, extreme weather patterns, and other destructive phenomena, cities are under pressure to take action, setting ambitious targets to reduce their carbon footprint. Energy transition is key to achieving these targets, with many cities already shifting to lower carbon or renewable energy sources like solar, wind, and hydropower. In Amsterdam, Arcadis has worked with the municipality to develop an Energy Transition Strategy that aims to achieve a carbon-neutral city by 2040. Measures include increasing the share of renewable energy, improving energy efficiency, and promoting sustainable transport.
As cities attract more people, so does the need for electricity to power growing populations and infrastructure. Various sectors supplying these services are moving towards electrification, increasing demand, putting pressure on our grids. With renewables being the cheapest form of power today3, it’s attractive for cities to invest in clean energy sources. But this also means more supply or even oversupply with grid capacity not expanding at pace. Infrastructure and space are key factors to support an effective transition. Cities must explore a range of options that best suit their unique strengths – from renewable energy and circularity of infrastructure, to repurposing industrial waste for energy supply.
Digitalization and Decentralization
New digital technologies are changing the way we produce, distribute, and consume energy. Smart grids, energy storage systems, and other innovations are making it possible to generate and manage energy more efficiently. Decentralization, which allows energy to be produced and consumed locally, is another key trend in the energy transition. In the Netherlands, for example, almost 40% of the electricity supply is generated by decentralized energy systems.
Public Awareness and Action
Citizens and organizations are becoming more aware of the need for sustainable energy, and they are taking action to promote change. Public opinion can shape policy and investment decisions, and cities that embrace sustainable energy will be better positioned to attract residents and businesses.
Government Policies and Regulations
Policies and regulations like the European Green Deal, the Biden-Harris Administration’s $11 billion in grants and the ‘Powering Up Britain’ Energy Security Plan can incentivize or mandate the use of sustainable energy sources, which can drive innovation and investment in the energy sector. Governments can also provide funding for research and development of new technologies, in partnership with the private sector.
From Vision to Reality: Towards smart, sustainable urban energy systems
There are many opportunities in the energy transition. The rise of sustainable finance, for example, presents a major opportunity to fund energy transitions, but the effects are concentrated in advanced economies. How can we approach this so that everyone is brought along and benefits from the journey?
We need to adopt a holistic approach to urban energy systems. One that recognizes the interconnected nature of the climate challenges, energy transition, societal welfare and spatial limitations. By taking a comprehensive ‘systems thinking’ approach to energy planning – bringing all stakeholders including local governments, the private sector, academic institutions, the energy and resources sector and citizens together – we can drive change across the entire urban energy ecosystem, from buildings and transport to water and waste management.
So, what needs to change today?