Amsterdam: A Smart City Goes Live

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That's why Accenture has teamed up with utilities in North America, Europe, and Asia to figure out the best way to reduce cities' carbon dioxide emissions. In the first project—a $100 million venture in Boulder, Colo., led by Xcel Energy (XEL)—some 60,000 households will be connected to a smart electric grid by this summer. In early trials, energy usage per household has fallen by as much as 50% thanks to real-time network monitoring by utilities and the installation of smart meters that let customers adjust their energy consumption by time of day or other factors. Over the next four months, Accenture expects to announce similar projects with up to three major European cities.

In Amsterdam, city planners already are on the case. Dutch grid operator Alliander, which is 30% owned by the province that includes Amsterdam, will spend €100 million ($139 million) annually until 2016 to upgrade its entire network to a smart grid. That will include installing new meters in homes that detail consumer energy use and relay the data back to utilities. By 2011, says Paulus Agterberg, Alliander's director of strategy and innovation, almost all of Amsterdam will be on a smart grid. "You have to spend your money [on infrastructure] in the right way," he adds.

Remote Energy Management

As the city's energy infrastructure gets a face-lift, local policymakers also are devising ways to maximize the new smart grid. By early next year, Amsterdam's planners expect to create a "virtual power plant," or infrastructure upgrades that will let households sell excess energy generated from domestic solar panels, wind turbines, and biomass plants back to the city for a profit. All told, the plan could add 200 megawatts of renewable energy, roughly the size of a large wind farm, to Amsterdam's electricity generation.

"The idea is to create household or neighborhood renewable power plants," says Maikel van Verseveld, an Accenture partner in Amsterdam who's participating in the project.

With the first programs up and running, attention now focuses on the next round of smart city upgrades. Central to the plans are 300 charging points across the city for electric cars. The first one already has been installed, with the remaining hookups—set to be placed in local parking lots and other public spaces—on track to be ready by mid 2010. AIM's Baron says Amsterdam also is in discussions with a large European mobile-phone manufacturer and software provider to develop technology that would allow people to control their household electricity usage remotely. That could allow consumers to switch appliances on and off while on the go. "The future is remote energy management," Baron adds.

Amsterdam's plans are ambitious, but they do come with a hefty price tag. According to estimates, it will cost $438 per household over 15 years to install smart grid technology alone. Additional outlays, particularly costs of up to $280 million needed to make the city's homes more energy-efficient, could be a tough sell for consumers already suffering in the economic downturn.

Yet by converting Amsterdam into a smart city, local planners expect to bolster the economy through public and private investment, as well as cut emissions by 40% by 2025. Says AIM's Baron: "The aim is to create innovation."

Scott is a reporter in BusinessWeek's London bureau .

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