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Smart Cities and Innovative Financing

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Issues: Finance, Sustainable Cities

“Cities in Europe are experimenting [with] new ways to invest in energy transition and finance green measures at [the] local level. Innovative financing models are becoming a priority because of [a] lack of public funding” says Sorina Buzato of the Remourban project (February 6, 2017).

In 1995 Stuttgart (Germany) started using a revolving fund to finance energy-efficient projects in the city. At first, the fund covered energy-saving projects that had a relatively short payback period. Afterwards these funds were then re-invested in more ambitious projects.

Agueda (Portugal) replicated this model of innovative financing to modernize public facilities and save water and electricity. The city expects a savings of 20 per cent after the implementation of the measures.

Typical energy-efficiency measures that can be financed through this model are low-power devices, pumps, ventilation, efficient lighting systems, solar panels and thermal insulation.

Other cities, such as Nottingham (U.K.), Valladolid (Spain) and Tepebasi (Turkey), have tried similar measures, looking to innovative financing instruments, such as green bonds and tax increment financing, as part of the Remourban project.