The challenge of paying for smart cities projects

As cities look to upgrade their infrastructure with smart technologies, paying for those projects presents a significant challenge of introducing smart technologies on a wide-scale basis. Constrained by tight budgets, cities need to identify business models that can help to attract private financing in order to make the introduction viable and financeable.

Several factors make it difficult to finance smart cities projects. One common obstacle involves technology risk: the project may be the first to deploy a particular technology, reducing investor confidence in the integration and usability of the technology in the absence of demonstrable proof of concept. It may also be hard to secure financing for a smart city project where it is difficult to monetize the benefits of the project.

While there are numerous options available to source finance for smart cities investments, a challenge in taking advantage of many of these options is matching the project to the most appropriate financing tool. This requires that you fully understand the project, its potential cashflows, the range of financing options available (locally and internationally), and available procurement methods to government in order to deliver.