Figure 3.38 New York City: Key Stakeholders in Electricity Supply

cities have not yet become eff ectively organized to pursue sustainable energy planning and management. In the traditional supply-driven and network-oriented urban energy landscape, the role of cities is limited. Even in a sophisticated city such as New York, offi cials realized that the New York City Energy Planning Board was needed to link supply and demand eff ectively as part of PlaNYC 2030, the city’s integrated energy strategy (City of New York 2007).

Stakeholder Dynamics

Urban energy planning and management are shaped by several principal stakeholders: local, regional, and national governments and their relevant agencies or authorities; public and private energy utilities, companies, vendors, and investors; customers; and public interest entities. Other stakeholders include fi nanciers, equipment and service providers (for example, energy service companies), and city service users. The relationships among these stakeholders are relatively straightforward. Governments regulate urban energy services to ensure quality, safety, environmental controls, and fairness to customers and investors; energy providers produce, transmit, transport, distribute, and retail energy to customers; and customers pay for energy to sustain services and reward investors. The public interest entities or organizations advocate on behalf of disadvantaged social groups, such as low-income households, to improve access and aff ordability. These entities and groups also inform and educate other stakeholders about sustainable energy solutions and press for relevant action. In particular, climate change has mobilized many international and domestic public interest entities.

Traditionally, city governments are most concerned about the needs and interests of consumers in their jurisdictions and strive to safeguard reliable and aff ordable energy services, especially in electricity (and heating service in cold climate cities). But the means of intervention are limited, as illustrated by the example of New York City (fi gure 3.38). In this case, the city government has been only marginally involved

Figure 3.38 New York City: Key Stakeholders in Electricity Supply and Consumption

Source: City of New York (2007).

in planning and managing electricity supply and demand, which offi cials are seeking to improve through PlaNYC 2030.

City governments are uniquely positioned to infl uence the stakeholder dynamics in favor of sustainable energy because they are signifi cant energy consumers themselves and are able to aff ect the behavior of energy consumers in the city. Cities also determine how urban areas are built, including energy supply infrastructure. However, intracity consultations are often challenging. Energy use cuts across many agencies, but stimulating interagency collaboration is a big challenge, particularly if energy costs and benefi ts are being borne unevenly. The functional areas within agencies—represented by technical staff members, environmental offi cers, budget teams, procurement personnel, and so forth—also bring unique biases, expertise, incentives, and constraints to eff orts to improve energy effi ciency. Some of these issues may be addressed through policies and programs, but the strong leadership of mayoral offi ces is often needed to push the parties to work together.

Economic, Financial, Social, and Environmental Aspects

Sustainable urban energy planning and practice should be economically justifi able, fi nancially viable, socially equitable, and environmentally sensible. These considerations form the basis for the proper selection and design of sustainable energy actions by cities.

Economic justifi cation requires cities clearly and consistently to account for and evaluate the costs and benefi ts of alternative urban energy solutions so as to facilitate robust comparisons. This is often challenging because evaluating environmental externalities, such as health benefi ts or hazards, is diffi cult. A critical aspect of economic analysis is the calculation of the lifecycle cost of alternative energy solutions. Many sustainable energy actions, especially energy effi ciency measures, have life-cycle costs lower than the business-as-usual alternatives. For example, Council House 2, a visionary building developed by the City of Melbourne, Australia, involved features reducing electricity use by 82 percent, gas by 87 percent, water by 72 percent, and corresponding carbon dioxide emissions by 87 percent. While the initial costs were high, it was possible for the city to envision a fi nancial payback period of only about 10 years because of the energy savings (C40 Cities 2009b). Though the commercial sector normally considers projects viable if payback periods are less than fi ve years, city governments tend to have longer investment horizons because their built environments last for decades. Other sustainable energy options may have longer payback periods, but may yield benefi ts that are more diffi cult to quantify, such as local investment, job creation, improved competitiveness, and enhanced quality of life (for example, reduced commuting times, improved air quality and health, more green space, and more community space).

Financial viability requires city actors to obtain suffi cient funds to implement sustainable energy solutions, sustain outcomes, and maintain a positive return on investment within prevailing and projected fi nancial cash fl ows. For a city to acquire and sustain modern energy services (for example, electricity, natural gas, or district heating), prices need to ensure cost recovery. For energy effi ciency measures to be viable, the saved energy has to be as reliable as and cheaper than conventional supply options. In other words, a viable sustainable energy solution must be a viable business proposition. Because market valuations often fail to account for environmental externalities, some renewable energy solutions, such as wind electricity and solar photovoltaic systems, may still require government subsidies or regulations (feed-in tariff s) to be viable. The recent expansion of carbon fi nancing markets should improve the fi nancial attractiveness of sustainable energy investments by providing a new and sometimes more secure revenue stream for such projects. But many fi nancially