Smart Infrastructure Finance
Investment and Business Models in the Data Economy
"Developing standards to integrate sustainability and resilience criteria in infrastructure is critical to project developers and financiers across asset classes, while helping public sector institutions bridge the infrastructure gap necessary to tackle challenges such as improving resource efficiency, advancing sustainability, and improving society's risk response to climate stresses"
Nick Robins, Co-Director, Sustainable Financial Systems, UNEP and Hans-Peter Egler, CEO Global Infrastructure Basel Foundation
The Smart Infrastructure Finance Hub is a cross-campus initiative led by Civil and Environmental Engineering to advance new business and investment models for efficient deployment of capital towards smart and resilient infrastructure systems.
The focus is on financial innovation and advanced assessment modeling for investment decisions and designs of resilient and sustainable infrastructure, to overcome technical constraints, investment barriers, and legal/policy requirements.
The Hub leverages domain knowledge in smart infrastructure systems with emerging data science paradigms, and real world financial innovations in infrastructure finance to offer a new value proposition to faculty, students, and professionals.
Motivation & Megatrends
1. Value Chain Innovation Transforms Infrastructure Systems Boundaries
Sustainable infrastructure industry value chains have evolved as the result of automation and digitalization, and extend 'beyond the hard assets and real estate' to include 'enterprise architecture' that serves to operate, maintain, and create value-added services for resilience of the underlying real asset, so-called 'smart infrastructure'.
2. Digitalization Enables New Data-Driven Business Models
The integration of IoT in the design, construction and operation of smart infrastructure systems, is resulting in new data-driven monetization platforms such as data commodity swaps and pooled risk transfer mechanisms. See here for an excellent white paper on the potential.
3. The IoT Economy Drives Infrastructure Data Monetization and Hedging Opportunities
New financial and business models are disrupting how smart city infrastructure can be financed beyond debt and equity investments. IoT-informed operations data for resilience and adaptation spur smart (blockchain) contracts, risk transfer contracts, 'smart' asset-backed securities, and institutional crowd finance (e.g. Convergence).
Adriaens, Tahvanainen and Haueselmann. Upcoming chapter on Smart Infrastructure Finance in Investment Reinvented: Sustainable Finance in the Information Economy (Springer, 2018).
Adriaens presented the 'Leading Edge' Seminar at the University of Toronto on "Where CleanTech meets FinTech: Data-Driven Business Models in the IoT Economy" on 01/18/18.
Adriaens invited as a delegate to the UN-DESA high level meeting on investing in sustainable infrastructure in Doha, Qatar (11/15/17). He presented on "Financing Sustainable Cities: Plenty of money – Lack of Investment Models".
New Book: "Financial Technology for Industrial Renewal" by P. Adriaens and A. Tahvanainen (2016). ETLA Press, Helsinki, Finland. Describes how financial technology can be integrated with economic development to design new infrastructure investment models for institutional investors such as pension funds and sovereign wealth funds.
"Critical Infrastructure for the Regional Maritime System". A KeyNote presentation at the Leadership Summit of the Great Lakes and St. Lawrence Governors and Premiers (Detroit, Michigan and Windsor, Ontario October 20-22, 2017), by incoming CEE PhD student Lt. Col. Dennis Sugrue, Detroit District Commander, US Army Corps of Engineers.
"From Mechanical to Digital: Monetization of Mobility in the Data Economy". A TEDx talk at the MCubed Symposium by Peter Adriaens, Robert Hampshire (UMTRI), Siqian Chen (IOE), and student Ryan Moya (SEAS/Ross) based on our MCubed collaboration on new mobility infrastructure systems. Rackham Auditorium, November 1, 2017.