How AI can help in urban development

18.09.2025

Source: E & M powernews

The potential applications of AI in smart cities are diverse. Researchers have now analyzed case studies and provide information on legal hurdles in a recent study.

In a recent study, researchers from Difu (German Institute of Urban Affairs) and Fraunhofer IESE (Institute for Experimental Software Engineering), together with lawyers from the BBH Group, have examined 120 case studies for the use of artificial intelligence in smart cities and regions. The aim: to highlight the potential for the use of AI at municipal level and to "prepare concrete fields of application and practical examples in an action-oriented manner".

In principle, the use of AI as a cross-sectional technology is possible in all municipal fields of action, according to the study - be it in traffic management, monitoring environmental parameters, handling bureaucratic processes, waste management, energy supply or participation processes.

However, the fields of "energy and environment" and "infrastructure" in particular show a high level of development momentum. This is not surprising given the dual transformation of municipalities - both in the area of digitalization and in the area of sustainability: the connections between climate change, climate adaptation and urban planning are creating great pressure to act. AI, with its possibilities for data analysis and forecasting, promises to provide evidence-based support for decisions.

Analysis and optimization

According to the study, AI applications for monitoring, anomaly detection and optimizing the use of resources have so far been the main focus in the "Energy and environment" field of action. Real-time data and AI-supported analysis models can help to control grids and systems of technical energy infrastructures, detect irregularities and damage at an early stage and improve decision-making processes.

One of the case studies presented in more detail in this context in the study is the "Grid Insight: Heat" project by Stadtwerke Iserlohn. They have developed an "Urban Digital Twin" (UDZ) for district heating networks based on AI. This integrates real-time data from various sources - such as district heating meters, geographical information systems and contract data - to create a comprehensive image of the district heating network.

The AI component creates heat demand forecasts and optimizes the scheduling of generation plants. According to the researchers, Stadtwerke Iserlohn was able to reduce its primary energy consumption by more than 15 percent.

From 2020 to 2023, Stadtwerke Konstanz tested the use of AI-based algorithms in the planning and operational management of distribution grids and microgrids in the "AI4Grids" project. The aim is to synchronize energy generation and grid capacities through intelligent grid control. Existing grids are to be optimally utilized and expansion avoided wherever possible.

An automated process continuously monitors the current grid status and creates reliable forecasts for generation and consumption. Critical loads can thus be identified at an early stage and recommendations for action forwarded to the control room.

Important legal classification

The authors provide further examples of the possibilities of using artificial intelligence in urban development. All case studies are given a legal classification, as the implementation of AI projects must not only meet the requirements of the EU Regulation on Artificial Intelligence (AI Act), says BBH partner Julien Wilmes-Horvath, lawyer and specialist lawyer for IT law: "The AI Act is just the beginning: anyone using AI systems must also keep an eye on copyright, data protection (GDPR) and IT security requirements."

The authors conclude that one of the key factors for the successful use of AI is for local authorities to have the necessary technical, organizational and specialist knowledge or to acquire this knowledge from external partners. A clear vision and the will at all levels to implement AI projects are also required. It is also crucial that AI projects are coordinated with other partners and neighboring municipalities.

The study "Artificial intelligence in smart cities and regions. Innovative AI applications for urban development" by the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) at the Federal Office for Building and Regional Planning. It is part of the "Smart Cities Model Projects" funding program, which is being carried out by the BBSR on behalf of the Federal Ministry of Housing, Urban Development and Building (BMWSB). It is available free of charge on the Internet.

Author: Katia Meyer-Tien