Cities are the economic engines of their nations, generating about 80% of global GDP. Yet they also account for 75% of global energy consumption and 70% of greenhouse gas (GHG) emissions, a challenge highlighted during the 5th Organisation for Economic Co-Operation and Development (OECD) Roundtable on Smart Cities and Inclusive Growth in 2025. Nonetheless, density, connectivity and institutional capacity make cities critical arenas for experimenting with innovative solutions that can later be scaled up nationally.

The dual role of cities as both a source and a solution to climate challenges underscores the significance of smart technologies in powering urban development. OECD defines smart cities as those that leverage digitalisation “to improve people’s well-being and build more inclusive, sustainable, and resilient societies”.

In developed regions like Europe, the European Union has embarked on the EU Cities Mission to deliver climate-neutral and smart cities by 2030. The initiative supports 112 pioneering cities in accelerating their transition to zero emissions through technologies including intelligent transport systems, smart buildings, and digital twins.

Here in Malaysia, a similar transformation is already taking shape through the AI Cities Initiative, one of the key priorities under the 13th Malaysia Plan (13MP). Led by Digital Nasional Bhd (DNB) and the Malaysia Digital Economy Corporation (MDEC), and also  complementing the Ministry of Housing and Local Government’s Smart Cities programme, the initiative aims to integrate technologies such as Internet of Things (IoT), Artificial Intelligence (AI), cloud, and other smart technologies into diverse urban systems across major cities from Penang to Johor.

Increasingly, the energy transition itself is becoming one of the central organising principles of smart city development. To this end, the nation’s electricity utility, Tenaga Nasional Berhad (TNB) is laying the intelligent foundations for Malaysia to power more adaptive, energy-efficient, and resilient urban environments.

Smart meters and AMI as the core of energy-aware cities

As highly interconnected living environments running on sensors and other devices, smart cities can be likened to a human body with different systems working together. Equipped with sensors, smart meters are part of the ‘nervous system’ in this body, functioning as sensory organs to offer real-time data that informs how other systems respond. 

This flow of information ensures that the city’s operations – from energy distribution to resource management – are constantly optimised based on real-time conditions. For example, during a heat wave, electricity demand may surge as more people rely on air-conditioning.  With smart meters in place, utilities can instantly receive data that allows them to respond and adjust power generation accordingly to lighten the load during peak hours.  

If smart meters are the nerve endings that collect information, then Advanced Metering Infrastructure (AMI) are the neurons that transmit and receive information to the utilities central system or ‘brain’. Synchronous updates from consumers, energy sources, and the grid itself enable utilities to drive functions like load profiling and outage detection.  

In Malaysia, TNB has installed over 5.6 million smart meters nationwide, targeting to deploy 9 million by 2030. The rollout of AMI infrastructure also enables bi-directional energy flows, supporting initiatives like Net Energy Metering (NEM) and Time of Use (ToU) tariffs that allow customers to optimise consumption and integrate rooftop solar generation into the grid.  

Evolving from connected cities to adaptive cities with AI 

Sensors, connected infrastructure, digital platforms, and intelligent devices enable smart cities to generate vast amounts of real-time data. Advances in AI are now making it possible for cities to not only collect this data but continuously learn from it, predict disruptions, and optimise urban systems dynamically. 

CelcomDigi and its partners, for instance, launched Malaysia’s first AI-powered traffic intelligence platform in high-traffic areas of Damansara, Petaling Jaya. The system uses AI, 5G connectivity, and advanced analytics to generate real-time insights for easing congestion and improving road safety.  

Meanwhile, the Johor Bahru Integrated Operations Control Centre (JBIOCC) in the city centre similarly uses AI to track traffic flow, detect potholes, and even catch litterbugs in real time. With the system, the average time to solve garbage disposal problems is within three hours, while potholes are repaired within 24 hours.  

Within the energy sector, AI-powered predictive capabilities are also enabling cities to anticipate disruptions, optimise energy resources, and boost grid reliability. TNB for instance developed an AI-driven predictive maintenance model to better manage its high-risk underground power cables and significantly reduce power disruptions nationwide. Aligning with Malaysia’s Smart Utility 2030 Roadmap, pilot projects in Selangor demonstrated how the new AI-based operational tool within its grid infrastructure could achieve more than 80% accuracy in failure prediction up to two years in advance. 

In Penang, the Bertam Smart Energy City initiative uses digital twin technology to create a detailed real-world replica of the entire city, enabling large-scale analysis of the city’s energy consumption and carbon emissions. This resulted in the identification of strategies that could lead to a total of 69.7% savings in energy and carbon emissions.   

Building smarter, more sustainable public infrastructure in cities 

Cities account for a significant share of global emissions, but they are also highly vulnerable to the impacts of climate change. Floods, heatwaves, and storms lead to disproportionate impacts across urban areas. Yet at the same time, cities are more than just sites of risk, they are also fertile grounds for innovation, collective action and policy improvement.  

When empowered, cities can foster knowledge spillovers, pilot new technologies, and implement governance frameworks that can ripple across broader regions. In this context, cities play an important role in scaling the capacity of renewable sources and electrification across key urban infrastructure from buildings to transport.  

TNB for example has been powering Ipoh’s aspiration to become a low-carbon city since 2022. TNB supplies energy-efficiency products and services while its subsidiary, GSPARX, provides the installation of solar systems. In line with Malaysia’s broader net-zero goals, the Ipoh City Council (MBI) intends to scale the initiative to all 154 local authorities nationwide.  

Back in 2024, TNB also signed a similar strategic agreement with the Putrajaya Corporation (PPj), aimed at transforming the country’s administrative capital into a smart city. The agreement includes data-sharing initiatives between the two entities as well as public infrastructure development for renewable energy. 

This includes the installation of LED streetlights, 500 EV chargers, and rooftop solar systems for 200 houses, resulting in energy bills savings of RM2.5 million for 20 years. Taken together, these initiatives demonstrate how smart cities can leverage economies of scale to accelerate renewables integration and future-ready energy infrastructure, driving more cost-effective, sustainable, affordable, and resilient energy systems. 

Going from smart cities to ‘wise’ cities 

Smart technologies are increasingly becoming key enablers for powering more adaptive, energy-efficient and resilient cities across Malaysia

Smart technologies are increasingly becoming key enablers for powering more adaptive, energy-efficient and resilient cities across Malaysia. However, Minister of Energy Transition and Water Transformation, Fadillah emphasises that sustainable urban transformation goes beyond technology alone. 

More importantly, it relies on ‘wise’ cities that can exercise sound judgment in managing growth while safeguarding long-term environmental and social well-being. The success of smart cities depends on how well they govern, manage, and utilise their resources, effectively translating plans into meaningful outcomes for the rakyat.  

Intelligent energy systems play a foundational role in enabling this shift, powering responsive, adaptive urban systems across mobility, transport, and other key sectors. As climate challenges intensify, cities are not only on the front lines but also at the forefront of solutions to drive a resilient, equitable, and low-carbon future for all.