Smart City Challenge 2025

• The implementer of these pilot projects is the FinEst Centre for Smart Cities, whose task is to lead the implementation of the pilots, conduct research and development work in the pilots, and manage the activities supporting the long-term sustainability of the FinEst Centre in the pilots. The FinEst Centre for Smart Cities also involves researchers from other institutes of Tallinn University of Technology for the implementation of the pilots and employs, if necessary, new researchers into the team, incl. from Aalto University.
• Cities from Estonia and other countries (cities* and municipalities bordering with a city*) will be involved in preparing pilots by identifying and formulating their needs and challenges, inventing solutions together with researchers to ensure their relevance for implementation in cities, and in implementation with the role of finding the best opportunities for piloting solutions and preparing for long-term use.
• FinEst Centre for Smart Cities signs a partnership agreement with the local authorities, which establishes the rights and obligations of the contracting parties, the liability limit between the implementer and the partner or third party, and the specific activities in which they will be involved.

*A City is a local administrative unit where the majority of the population lives in an urban centre of at least 50 000 inhabitants and cities from countries with less than 5 cities of more than 100 000 inhabitants if they have more than 10 000 inhabitants. Those countries are: Croatia (HR), Cyprus (CY), Estonia (EE), Ireland (IE), Latvia (LV), Lithuania (LT), Luxembourg (LU), Malta (MT), Slovenia (SI) and Slovakia (SK).

Initial pilot project idea selection

The strongest four ideas based on the initial joint proposals will be selected to the 2nd phase of validation by the following criteria:

Would implementing the idea help the FinEst Center to create a world-class team and get additional funding in the following ways (max 6 points):

• potential contribution to the long-term sustainability of the FinEst Centre (new service, new product, new company, cooperation with a private company, new grant proposals, new researchers)
• addressing important focuses for the FinEst Centre: involvement of researchers from various fields, co-creation by involving city residents, improvement in city governance to ensure the sustainability of innovations.

How would these ideas contribute to the implementation of the strategic goals of the Estonian state and your (= partner city) home country (max 6 points):

• „Estonia 2035“ goals.
• Tangible positive impacts on the overall living environment, including social and cultural dimensions.
• User-centric design to ensure equal access to public services for all population groups.
• Using data to address urban challenges.
• Contribute to sustainable construction, and more efficient and sustainable energy usage.
• New solutions follow the new Bauhaus principles for sustainable and inclusive future that is beautiful for our eyes, minds, and souls.

In this phase, ideas will be evaluated by 3–4 FinEst Centre for Smart Cities team members or external smart city experts invited by them, along with two representatives from the Estonian public sector per pilot—one of whom will be from the Ministry of Economic Affairs and Communications. The final selection will be made by consensus.

Final selection of PILOT PROJECTS

Proposals and plans will be evaluated in written form by an international evaluation committee (10 members), which consists of four sub-teams, each of which evaluates specific criteria:

• FinEst Centre (1 member, Director)
• scientific (3 members)
• entrepreneurship (3 members)
• public sector (3 members)

Growing the sustainability of the FinEst Centre for Smart cities (max 12 points, threshold 6 points):

• Potential contribution to the long-term sustainability of the FinEst Centre (new service, product or company, cooperation with a private company, new grant proposals or researchers) (max. 4 points).
• Alignment with key focus areas of the FinEst Centre: interdisciplinary research involvement, co-creation with city residents, and improvements in city governance to support the long-term sustainability of innovations (max. 4 points).
• A well-developed and detailed pilot project plan, including a realistic budget and clearly measurable objectives (max. 4 points).

Business potential (max 16 points, threshold 8 points):

• Innovativeness of the new solution (max. 4 points).
• Scalability and commercial potential of the solution (max. 4 points).
• Quality of the plan for piloting the solution in the partner cities (max. 4 points).
• Quality of the solution’s commercial validation plan (max. 4 points).

Wider impact (max 12 points, threshold 6 points):

• Concrete positive effects for the improvement of the living environment as a whole, incl. social and cultural; user-centric design to ensure equal access to public services for all population groups; follow the new Bauhaus principles for sustainable and inclusive future that is beautiful for our eyes, minds, and souls (max. 4 points).
• Use of data to address urban challenges, and/or contribution to sustainable construction, and/or more efficient and sustainable energy use (max. 4 points).
• Contribution to the „Estonia 2035“ strategic goals (max. 4 points).

Research competence and potential (max 12 points, threshold 6 points):

• Level of research experience and achievements so far in the context of the proposed solution idea (max. 3 points).
• Research and development potential (max. 3 points).
• Quality of the pilot research plan (max. 3 points).
• Quality of the pilot’s scientific team (max. 3 points).

We expect all pilot projects to demonstrate their contribution to the following key performance indicators:

Commercial indicators:

• Number of customers/number of cities/number of countries that have confirmed the need for that solution, its priority to them and relevance of the proposed solution by the end of the pilot validation period (= full pilot proposal time).
• Number of customers/number of cities/number of countries that have confirmed their interest to buy the solutions by the end of the pilot project and/or confirmation of interest by investors.
• Potential turnover in euros from the sales of the created product/service in years 3-5 after the end of the pilot project.

Impact indicators:

• Measurable potential impact to cities in year 5 after the end of the pilot.
• Measurable potential impact to citizens in year 5 after the end of the pilot.
• Measurable potential impact to the environment/climate in year 5 after the end of the pilot.

Research indicators:

• Number of research articles published during the pilot project or 6 months after the end of the project (quality over quantity).
• Number of new researches involved with the FinEst Centre for Smart Cities for the pilot.
• Follow-up projects with a positive financing decision by the end of the pilot project or 6 months after the end.

• Piloting in cities should start as early as possible (latest in the 9^th month) to get real feedback and adapt the solutions based on that.
• Focus of the pilots is on validating the solutions based on research done for cities and preparing new services or products for the market.
• The research component during the pilots is either on fine-tuning the solution methodology and/or technology, or on analysing the new solution, and/or technology being implemented in a city.
• Follow-up research and development plans will be prepared for new grant proposals parallel to the pilots.

Timeline for the medium pilot projects (24 months), could be as follows:

• 6 months – development of the solution and method to assess the impact, including the methodology, technology, and needed research, also close cooperation with potential future users
• 12 months – pilot in two cities and pilot analysis, impact assessment, preparation of the initial business plan
• Go/No-go decision based on the piloting results and business potential
• 6 months – further development of the solution to prepare it for scaling and commercialization and/or preparing follow-up projects.
  • These 6 months are financed only in case the team proposes market proof either in the form of customers or investors and a solid business plan.

The following describes the pilot projects teams.

Pilot project management team can consist of one or two people with the following roles:

• Innovation and Sustainability Manager, Research and Quality Manager of the pilot project.
  • Both come from the FinEst Centre for Smart Cities team or will be employed as a new employee to the team. The latter can also be an employee of another TalTech department. Both roles can be carried out by one person.
• A business leader should be engaged—either from within the initial team or externally—no later than month 7 of the pilot project.

Research and development team:

• Into the teams of our pilot projects, we can employ people directly to the FinEst Centre or engage people working in TalTech, incl. people already working in the FinEst Centre. However, for pilots starting from 2025, we expect the Research Leads and/or Pilot Managers to be employed directly by the FinEst Centre for Smart Cities, an autonomous structural unit within TalTech.
• Pilot teams are also very welcome to engage researchers from Aalto University and we will employ them to the FinEst Centre.

City teams for piloting:

• TalTech will involve relevant people from the partner cities to guarantee good quality contribution to the development of the pilot solution, carrying out the piloting in the city and preparation for long-term implementation.

Advisory board:

• Each project will arrange a competent advisory board for itself, having at least the following members:
  • Two representatives of Estonian ministries to provide support in Estonian-wide implementation preparation for long-term.
  • International high-level experts from the domains of the project, from both research and business side.

These pilot projects will be financed by the European Regional Development Fund and Estonian Ministry of Research and Education. This financing is given to the FinEst Centre for Smart Cities to build its sustainability and improve Estonia cities with research-based solutions.

This financing is an investment by the FinEst Center for Smart Cities into the pilot projects and the expectation is to earn the money back through follow-up projects and percentage of the future commercial turnover. The income will be reinvested into new pilots.

As a result of the 2025 Smart City Challenge, we would like to implement two medium-sized pilot projects with a duration of 24 months each, and a budget of €840,000 per project.

The financing is initially granted for 18 months and can be extended for 6 months for commercialization preparation only in case the team proposes market proof either in the form of customers or investors and a solid business plan.

The budget is confirmed at the beginning of the pilot project but it will stay flexible inside the pilot, so that the pilot is supposed to shift money between activities, people and cities to achieve the best result for the pilot.

The eligible costs are:

• Personnel, except administrative
• Services, materials and products purchased

25% of lump sum overhead is paid on top of the direct cost, except subcontracting to cover general costs (phone, computer, administration, etc).

Financing is 100%.

Researchers from Aalto University will be employed by TalTech.

In case of cities, TalTech will cover needed direct costs related to conducting the pilot, incl. needed travelling and experts.

Private companies can participate with their own financing or make offers to the tenders and get selected and paid based on open competition.

Concrete budgets based on action plans and specifics will be prepared for each pilot in the finals during the validation period (April-August 2025) under the lead of the person from the FinEst Centre for Smart Cities and in close cooperation with the research and development team, partner cities and other partners if relevant.

We will also finance planning and initial proof-of-concept during April-August 2025, with about 14,000 euros per pilot project. Potentially 4 projects will be chosen for this phase.

By submitting your idea, you will give the FinEst Centre for Smart Cities the right to share this idea with external experts during the evaluation period. If this idea is selected, the FinEst Centre for Smart Cities has the right to implement this idea with offering you an active role in conducting the pilot.

Research results from your prior work that are used in the pilot project will remain your intellectual property. However, any new developments arising from pilot projects conducted in collaboration with the FinEst Centre will become the intellectual property of the Centre. We will collaboratively contribute to the commercialization of these results and share success based on mutually agreed terms. You’re free to integrate pilot project outcomes into your future research unless they are designated as business secrets.

FinEst Centre is happy to share the profit with the research and development team contributing to the commercial success of the solution. IP term with private partner will be negotiated separately.

In the FinEst Centre, the implementation of all pilots is supported by a project manager who answers the questions that arise, organizes the guidance and training of the teams and especially the leaders of the pilot projects, and provides support and assistance to them through regular mentoring sessions.

The finance department of TalTech prepares pilot project financial reports to the financier based on the correct input received from the institutes. The partners prepare their own reports, but the financial department of TalTech guides and advises them. During the first quarter of the implementation of the pilot projects, financial reporting training will be conducted.

The procurement / tender department of TalTech helps pilot projects to conduct procurements based on the input received, guides and trains team members in conducting procurements. The partners carry out their own procurements, but TalTech procurement department advises them if necessary. In the first quarter of the implementation of the pilot projects, procurement / tender training will also be conducted.

FinEst Center will organize three commercialization trainings-workshops for the pilots during the pilot project implementation period and two panels with experienced entrepreneurs and investors. In cooperation with TalTech intellectual property experts, the intellectual property created in the pilots is mapped, a plan to protect it created and implemented.

The internal auditing office of TalTech will train and guide the pilot projects in preparation of their data management plans.