Once you have a Water Tower and a Fire Station ready, fires will start appearing in your city.
When you're in the game, you may see a fire icon at the bottom of your screen. Tap it to get to the building. Tap the building once to put out the fire.
Every fire you extinguish gets you a small amount of coins and 2 points of energy. To put out the fire you need 1 unit of water. You can receive water from the Water Tower.