How 'smart water' is revolutionising the utilities market
'Smart Water' is a trend that is taking hold in the water industry, and momentum is building.
What it means is that the extraction, transmission and analysis of big data is enabling smarter, more efficient decision making for end users, such as water utilities.
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The ability to gather data and turn it into actionable insights has meaningful implications in terms of optimising infrastructure systems and better managing the constrained capital of these utilities, which ultimately leads to improved affordability for consumers of water longer term.
Smart water solutions drive costs down and, given that the price of water is essentially the cost of treating and transporting it to the user, increased adoption is a big win.
Imagine utilities using predictive analytics, artificial intelligence and remote monitoring and controls to reduce water leakage or 'non-revenue' water, fix water equipment before it breaks and hence save a significant amount of unnecessary capital spend, find the under-reporting meters, reduce sewage discharges into rivers during extreme weather events and flag abnormal pollutants ahead of the treatment plant or before it enters your home.
This technology exists today and is becoming increasingly relevant as more creative solutions are evolving to address the needs of capital constrained utilities with significant social obligations.
It also means that estimates regarding spending required on water infrastructure over the next number of years may be too high.
Some $14trn is anticipated to be allocated to spending on water infrastructure by 2030. Typically, half of this spending is on underground infrastructure such as pipelines and tunnels.
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However, it is becoming more likely that these numbers will never be achieved, not because the need is not there, but because the water industry is starting to jump on board, using big data to lower total costs.
Numerous companies have these technologies in their portfolios. We anticipate 'smart water' to be one of the fastest-growing areas in the water space over the medium term.
Catherine Cahill is a senior portfolio manager at KBI Global Investors
Bull Points
• Smart water solutions are higher margin for the provider and allow them to become more ingrained with their customers
• Win-win for the company and for the customer. As costs come down, affordability improves
Bear Points
• Utilities are inherently conservative, so mass adoption will take time
• Many smart water investments are generally discretionary, so the more problematic utilities are likely too busy fighting fires to adopt forward thinking solutions
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