Soluble Problems: Technology Drives the Future of Water


Innovative technologies could transform outdated water supply systems – for a price.

With the simple act of turning on a faucet, we complete a complex process.

One on the cusp of significant change.

The water industry in the United States is approaching a crossroads. Aging infrastructures, scarcity of resources, declining water quality – even climate change – will require the acceptance and application of innovative technologies to keep the water flowing. These technological solutions come at significant initial cost, but over time will prove their transformative worth.

That doesn’t make getting started any easier.

The U.S. water industry is surprisingly fragmented, a maze of cash-strapped municipalities and revenue-driven companies serving relatively small constituencies. And despite divergent trends in the supply of and demand for clean, safe water, suppliers and the consuming public will need to be convinced costly innovations and upgrades are not only desirable but necessary. Capital solutions will be at a premium.

Notable technologies include the use of sensors to aggregate data, the ability to work on subterranean pipelines without breaking ground, and the need for energy-efficient desalination methods.

Big Data (Internet of Things)

Gathered by sensors, accurate and timely water data allows for sophisticated analyses not previously done. For example, leaks or faulty meters that might have gone undetected for long periods of time, leading to wasted water and lost revenue, can be found in a timely manner.

In August 2016, leading global water technology company Xylem (NYSE: XYL) announced its agreement to acquire Sensus, a leading provider of smart meters, network technologies and advanced data analytics, for approximately $1.7 billion – a transaction that forecasts change and opportunity.

Trenchless rehabilitation

Much of the nation’s water infrastructure, some of which dates to the late 19th century, has reached or is approaching the end of its useful term. In fact, water officials told the New York Times in 2009 they believe wooden water mains are still in use in South Dakota, Alaska and Pennsylvania, among other places. According to the American Water Works Association, repairs, restorations and expansions necessary to maintain the current levels of service for a growing population will cost at least $1 trillion over the next 25 years.

Trenchless rehabilitation offers an opportunity to repair subterranean water systems with minimal or no disruption to nearby roads and businesses. Companies such as Pure Technologies and Aegion have increasingly become key players in the effort to restore or replace existing pipelines using methods that work from within, eliminating the need for an access trench.

Desalination

Used effectively in the Middle East and certain other parts of the world, desalination has the capacity to increase water sources, especially in areas where freshwater resources are limited. AquaVenture Holdings, through its Seven Seas Water business, is a multinational provider of desalination and wastewater treatment solutions, providing 7 billion gallons of potable water to customers in the Caribbean and other parts of the world.

The primary downside to desalination is the amount of energy required. The need for additional research and development creates opportunity for water technology companies able to address the high energy costs. Energy Recovery has set the industry standard for energy-recovery technologies. The company claims facilities using its devices, including some of the world’s largest desalination plants, save more than $1.7 billion annually on energy expenses.

Conclusions

Change is coming to how we source, treat and transfer water. Technology is forcing us to re-think water.

To prepare for a shift toward technology, water suppliers should begin the process of understanding the return on investment associated with new technologies as well as the best ways to finance them. Municipalities can look to bonds to raise capital, or consider privatization. Private or publicly traded companies can look to the capital markets or debt capital markets.

While municipalities will not face pressure from a business standpoint to adopt new technologies, private or publicly traded companies that are slow to innovate risk facing a competitive disadvantage.

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