On 28 of July 2017, Master Meter, in collaboration with Water Finance & Management, released, The Essential Guide To Financing Smart Water Projects. This ebook provides an overview on water infrastructure financing, the growing investment in smart water technology, and how these critical projects are being funded.
The report draws heavily from Bluefield Research’s in-depth analysis of smart water markets, trends, and forecasts. It also taps Bluefield analysis on public-private partnerships, globally, and their potential impact on project deliveries going forward.
Smart water infrastructure has quickly become an important urban infrastructure solution in both the United States and around the world. This is because cities and countries are struggling to handle a growing number of water management challenges compounded by aging infrastructure, water loss, water scarcity, population growth and more.
Investing Smart: Smart Water Infrastructure & Its Global Market Outlook. According to a recent report from Bluefield Research, the global water industry will spend more than $20 billion on software, data and analytics solutions over the next decade. The report, U.S. Smart Water: Defining the Opportunity, Competitive Landscape and Market Outlook, indicates that the trend will position technology providers to deploy state-of-the-art solutions to enable more advanced levels of system intelligence, real-time network visibility, energy efficiency and customer service.
“Historically, utilities have been hobbled by their inability to generate actionable insights from disparate network and water usage data, but this is changing with more advanced data management and cloud-based solutions,” says Will Maize, senior analyst at Bluefield Research. “Early adopting utilities, including American Water and East Bay Municipal Water District, are leading the shift towards smart water technology adoption.”
“While smart meters garnered the most attention, asset intelligence and visibility into real-time network conditions offer significant benefits,” says Maize. “Water companies can now go from being reactive to proactive.”
U.S. Smart Water Forecasts, 2016-2026
Seizing on this burgeoning demand for solutions is an outside group of venture- backed start-ups seeking to leverage their data expertise, much of which draws from other industry applications. These data and analytics companies are looking to integrate disparate sources of data to optimize networks, track water quality, and generate insights for asset performance management. Their primary challenge, however, will be overcoming a credibility gap with demonstrated pilot projects and buy-in from municipal utilities. A select group of companies from more mature smart water markets, Europe and Israel, are also beginning to make headway in the U.S. market, says Bluefield.
Partnerships & Innovative Approaches: P3s & Emerging Trends That Significantly Impact Financing and Project Delivery. According to a report from Bluefield Research, the market for P3 water projects was set to nearly triple between 2016 and 2020. In that timeframe, total investment is expected to surpass $58 billion, of which 80 percent will target new seawater desalination and wastewater treatment plants.
Many countries across the globe are facing a perfect storm of financing constraints and water infrastructure shortfalls. Dramatic declines in oil and commodity prices, low water tariffs, groundwater overdrafts and untreated wastewater discharges are prompting governments to tap the private sector through public-private partnership programs.
The report also states that the global adoption of the water P3 model will come to the forefront over the next five years through a combination of continued growth in P3s in markets where the model is well-established (China, Brazil), resurgence in markets that have stalled (Indonesia, Philippines, Mexico, Egypt), and new markets opening up (Persian Gulf countries, Vietnam, Peru and the United States).
Global PPP Project Flow by Asset Type
“Particularly in emerging markets, led by China,municipalities are hard pressed to match the financial capacity and operational expertise that the private sector can provide,” says Phuong Pham, Senior Analyst at Bluefield Research. “National governments aim to de-risk their water sectors for private investment with new PPP laws and more attractive contract tenders, while preserving long-term control over assets.”
An increasingly diverse group of private and semi-private firms are responding to new tender opportunities for P3 contracts. Bluefield’s analysis of the portfolio strategies of the 50 largest global water players indicated that the water P3 market is in transition, with a cast of new players emerging.
The global P3 market is led by integrated water players Veolia and Suez who have sustained their positions in recent years, followed by semi-private local utilities (SABESP, COPASA), rapidly scaling Chinese players (BEWG, China Everbright), emerging utility concessionaires (Manila Water, AEGEA) and integrated water players (Aqualia).
“Many players turned their backs on PPP opportunities during the recent recession because of their capital intensity, while they deleveraged and reviewed their value chain positions overall,” says Keith Hays, Vice President of Bluefield Research. “This market shakeout has left a field of players with clearer strategies to navigate continued macroeconomic uncertainty and address new opportunities.”
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Reese Tisdale is the President of Bluefield Research, a market research and insight firm focused exclusively on supporting companies addressing opportunities in water. Learn more about how Bluefield is helping companies make more informed decisions with data-backed intelligence.