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18 January 2017 / Keith Hays
Something Old, Something New: Europe’s Water Utilities Get Smart


Water utilities are notoriously known for their aversion to new technologies when it comes to running their drinking water networks—there’s too much risk and often unclear returns. Vendors have been called out for bombarding utilities with information about complex data, analytics, sensors, and other products that has amounted to a lot of noise, but only a selection of contract awards.

Implementing new software platforms on a water network often requires a painful process of data organization and integration, not to mention personnel training and a slew of new operational protocols. Nevertheless, an accumulation of badly needed repairs, over $10 billion in lost revenue to leakage, and thin operational margins are prompting European utilities to move past their conventional approach and consider an array of networked, real time, always on, and autonomous solutions – aka smart water technologies.

European utilities, particularly those with leaky networks and strong regulatory regimes, are at the forefront of smart water – taking concrete, incremental steps to improve water network operational efficiency. In some cases, the results have been astounding: halving of non-revenue water, 20-40% drops in energy consumption, and substantial savings for meter reading. Although a clean slate may be optimal, utilities confirm the key is not necessarily an overhaul of network control rooms, but rather, using these new technologies to pinpoint trouble spots on distribution networks, optimizing pressure management, increasing condition monitoring, coupled with good old pipe and pump replacements.

Bluefield Research has recently published a series of reports to help cut through the noise around smart water, getting to the facts of tangible results for utilities. Let’s look at the facts:

It’s all about OPEX. 20-30% of water utility OPEX can be greatly improved through better management of metering, leakage, and energy consumption according to Bluefield’s recent research based on vendor conversations. Still, while smart metering penetration in Europe averages 18%, and less than half the market has implemented district metering areas. The components are all related: better metering = less leakage = less pumping of water = greater energy efficiency.

Advanced Metering – An Optional Enabler for Smart Solutions 

Smart Meters are a critical first step – allowing utilities to harness the value of “big data” to manage unbilled water consumption and rising CAPEX and OPEX costs. Europe’s installed base of 11 million smart meters are expected to increase 28% over the next decade led by regulator Ofwat’s push for reductions of total expenditure.

Deployment of smart meters is overwhelmingly focused on automatic meter reading (AMR) which makes up 68% of Europe’s market for water meters. Danish and German utilities, industry leaders with non-revenue water below 10%, have relied more on conventional network monitoring such as acoustic detection and programmed maintenance. French and Spanish water utilities comprise 90% of the 2.5 million of advanced metering infrastructure (AMI) connections operational in Europe, largely supported by in-house solutions from Veolia and Suez.

Utilities Fashion Low tech and High tech Leakage Management Strategies

Lost revenues to leaks and incorrect billing exceed more than US$10 billion annually for Europe’s water utilities. Considering the economic viability of fixing all those leaks, and utilities’ internal targets, the obtainable savings for non-revenue water among Europe’s larger utilities totals US$1.2 billion, led by ACEA, Irish Water, Apa Nova Bucaresti and larger UK firms.

Utilities are pursuing a multi-pronged strategy to address current and future leakage; private utilities are playing a vital role in driving the deployment of smart solutions in UK’s tightly regulated market. Structuring information flows on network infrastructure has been a key facilitator for leakage management.

All vendors tout leakage reductions with showcase network references, but high levels of customization challenge comparisons between different solutions. Once again, achieving these results often involves combining low-tech asset inventory approaches and acoustic detection, with higher tech deployment of sensors and condition monitoring systems.

Powerful Alternatives to Business-as-usual

In addition to leakage, associated power costs fall in utilities’ cross hairs for operational savings. Looking more widely across Europe, 50 major utilities consume over 11 TWh of electricity, costing over US$1.5 billion per annum, equivalent to 11% of total OPEX. Not all of that is put to good use: energy usage attributed to non-revenue water (NRW) is estimated to cost over US$226 million per annum. Major Europe utilities report energy costs ranging from 3% of total OPEX (Gruppo Hera, Dunea, Toulouse Metropole) to 22% (Malta WSC).

Upgrades to hardware components such as efficient pumps (up to 70% consumption reduction) and variable speed drives (up to 50% reduction) promise most energy efficiency improvement, depending on the legacy system being replaced. Software solutions complement these hardware upgrades and offer further energy efficiency gains (10-25%).

Asset Management: Adding Up the Benefits of Smart Water

As utilities chisel away at their OPEX costs with an evolving set of small-bore measures, the approach to broader strategic issues takes shape in the context of asset management. The questions utilities must look at today are vastly different and more complex: Which network monitoring and maintenance solutions significantly increase the lifetime of key plants? How should utilities change their approach to replacement programs? What delivers the most value to customers, and what trade offs need to be made between OPEX and CAPEX?

Most utilities need to leverage basic tools to manage their data before they can really harness the value of IoT. Networks are dispersed, tariff environments vary and there is no “smart water” standard to date. European Utilities continue to develop their own unique strategies to address these key issues, and the advent of networked, real-time solutions across network operations offers the potential to work smarter.

What’s your Bluefield strategy?

Keith Hays is Vice President and co-founder of Bluefield Research, a market research and insight firm focused exclusively on supporting companies addressing opportunities in water. Bluefield has an upcoming report on Smart Water in Europe, as well as individual reports on Smart MetersLeakage Management, and Energy Efficiency in Europe.

Keith Hays
VP & Managing Director

Keith Hays is a seasoned market insight professional with over 15 years’ experience in the telecom and energy sectors as a management consultant and industry analyst. Prior to joining Bluefield, Keith built market insight services for Pyramid Research, Emerging Energy Research, and IHS in the US and Europe, providing strategy guidance to infrastructure investors, global energy companies, utilities, and equipment manufacturers.

Mr. Hays holds a BA from Columbia University in English Literature and Hispanic Culture, and an MBA from IESE Business School. He leads Bluefield Research’s team of water experts in Barcelona, Spain.





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