Driven by utility responses to water scarcity, compliance with local regulations, and the need to be more customer-centric, we have seen an increased focus by the water sector on data and analytics solutions. This has resulted in an uptick in smart water project announcements globally (100+) in the first half of 2017.
The U.S. (66 projects) and U.K. (14) were the most active smart water markets during the first six months of this year, followed by Asia Pacific (14), and the Middle East (9), according to our Q1 2017 update. These deals reflect shifting opportunities, for utilities, investors, and vendors, to capture value and maximize operational resilience – evident across the municipal water value chain.
As my colleague Will Maize pointed out in a recent interview, it’s time to remove the quotation marks around smart water — data and analytics solutions have taken off. Our water experts have identified a number of signposts that signal smart, innovative water solutions are on the rise globally:
- As utilities become more customer-centric, we see smart metering becoming more prominent: Bluefield identified 25 projects across 18 states, including the U.S. Virgin Islands, consisting of over 323,200 Advanced Metering Infrastructure (AMI) and 5,500 Advanced Meter Reading (AMR) meter units. Deployments of AMI meters outnumber AMR, indicating a growing demand for real-time data collection, which enable customer-centric software platforms.
- Smart water deals represent increasing share of water mergers and acquisitions, and now hold much more value: A new benchmark was set in smart water M&A, as private equity EQT completed it’s smart water portfolio paying $270 million for Innovyze, reflecting a 16x EBITDA for the profitable network modeling and business analytics platform.
- Smart water players from mature markets – such as the UK and Israel – turn to the US for opportunity. TaKaDu landed its first U.S. contract, inking a deal with Knoxville Utility Board (KUB) after a public bidding process.
- Private equity sees water as an opportunity. SoftBank snapped up equity’s majority in OSIsoft while Optimatics raised capital from venture and strategic investors to support growth initiatives.
- Uptick in smart water adoption across the Middle East, stemming from fiscal pressure, demonstrates turn to water efficiency. Kuwait just launched a long-awaited smart metering initiative, awarding the 7-year contract to Zain, in partnership with E&Y and Ericsson.
- Vendors are creating new value through strategic partnerships. Aclara and Valor Water Analytics formed a strategic alliance to help water utilities reduce non-revenue water, while seeking differentiation in competitive bidding processes. On the commercial side, Xylem has signed a deal to represent Pure Technology’s products and services to the water sector in the GCC.
We at Bluefield Research are optimistic about the scaling opportunities for smart water, globally. Our water experts track drivers, opportunities and strategies shaping this growing market.