The water sector has lagged behind the electric and gas industries in the adoption of smart technology. However, increasing pressure on water utilities to realise value from non-revenue water sources is opening up a host of new opportunities for the deployment of smart technologies in the global water sector.
Smart water networks (SWNs) offer one of the fastest-growing markets for water technology worldwide, with a compound annual growth rate of 13.9% between 2013 and 2018. Over that period, the market is expected to increase from US$3.6 billion to US$6.9 billion, generating opportunities for companies providing solutions to excessive leakage, inaccurate billing and network inefficiency.
The largest segment, which offers the lion’s share of the opportunities, is smart leakage management (41%), followed by smart metering and customer services (37%), smart network optimisation (20%) and smart solutions for water quality monitoring (2%). Across three market segments (excluding network optimisation), the highest capital expenditure is in instrumentation, which encompasses smart meters, flow meters, pressure sensors, acoustic sensors, and similar equipment.
According to Global Water Intelligence, capital expenditure in the smart water networks market will be driven mainly by:
- The need to improve operating efficiency. Smart solutions to reduce leakage will allow utilities to identify the location of water losses more easily, optimise the schedule of repair works, and reduce labour costs. Reducing energy expenditure and carbon emissions through the optimisation of operations is also a major driver.
- Regulations promoting improvement of the service offered to consumers. These can involve the adoption of key performance indicators, benchmarking initiatives, and water quality standards. If these targets are particularly strict or the timeline for compliance is short, adopting smart water network solutions may be the only viable option for utilities to avoid penalties.
- Water scarcity and growing demand. Both of these dynamics make it more challenging for utilities to ensure the security of water supplies to their customers. Smart water networks can provide the tools needed to make decisions about the future, as they can address both sides of the supply-demand equation. The in-depth data created by smart systems can help generate a detailed picture of the state of water networks, showing where to reduce wastage, improve efficiency and avoid unnecessary costs.
The greatest value lies in systems that manage the volume of water lost through network leakage, a segment estimated to be worth US$1.5 billion in 2013. Utilities in South East Asia and Latin America are increasingly looking to smart solutions as part of ongoing programmes to reduce non-revenue water, which will push growth in these regions to 14.1%. As these economies develop and mature, the expectation of a reliable water supply will increase, and the acceptable level of leakage will fall.
Investment in smart meters and improvements to billing systems will grow annually by 15% until 2018, representing the fastest-growing segment of this market. The premise here is that when customers have a clearer picture of how their consumption affects their bills, they will have a greater understanding of the true value of water. Smart meters provide more granular data on customer consumption, allowing utilities to predict and plan for future water demand more effectively. Sales of smart meters in the water sector are worth US$767 million annually, representing more than half the US$1.3 billion market for all customer facing systems.
Opportunities in network efficiency optimisation splits the market along regional lines into early adopters, encompassing those countries which have already made significant investments in smart systems (this segment is growing at a rate of 10.2% a year), and countries that are just starting to realise the potential benefits that smart systems can bring (and where the market for smart water solutions is growing at 18.7% a year, albeit from a lower base). Early adopters currently account for 60% of the total market, but by 2018 the rest of the world will have caught up.