- Industry: Energy & Utilities
In the US, public water systems have made incredible accomplishments, including the almost complete eradication of water borne disease, while serving over 350 million people 24/7. Despite this success, the need for water innovation has not been greater since the 1890’s.
In the US, the public water systems have made incredible accomplishments, including the almost complete eradication of water borne disease, while serving over 350 million people 24/7. Despite this success, the need for water innovation has not been greater since the 1890’s when cities were expanding and water resources were being polluted. Water supply agencies are now facing a convergence of technical, political and financial challenges exceeding any they have seen.
There are three converging drivers that will keep water on the forefront of government, industry and almost all 350 million people in the USA:
- An interest in modernizing our infrastructure leading to surges in capital expenditures such as the American Reinvestment Act, and thousands of local projects.
- A spotlight on increasing water challenges here in the US as a result of the drought of the West, the floods of the Mississippi River and other urban flooding events.
- The drum of climate change, which continues to grow louder and is becoming synonymous with drought, floods and major storm events.
- First, the industry of managing water is quite frankly risk averse. This industry attracts and trains very logical and conservative engineering minds, as it should. Consider your mindset if several million people’s health was dependent upon the operation of facilities under your responsibility.
- Second, the industry is exceptionally fragmented. According to USEPA, there are over ~52,000 community public water systems and 15,000 wastewater systems in the USA. It makes for a daunting task to test, scale and commercialize new technology when your customers are so fragmented and conservative.
- Third, is the long sales cycle, which is driven by the above conservative nature, and the restrictive purchase rules associated with public sector work. These policies often do not differentiate between experimental discretion and the purchase of a commodity. This long sales cycle, combined with lack of exit options, and investment platforms is unattractive to private equity, further reducing innovation.
- The fourth barrier is characterized by a desire to “see how it works in my back yard”, but the back yards are not available to companies without a contract with the utility…and contracts are often not won by firms without track records and multi-million dollar insurance coverage.
- Finally, water Infrastructure lasts for decades, this long asset life, with different segments failing at different time points. This leads to incremental investment, as opposed to disruptive system changes. Fortunately, after decades of stagnation in water related patent filings, innovation models are beginning to emerge and innovators are eager to bring creative ideas and technologies to market.
- Brick and mortar testing facilities built into existing utility plants
- A focus on new potentially disruptive technology, not tweaks to existing systems
- Ability for public water utilities to invest and receive returns
This suggestion clearly does not address all the innovation needs of the water sector, and a lot easier to state than to achieve. But it is a critical step towards testing, and adopting innovation while instilling a cultural shift towards experimentation. Larger reforms in pricing, regulation, and purchasing are needed to enable a complete transformation. But as the world desperately needs new innovation, and the US Water Utilities and business ingenuity are to contribute, we must envision a different innovation model. Turning our utilities into collaborators, testing grounds, and a resource of expertise will only happen when they are the epicenter, not the end-use. If we hope to make a difference, change the world, and preserve our water resources for future economic, social and environmental goals, we need to change our model. With a vision, we can start to move the policy pieces into place.