Digital Transformation & Software Engineering Services
Will Water Companies always supply and treat Water?

Will Water Companies always supply and treat Water?

Will they evolve to do more than this? Or will other companies enter their market?

With the inexorable transition to more people living in large cities and conurbations, there will need to be an accompanying high concentration of basic utility infrastructure, including water, gas, electricity, broadband and mobile services. In most cases the cost of delivering these services per capita will fall as they become more localised, with denser but smaller infrastructure lengths requiring less pipe or cable compared to the distributed systems required today to support more geographically dispersed customers.

But what about those people who either choose to (or have to) remain in more suburban or rural areas, where the population density will be reduced? Currently there is a universal service obligation in many countries, an example of this being the price of a stamp to post a letter is the same irrespective of the dispatch or ultimate delivery location within a country.

While the price paid by the consumer for using a utility’s service varies a little depending on the utility supplier and tariff selected, the price for starting a utility’s service (any connection fee) and the tariff selected is fixed for each of the supplier’s customers even though the cost for the “delivery network operator” that provides the basic commodity or service on behalf of the utility firm can vary considerably. Those variations are based on differences in the point of supply, distance from the point of production, age of the delivery infrastructure, raw production costs, and other related factors. A similar model exists in apparel retail, where the price of an item is commonly the same, whether it’s a Small, Large or XXL size – although this is changing in some cases to reflect the substantially different quantity and strength of material required. Similar gaps are appearing and widening in the cost for sending parcels rather than just letters.

In the future, will the majority of people who live in cities object to subsidising (through higher prices) the provision of a universal service to people who live in less populous areas? How can service providers address this imbalance to make it seem fairer?

One option is through more micro-supply or micro-generation propositions in the thinly populated areas. This is already evident in the energy sector, where rural properties have the space for significant Photovoltaic solar energy production which isn’t the case for a thousand people living in a large high-rise apartment complex of the future with a small roof space.

Is there a parallel debate to be had for the supply of water?

Currently water utilities supply clean potable water for consumption, cooking, washing and bathing, and treat dirty waste water including sewage.

Ness Digital ServicesClean water is supplied from several sources, such as rivers – now only permitted in extreme conditions to prevent them from drying up, reservoirs – some of which have disappeared, deep water aquifers – many of which are subject to climatic change, and other flavours of water supply. In the UK more rain falls in the west and north, but there are no large pipelines to supply water from these areas to the less wet south-east which has a higher water demand.

White goods manufacturers are constantly reducing the amount of water required to wash clothes and dishes, and bathroom equipment manufacturers are reducing the flow of water through showerheads, but we still see that water demand is steadily increasing with population growth.

There has been some effort by water companies to encourage rainwater harvesting and a reduction in the use of clean water for sewage, such as “Hippo” bags in cisterns – but this has had limited effect on the demand side to date. Something will have to change.

In the future, water companies may find that enabling customers with properties in less populous areas to collect and purify rainwater with new technology may be more cost-effective than having to maintain and replace lengthy and antiquated delivery infrastructure in order to meet ever increasing leakage, purity and other targets set by the regulator.

While the argument for rainwater harvesting is proven to an extent, the idea of localised treatment of wastewater is a lot less palatable. Technology may arrive at the point where complete treatment, recovery of “grey” water (for use in cisterns, washing of cars, watering the garden) and disposal of dried waste product, may be achievable in a much smaller space than is required today. What seems likely is that a number of smaller more-localised waste water treatment plants may be established, as even in the future the more advanced equipment required to perform this kind of small-scale treatment is likely to need more space than might be acceptable in a single property’s plot of land. This would ensure a consistent level of water purity and a single collection point for solid waste removal, which is often used today as a fertiliser.

Most water companies are used to complying with demands from the regulator. In recent years these demands have changed to cover service incentive mechanisms designed to improve customer experience, and minimum leakage targets to reduce waste in the supply of clean water.

Few water companies are currently expecting their business model to change dramatically. If the regulator ever allows for a non-universal service obligation, they expect to vary their pricing for connection and utilisation based on the supply location. However there is the potential for change if a significant number of their customers start to self-serve, either individually or as a local community. Should this happen it will encourage a wave of more nimble innovators to offer alternatives who will become competitors to the incumbent water companies. This move towards localised production is expected to happen in the energy utility sector, and some of the technology being designed for that purpose could be applicable to water. A series of smart water grids and localised supply and treatment capabilities can’t be far away.

At Ness we are always looking at disruption across industries, and challenging the status quo to help clients envisage a pathway to transforming their business.

About the Author

David Mackay David Mackay
David is Associate Vice President – Ness Digital Engineering

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