Innovation in the water industry: barriers and opportunities for US and UK utilities

Abstract

Water utilities face a variety of challenges in meeting future demands under climate uncertainty, addressing aging infrastructure, ensuring water quality, and reducing energy use. The agility of the utility to implement innovative solutions to these challenges depends upon a variety of factors including utility governance and culture, regulatory environment, condition and performance of water infrastructure, and funding mechanisms for system improvements. The consequences of failing to meet these challenges could include environmental degradation, public health risks, and reductions in the level of service customers have come to expect, all at a highly elevated price. Two different types of water utilities are compared in this context: privately owned companies (using UK water companies as examples) and publicly owned utilities (using US municipal utilities as examples). Examples of innovation in the water industry, in the US and UK as well as globally, provide insight into the key barriers and opportunities for change. The successful drivers of innovation in the water industry are shown to include: a supportive culture at the water utility; a regulatory regime that allows or even promotes innovation; the financial ability to undertake research and implement improvements; and crucially, the backing of the public. Ultimately, neither the municipal nor the private model is perfect but the best elements of these could be combined as the basis for an innovative water utility of the future. © 2015 The Author. WIREs Water published by Wiley Periodicals, Inc. How to cite this article:WIREs Water 2015, 2:301-313. doi: 10.1002/wat2.1082 INTRODUCTIONG lobal challenges related to water availability, aging infrastructure, ensuring water quality, and energy use reduction will require innovative solutions. Yet, the water sector is considered conservative and risk averse. This paper examines innovation in the water industry from the perspective of a water systems engineer with more than 20 years of experience in developing strategic plans for water utilities, working both in the US and the UK. Two different types of * Correspondence to: v.speight@sheffield.ac.uk water utilities are compared here: privately owned companies (using UK water companies as examples) and publicly owned utilities (using US municipal utilities as examples).Both types of water utilities face similar challenges, with assets that are reaching or have already reached the end of their useful service life and now require replacement or upgrading at a significant cost. To evaluate the potential for innovation and the barriers to achieving change, it is important to consider a variety of factors including water utility governance and culture, regulatory environment, condition and performance of water infrastructure, and funding of system improvements. Examples of innovation in the water industry, in the US and the UK as well as globally, provide insight into the key motivations for change. Ultimately, neither the municipal nor the Focus Articlewires.wiley.com...

Invention and Diffusion of Water Supply and Water Efficiency Technologies: Insights from a Global Patent Dataset

“…For example, water demand management creates a dilemma for water utilities as it relies on both consumer participation and, in situations of volume-based rate structures like the UK, it compels them to implement actions that result in loss in their own revenue (Speight, 2015).…”

“…Success in leakage mitigation highlights the potential for innovation spurred by regulatory requirements and funding availability; International Water Association water audit procedures have been adopted as a standard in many countries, drawing upon insights from regulatordriven UK water industry leakage reduction. The global leakage reduction and pipeline rehabilitation market is now estimated at around $3 to $5 billion (Speight, 2015).…”

“…Lowering barriers to trade and FDI is thus a way to foster technology diffusion. Speight (2015) identifies strong leadership and investment from regulators as important drivers of innovation and highlights the example of innovation for water in Singapore.…”

“…Wehn and Montalvo (2014) argue that whilst Europe is held to be a leader in knowledge, technology and innovation in water, the sector in general is perceived to be less dynamic and innovative than many other sectors. Water utilities generally rely on outside actors, either research institutions or supply chain companies, to perform research and deliver pre-tested advances (Speight, 2015). US water utilities do not directly allocate budget line items for research and this coupled with their diversity of size and types means estimates for US research investment are difficult to make.…”

“…US water utilities do not directly allocate budget line items for research and this coupled with their diversity of size and types means estimates for US research investment are difficult to make. UK water companies invest just over one half of one percent of their capital expenditures on research and development (Speight, 2015). Recent policies in the EU seek to address the key barriers in water markets, such as insufficient access to financing for innovation, high capital-intensity, and built-in risk aversion (EIP, 2014)..…”