Change is the key word for the water industry as the sector enters the sixth investment period; AMP6. For the water companies the focus is on customers and their needs; there is the introduction of TOTEX (Total Expenditure) bringing life cycle assessment back into the thinking and from 2017 the opening of the retail and wholesale markets in England and Wales.
It is safe to say that the water landscape is undergoing a fundamental change. Add into the mix changing demographics, rapid development of technology, rapid increase in data transfer and an ever changing climate; the water sector will evolve dramatically over the next 10 years.
Leakage from the water network continues to challenge the industry. This is despite 20 years of attention following the ‘Leakage Summit’ in 1995, during which time leakage has reduced by 40%; a major achievement by the water companies and their supply chain. However, leakage costs the industry money, customers’ widely think that leakage should be lower, and zero leakage remains a distant aspiration. So what challenges lie ahead for leakage and managing the water network over the next 10 years?
Competition and the separation of retail and wholesale markets will have a major impact. The industry will see the emergence of new retailers and service providers. New ideas and operational process from different sectors will be applied to the water sector. At the same time the role out of energy smart metering will bring a range of benefits to energy customers, and operators, which along with carbon reduction, cannot be realised in the water sector. However, there will be opportunities for the water sector to take advantage of some of the energy sector’s investment in data communications and technology. The water sector continues to develop a localised policy to water metering roll out, but the benefits from those companies who will achieve ‘full’ metering in AMP6, coupled with the lessons learnt from the energy smart metering – could spur the onset of a wider water sector policy on full metering. A new vibrancy from these initiatives and a better understanding of where water is consumed in the network will have a direct impact on leakage levels over the next ten years.
The water resource situation in the UK will have a significant impact on how we operate water networks. There will be environmental pressure to reduce abstractions from vulnerable catchments. We will see significant increase in population and housing; not just in the south east where much of the past growth has been, but also in the north with the ‘Northern Powerhouse’ forming part of the Government’s strategy. Climate change will also be a factor, with increased uncertainty of rainfall and demand patterns. These factors all increase the pressure to reduce demand from the water distribution system, which means reducing consumption in households and the commercial sector, and further reductions in leakage. It also increases the need to implement further water transfers between geographic areas.
Ageing infrastructure is a further factor that must be considered. Although water company asset performance is relatively stable, there is growing concern that the rate of asset replacement is inconsistent with asset lifespans. In addition, society is expecting higher levels of service from these assets, with increasing pressure to maintain continuity of supply and reduce minutes of lost service. This, with the need to move water around the network differently in response to growth and water transfers, will place even higher expectations on aging assets. The challenge will be to find ways of getting more from the existing assets, being smarter at operating and replacing the assets, and ensuring that new water networks meet the future challenges.
In conclusion, the next ten years will present some significant changes and challenges. The sector, the water companies, regulators and supply chain, will need to innovate to get more from less. This will be essential to meet increasing expectations from competition and customers, to ensure resilience, and to maintain a long term balance between resources and demand.
Dene Marshallsay, Director of Artesia Consulting.