It is difficult to overstate the challenges that COVID-19 poses for the water sector, from operational difficulties to acute financial shocks. But the pandemic also presents a long-term opportunity for the industry to rethink the status quo and embrace innovation. In particular, we see the crisis as a proving ground for digital water technologies, and a potential watershed moment for the digital transformation of the water sector.
Utilities that have already made digital investments are best positioned to cope with the crisis
It is still early days, but the stories we’ve heard across the industry suggest that digital technologies have already played an invaluable role in helping utility workers remain connected to their critical assets, customers, and co-workers amid widespread lockdowns. In many cases, utilities which made robust investments before the crisis in digital monitoring and control capabilities – e.g. automation and optimization platforms, sensor and telemetry equipment, remote workforce and customer management tools – are faring better than those that did not.
Meanwhile, technologies that can be deployed rapidly to fill existing operational gaps have seen a boost in demand. According to a recent American Water Works Association survey, 74% of U.S. & Canadian utilities have implemented telework policies for non-field employees in response to the pandemic. Some utilities have asked as many as four-fifths of their staff to stay at home, necessitating significant investment in remote communication and productivity (e.g. laptops, teleconferencing platforms), online billing, and cybersecurity.
Utility leaders will likely emerge from the COVID-19 pandemic with greater familiarity and trust of digital technology in general
Digital water will top the agenda for post-pandemic resilience planning
While the COVID-19 crisis is unique in many respects, it is neither the first nor the last social, economic, or environmental disruption that the water industry will face in the coming years. Thus, when the pandemic subsides and utilities’ focus returns to long-term resilience planning, digital tools are likely to be top of mind. Platforms for remote monitoring, management, and control of critical infrastructure will be in high demand. Revenue recovery and cost optimization solutions such as smart metering, leak detection, and advanced asset management will also receive greater attention as utilities seek to shore up strained financial positions. Cybersecurity will remain paramount as increasing device density creates more potential attack surfaces.
More broadly, the sudden shift to remote, distributed work has forced utilities to rely on digital tools to an unprecedented degree. Assuming no major lapses in performance or cybersecurity, utility leaders will likely emerge from the COVID-19 pandemic with greater familiarity and trust of digital technology in general, dispelling some of the industry’s cultural barriers to digital innovation, and driving more rapid adoption of digital water solutions moving forward.
Out of crisis and disruption, come innovation and growth
COVID-19 has brought considerable hardship to the water sector. However, this period of disruption will also lead to significant innovation, as utilities adapt to fundamentally new ways of doing business. Many of today’s leading digital platforms – like Uber, Slack, and WhatsApp – were founded during the Great Recession. Similarly, there were more digital water companies founded globally in 2009 than any year prior, many of which have gone on to become market leaders.
At Bluefield, we have updated our forecasts to account for the impact of COVID-19. Though we expect a near-term contraction in the digital water market due to project delays and recessionary conditions, we ultimately believe this crisis will advance the digital water market by at least 2-3 years by the latter half of the decade, with a total of about US$9 billion in additional, cumulative market value generated in the U.S. & Canada alone by 2030.