Before the global health pandemic, the water industry had already embarked on a journey towards digitalization; however, the enforced lockdowns and ‘new’ normal life in the time of the coronavirus seem to have accelerated this move towards adopting advanced digital solutions.
For decades, Frost & Sullivan has helped corporate leaders and governments navigate and identify disruptive technologies and trends, including for the water sector. Now, in these unprecedented times, we speak with Fredrick Royan, the company’s Vice President – Global Leader, Sustainability and Circular Resource Economy ATLAS, to find out how the pandemic will affect digitalization in the water sector.
Question: Frost & Sullivan recently published a paper saying water and wastewater utilities are actively exploring the Industrial Internet of Things (IIoT). How do you think the current health pandemic is going to affect the implementation of new technologies in these types of utilities?
Answer: The future of the water industry is shaped by three key influential factors – Sustainability Development Goals & Circular Economy, Risk & Resilience and finally, Digital Transformation. The current health pandemic has brought in a new dimension of risk and resilience preparedness and also accentuated the much-needed digital transformation in water utilities.
Water utilities are looking to operate in a new normal in the prevailing scenario of COVID-19 at least for the next 12 to 18 months
We published our first report on the Global Smart Water Grid Market back in 2012 and estimated the market size to be around $5.8 Bn and forecast to reach $22 Bn by 2020 with a CAGR of 14.4%. The report highlighted that smart water grids offered the opportunity to realise tangible benefits in operational efficiencies. We had also highlighted that industrial convergence was driving innovation in the smart water sector; however, there was a strong need for innovative business models that unlock the value of smart solutions for water utilities. Water utilities are looking to operate in a new normal in the prevailing scenario of COVID-19 at least for the next 12 to 18 months of a limited workforce and possible supply chain disruptions. We expect an increased urgency for digital transformation with the convergence of IT and OT in utilities, and to identify key processes and areas for deployment of smart solutions for customer service improvement, billing revenue and accuracy, ensuring sustainability in operation as well as enhancing workplace safety and keeping pace with regulatory and technological changes. We will also expect an accelerated focus on the smart city transformation with a greater impetus on water, with its addition to other key smart infrastructure services such as mobility and energy.
Q: To combat the COVID-19 pandemic, most water utilities have a continuity plan in place. How do you think digitalization is helping companies continue to deliver water and wastewater services?
A: Most utilities in the developed world have invested in digitising parts of their water and wastewater infrastructure, operations and customer services – these utilities will certainly be realising the value of the investment in digitalisation of the infrastructure during the current lockdown measures in most parts of the world. Especially with a limited workforce, it could have been a significant challenge for water utilities had it not been for the investment in smart automation and remote monitoring for parts of the operations and services. Water utilities could be faced with a wide range of breakdowns and failures associated with leaks & bursts, breakdown of faulty assets or even water quality-related issues that are now supported by smart water solutions. IIoT based asset management enhances both economic and environmental sustainability of water infrastructure with a holistic approach covering event/alarm management, process control, customer data/billing management, NRW/leak management, quality control, resource optimisation, calibration & control and efficiency tracking. The Central Event Management product of TaKaDu is pioneering in this respect as it aims to bridge the silos with an integrated solution that provides the data analytics combined with the core function of central event management supported by a cloud-based service.
We will also expect an accelerated focus on the smart city transformation with a greater impetus on water, mobility, and energy
There has also been an evolution in the digitalisation of operational monitoring in water utilities as we have witnessed in leading utilities such as United Utilities in the UK. There has been an evolutionary process built on system thinking started with manually operated analytic platforms, through dashboards, machine-led monitoring to the next stage where we will witness a significant push: machine-led predictive analytics. In our report, we have highlighted the use case of the EMAGIN’s AI technology, Hybrid Adaptive Realtime Virtual Intelligence (HARVI) platform implemented by UU, which has clearly highlighted the value of enhancing process efficiency as well as contributing to tangible benefits of energy savings. We are certainly witnessing a greater push of artificial intelligence-driven by initiatives such as Earth AI by Microsoft as well as the launch of its Planetary Computer which is aiming to harness the technological advancements in tackling issues around four areas of climate change, biodiversity, agriculture and water.
One of the other key fundamental drivers of digitalisation in the water industry will be communication protocols. These play an essential role in the relay and transmission of data in an effective and efficient manner. We have seen that in the smart water meter sector, utilities are still evaluating the various communication protocols to support the smart water meters being deployed in the rollouts. The communication protocols will also play an even more significant role as we witness even more investment in sensors in the broader water and wastewater infrastructure – particularly in the treatment processes. LPWAN communication technologies such as LoRa and SigFox have been prominent, and we will also see an increasing role of NB-IoT, both in the metering sector, as well as in the broader water infrastructure. Vodafone and Huawei have certainly had a pioneering role in pursuing the NB-IoT solution and its deployment in select regions of APAC and Europe while Verizon has played a similar role in North America.
Grundfos has certainly been successful with the start of its IoT journey following the key strategic alliance with Ericsson leveraging the connectivity solutions of the latter to enhance the efficiency of its pumping solutions. Its recent partnership with Siemens further highlights the strong need for collaboration and building of a strong ecosystem of key partners in putting together an effective digitalisation solution and service.
The broader form of digital transformation, especially in cities, is also encompassing the aspects of environmental resilience which has driven the interest and investments in solutions such as the digital twin. One of the leaders in this space is Jacobs with its Replica Digital Twin Solution which has already been leveraged to support more than 200 facilities globally. Jacobs is certainly reaping the benefits of its investment in the five innovation hubs focused on automated design, Internet of Things, applied geo-spatial sciences, predictive analytics and cyber-security.
Q: Frost & Sullivan’s recent analysis found that the predictive and prescriptive intelligence not only improves the resilience of the infrastructure but also minimizes the damage to the environment. After the pandemic, will water companies devote fewer resources to environmental strategies due to the economic crisis?
A: After the pandemic, the key challenges that water utilities could be faced with is lack of revenues from the non-household sectors comprising of industry and retail. Secondly, a high cost incurred in meeting the increased supply to households with the majority of the population in lockdown, and paying in many cases a standard and relatively low tariff compared to the relatively higher volume of water consumed and wastewater discharged. This will certainly have to accelerate the metering rollout for water utilities, and we will witness an increased urgency in the smart water meter rollout programmes. As for the water companies devoting fewer resources to environmental strategies – I feel they still must make necessary investments in predictive intelligence solutions that can reduce damages to the environment. Extreme wet weather events are another example that has laid bare the resilience of cities and water utilities, as we recently witnessed with the winter flooding in the UK. Digital solutions can be harnessed in a broader resilience strategy. For example, it is encouraging to see the recent announcement of the Met Office, which will make a significant investment of around £1 billion for a new supercomputer and its operation over the next ten years. However, water utilities will benefit from the investments that are also being made by the IT industry, as well as the open innovation framework for the accelerated use of AI and the benefits in predictive analytics to enhance resilience and minimise damage to the environment.
There has been an evolution in the digitalisation of operational monitoring in water utilities as we have witnessed in leading utilities
Q: How do you think the Covid-19 crisis will affect the emerging Asia-Pacific (APAC) Water and Wastewater Services market, which was predicted to grow at a CAGR of 5.82 per cent between 2017 and 2022?
A: Safe and continuous provision of water and wastewater services are even more important in the current environment of the pandemic. This concern is especially prominent in parts of the emerging markets of South Asia, Africa and Latin America, as the pandemic is expected to impact these regions in the coming months. The coronavirus crisis will hopefully push forward the agenda for 24/7 water supply in these regions. It will also be important for the funding agencies that finance water service infrastructure projects in these emerging markets, mandating the need for digital-enabled solutions and services to ensure that the water services are resilient.
Data as a Service can be a strong lever of growth for the deployment of smart water solutions and services, particularly in the emerging market. With most, if not all, utilities and regulatory agencies lacking the financial muscle, as well as the skills and expertise in their workforce – DaaS is an excellent business model that can deliver both a high level of value and service. One of the key drivers that will facilitate local authorities to embrace the benefit of DaaS is the IT/OT convergence that will break down the silos and bring the much-needed systems thinking approach in pursuing efficiency improvements and the value-added benefits linked to key sustainability targets. There are some excellent use cases of business models across various applications of smart water solutions. For example, Utilis and its satellite imaging service for leakage detection and management. Kando is an example for wastewater monitoring. Smart water metering companies like Sensus, Kamstrup and Itron, and sensor companies such as Hach and Endress are also witnessing stronger growth on the value-driven segments of their businesses. One of the best examples for the emerging markets is the DaaS project being delivered by s::can for the Central Pollution Control Board of India.
The communication protocols will play an even more significant role as we witness even more investment in sensors in the broader water
Q: Last year, Frost & Sullivan outlined that modular water systems and strategic financial plans were key to leaving no one behind in terms of access to safe water. Do you think that this pandemic has been a wake-up call to what is normally called the silent water crisis? And if so, are modular water systems still the best way to achieve this ambitious goal?
A: As I mentioned in the introduction, Sustainable Development Goals are some of the key influential factors that are set to shape the future of the water industry, especially SDG 6 that looks to ensure universal access to safe drinking water and sanitation. We have also highlighted in earlier research papers the role of decentralised systems as they have an important role to play over the next 10 years in meeting the SDG 6 goal. This pandemic has further highlighted the critical importance of not just safe drinking water but also of sanitation. Decentralised systems have strong sustainability credentials in comparison to centralised systems, and there is certainly an excellent opportunity for digital sustainability to shape the future form and role of decentralised systems in achieving the ambitious SDG 6 objective of universal access to drinking water and sanitation by 2030.
Q: Is Frost & Sullivan currently working on a new study in relation to the digitalization of the water and wastewater market?
A: It is nearly 10 years since at Frost & Sullivan we started focusing on the smart water sector in the water research program. We have consistently tracked and reported on the key growth opportunities as the market has evolved. In recent years, we have focused on specific but important segments of the smart water grid market, such as sensors. COVID-19 has certainly highlighted that digitalisation in the water sector is set to be a key focus not just in developed markets, but also in the emerging markets. Leading players in specific parts of the digital ecosystem, like consulting engineering, treatment technology, pumps & other hardware, sensors, process automation and control, telecommunication and software and analytics, are partnering and collaborating in developing innovative solutions and business models for customers. We have just begun to consolidate our market intelligence of published research over the last 10 years on the topic of the smart water grid market. We are also looking to publish a new report on the Growth Opportunities for Digital Sustainability in the Global Water Industry.