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Regulated UK market leads on leak detection

  • Regulated UK market leads on leak detection

About the entity

Ovarro
Founded in 1977, Ovarro (formerly Servelec Technologies), is a market-leading provider of remote telemetry units, sensors & loggers, secure SCADA systems and business optimisation software providing complete end-to-end automation and...
Schneider Electric
Idrica

Pressure to reduce leakage levels coming from UK water industry regulators has led to a global interest in leak detection and location technologies emerging in the UK market. David Frost, managing director, Servelec Technologies explains the thinking behind the company’s acquisition of Primayer, a leading light in pinpoint leak detection.

When David Frost joined Servelec Technologies as managing director just over a year ago, his first task was to scour the market for acquisitions boasting technologies delivering  step-change in digital technology and leak detection. He reached out proactively to Primayer, a mature technology company based in Denmead, Hampshire.

The two companies had had a mutually respectful relationship over many years, but the timing was right as Primayer’s owner, Roger Ironmonger was just starting to consider his own next steps.

“The strategic rationale was as good as any you can find when you’re trying to build out the core business - we want to present an end-to-end offer to water companies to remotely monitor and control their assets. This starts with Primayer’s onsite datalogger and correlation system, which feeds directly into Servelec Technologies highly secure SCADA/telemetry data transfer systems.

“There was no duplication, it was 100 per cent a complementary offering and the synergies go further still as our end customers in the UK are the same.”

Industrial IoT is reshaping automation, engineering and infrastructure globally and for the water industry, the installation of multiple low-cost leak detection devices makes capturing real-time operational data much easier. By harnessing and transmitting this wealth of newly available data, companies can carry out strategic operational analysis to drive efficiencies and reduce cost.

Both Servelec Technologies and Primayer already have their own international channel partners selling their portfolios. For Servelec Technologies this includes markets outside water, including energy, oil & gas and transport.

The reason Frost chose to scout UK technologies first was because of strong regulation in the market. He says Ofwat, the economic regulator for England and Wales, is challenging the water companies to continue to improve performance, which drives faster adoption of new technology, making it  highly attractive.

He says that operating out of the UK gives the synergies from Servelec Technologies and Primayer an advantage. “Leakage is a global challenge and the UK is seen as a thought-leader. The way the industry is structured and regulated in the UK and the way technologies can be deployed within the district metered areas (DMAs) in the water network makes it progressive.

“As we seek to translate that success into other markets, it is easiest where there is tight correlation, such as Australia, Malaysia and other parts of South East Asia. Where the market is more fragmented, in France and the US for example, we will need to translate our model to make it relevant to those geographies.”

In the longer-term Western Europe, the Middle East and China are also in sight. Frost says further acquisitions are on the horizon as Servelec Technologies pursues global growth, but leveraging the full portfolio through its existing channel partners also provides opportunities. 

“One example is Australia,” says Frost. “Primayer haven’t had a local representative there before, while Servelec Technologies has been in the market for over 15 years. This presents a significant opportunity to introduce their pinpoint leak detection noise loggers straight into the utilities we already work with.”

Back in the UK, the water industry is still waiting for more detail on AMP7 - the regulatory asset management period 2020-2025 for England and Wales. At the time of writing only three water companies have had their business plans approved by Ofwat.

“The general sense we have is that budgets will increase significantly for this kind of technology,” Frost predicts. “Water utilities can’t continue to do what they’ve always done and deliver on their customer commitments.

“In terms of leakage and spillage events, the regulators are gaining teeth through penalties, which is positive from our point of view because our technologies are designed to mitigate these risks. We are optimistic that AMP7 is going to bring a significant increase in the opportunity for organic market growth.

“We expect to penetrate further and grow significantly, especially through Primayer’s pinpoint noise correlating technology. Water companies are looking for greater analytics capability and we have the hardware and software to do just that – along with the capability for intelligent decision-making based on real-time data through a central control system.

“This gives us the perfect tail-wind as we take forward the synergies born from bringing these exciting businesses and technology portfolios together.”