Making a Splash with Digital Water

March 9, 2020
As the digital revolution continues to rage, water and wastewater management is the latest to get swept up in a tide of 1s and 0s.

Technology-based innovations transforming the water sector

Water and electronics — hardly a match made in heaven, right? Put the two together, and you probably think of flying sparks or desperately trying to salvage a sodden iPhone in a box of rice. For most of us, therefore, it might come as a surprise to hear that digital water is one of the hottest trends in industrial innovation. But as the digital revolution continues to rage, water and wastewater management is the latest industry to get swept up in a tide of 1s and 0s.

Digital water. Smart water. Water 4.0. These are some of the names given to a set of digital technology-based innovations currently transforming the water sector. At all stages of the water value chain — from source to utility provider to customer — companies are employing digital solutions to create networks that are more flexible, efficient and economically viable. Before launching into the specifics of digital water, however, it is worth considering the myriad factors currently driving this transformation.

First, the global water supply is faced with a number of pressing threats, mostly anthropogenic in nature. The big one is climate change. In regions prone to flooding, rising sea levels threaten to contaminate freshwater aquifers and farmland, while in dryer regions, droughts are becoming both harsher and more frequent. These problems are exacerbated by the fact that 60 percent of the world’s population lives by crowded water basins shared by multiple states — many of which are failing — raising the likelihood of conflict over natural resources.

A serious challenge for the developed world comes in the form of aging infrastructure. We all saw how serious an impact aging infrastructure could have when, in September 2014, decrepit pipes caused neurotoxic lead to leach into the water supply of the city of Flint, Mich., with disastrous results. The United Kingdom is set to spend £25 billion in an effort to upgrade its infrastructure, covering an asset base that includes over 800,000 km (49,7097 miles) of sewer and water supply pipes.

On top of these supply challenges comes increased demand. By 2040, industrial consumption is expected to account for 38 percent of total water consumption, up from 21 percent today. And by 2050, 70 percent of the world’s projected 10 billion population will live in cities, including a more water intensive, emerging middle class. With this, water suppliers will be tasked with creating more extensive networks while also tackling issues surrounding unequal accessibility and sanitation.

The drive to digitize water is not all reactive, however. Policymakers are accelerating digital adoption through regulation designed to improve the standard of water and wastewater management. The UK water regulator OFWAT, for instance, now mandates at least three digital methods by which water companies interact with customers to improve the ease of engagement, and in California, the Sustainable Groundwater Management Act requires the use of digital technologies to measure real time resource usage, enabling more sustainable patterns of consumption. Another force driving adoption is changing generational expectations and digitalization as a society-wide phenomenon, one that carries significant momentum and seeks to permeate all aspects of our daily lives.

Against this backdrop of climate pressures, aging infrastructure, urbanization and population growth, rising industrial consumption and regulation, digital water claims to offer some promising solutions. A growing number of companies and utility providers are bringing together Operational Technology (OT) and Internet of Things (IoT) technology to detect and diagnose complications, optimize network flow, and manage consumption. The solutions they offer utilize a number of building blocks:

Telemetry, imaging technologies, and geographic information systems: Companies such as Cloud to Street and NASA’s GRACE (Gravity Recovery and Climate Experiment) program are using remote sensing technologies including drones and satellites to map water resources and measure fluctuations in supply, helping utility providers, among other things, prepare for the consequences of extreme weather (e.g., sewage overflow due to heavy rain) and even provide water quality data (e.g., turbidity, algal blooms).

Supervisory Control and Data Acquisition (SCADA) systems: SCADA systems can provide real-time data on water quality, flows, pressures, and levels. This information can be used to optimize resource use (e.g., supervise and predict use volumes), detect and diagnose complications in the network (e.g., pipe corrosion or water discoloration) and provide information for long-term operational planning (e.g., prioritize repairs and replacements for aging infrastructure). Industrial companies such as GE, Schneider Electric, Rockwell, Siemens and ABB jockey for control as leading producers of the industrial machinery at the core of these advanced systems.

Artificial intelligence, machine learning and immersive technologies: The great strides being made by the likes of Google, Microsoft and IBM in the fields of machine learning and artificial intelligence are already transforming the water sector, assisting a host of systems that are data rich but information poor. AI can recognize patterns in data to optimize the planning and execution of projects and provide a clearer insight into resource loss in real time. Furthermore, Augmented Reality (AR) and Virtual Reality (VR) technologies offer new ways to support decision making in the field by providing holographic representations of physical assets and offering immersive situational training for workers.

Smart metering: Smart meters enable companies to generate accurate, automated billings based on granular consumption data. This, in turn, allows for a fairer system of payments based on exact household usage volumes. This data can also be used to build household profiles from usage patterns, painting a more detailed picture of the water network and informing new tariffs and marketing approaches.

Blockchain technology: Much-hyped blockchain technology — already in the process of transforming other industries — offers a range of emerging applications in the water industry. As a digital, decentralized ledger, blockchain can be used to record activities, events and transactions that take place in the day-to-day management of water systems. One application of this is to facilitate water rights trading by offering a platform for the real-time monitoring and auditing of water trading and providing regulators with visibility over the market to ensure compliance. Another application is to facilitate direct, secure transactions between water companies, consumers, utilities and other players. By disintermediating the third parties typically required to verify these transactions, the industry can reduce settlement times and eliminate fees. Finally, blockchain technology can facilitate capital raising. Methods of capital raising using blockchain-backed cryptocurrencies — such as Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) — can offer resource providers new ways of securing investment for projects.

Taken together under the umbrella of digital water, these innovations are helping tackle the fairly daunting list of challenges and demands we covered previously. Digital water offers multiple advantages, including:

• customer benefits of increased affordability, greater engagement, fairer billing and reliability

• operational benefits of predictive maintenance, and enhanced flexibility and efficiency

• financial benefits of reduced operational expenditure and increased revenue potential

• resiliency benefits of greater sustainability and enhanced workforce development

Yet, we must also temper our expectations. Digital water cannot eliminate the causes of water scarcity and precarity. It cannot prevent climate change, stem population growth, eradicate natural resource conflict, or eliminate socioeconomic inequality. What digital water can do is present smarter, more effective methods of addressing the issues we face. Drop by drop, our glass of intelligent solutions is being filled with digital water. The question that remains is whether the glass is half empty or half full. WW

About the Author

Andrew Dyer

Andrew Dyer is an investment director in Baird Capital’s Industrial Solutions team, focusing on originating and transacting mid-market industrial deals across a global platform. After qualifying as a chartered accountant with Ernst & Young, where he focused on commercial and operational advisory, Dyer spent three years in industry with Anglo American plc. He has a BSc in economics from the University of Warwick.