Pumps & Systems staff spoke with Bluefield Research President Reese Tisdale about the major trends to anticipate in 2017 and how the landscape of the water and wastewater industry will change.
What kind of year will this be for water/wastewater?
Given what has happened in Flint, Michigan, and California, a more widespread focus on water and wastewater is increasing. After emerging from the economic downturn, which undercut public spending in water infrastructure by almost 15 percent from 2009 to 2014, we anticipate a surge of network upgrades that will usher in a range of infrastructure technology, equipment and financing solutions. More broadly, several trends to watch will be in the markets' ability to stay ahead of deteriorating infrastructure, supply a growing population with clean water, and mitigate wastewater effluent impacts on water bodies.
There is no silver bullet to solving the infrastructure challenge. Stakeholders must deploy a range of solutions including alternative financing, operations management and innovative technologies. Capital expenditures (CAPEX) for U.S. municipal water and wastewater utilities—including spending on pipes, plants and pumps—are expected to exceed $532 billion between 2016 and 2025. This new outlook, which draws from planned utility budgets outlined in the capital improvement plans, represents a 28 percent increase over CAPEX during the last 10 years. Going forward, markets for trenchless technologies, real-time data and analytics (or smart water), and advanced treatment solutions are expected to show significant growth in their attempts to carve out efficiencies.
Alternative water supplies scale to offset drought, meet demand. Water scarcity and drought continue to reshape the water landscape, as demonstrated by the recent increase in wastewater reuse projects in the U.S. Four states—Florida, California, Texas and Colorado—now account for 95 percent of the development pipeline that has surpassed 600 projects. Bluefield’s most recent forecast shows California surpassing Florida as the leader for reclaimed wastewater over the next decade. At the same time, Bluefield’s critical analysis of more than 35 desalination projects in the pipeline across multiple states will require a break from historical trends. Permitting and regulatory frameworks must continue to evolve at the state-level for more increased activity. Desalination’s struggles to grow at scale in the U.S further highlights the opportunity that wastewater reuse firms are capitalizing on.
Regulators will continue to tighten the rules. Municipal sewer systems are facing increasing enforcement action and Clean Water Act violations by the Environmental Protection Agency (EPA) to reduce discharges of raw sewage and stormwater runoff. Through the National Enforcement Initiative, the EPA lists 29 civil judicial consent decrees to address combined sewer systems and sanitary sewer systems. At year end, the EPA estimates as much as $28.9 billion of infrastructure investment will be needed to mitigate stormwater overflows. Negotiated compliance timelines stretch from 2016 to 2037 across 11 states and 29 utilities.
Data and analytics for infrastructure are gaining traction, even in water. The vision for an end-to-end “smart water utility” has been slow to emerge as the internet of things envelops our daily lives. For water utilities, unfavorable economics, labor challenges, technology aversion and cultural resistance to change are often flagged as barriers too large to overcome. In a vacuum, this may make sense, but the reality is that we live in an ever-connected world with a dynamic range of challenges, solutions and, in this case, opportunities. Fortunately, seeds are being sown by utilities that could have a far-reaching global impacts. By zeroing-in on supply management, metering, leakage and energy efficiency, utilities across the continent are optimizing their operations through a host of demonstrated hardware and software solutions that are capable of measuring, monitoring and analyzing the networks as a whole.
In all cases, solutions do exist. These capital-intensive projects will demand spending on equipment across the supply chain—pipes, pumps, treatment systems, etc.
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