[00:00:00] Speaker A: Everything is out of whack a little bit, you know, so you need to adapt and you need to have tools to at least predict or have some sort of mechanism to anticipate yourself to things that might not seem like they can happen today, but they are going to happen tomorrow in the following years for sure.
[00:00:22] Speaker B: I'm Rhys Tisdall. This is Future Water which we talk about all the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is episode 121. That's a 1, 2, 1 and as always I have a good feeling it's going to be a great one. That's because today I'm joined by Bluefield senior analyst Antonio Del Olmo who has been ramping up his research efforts in Europe.
And part of this has included some in depth profiles and insights into countries like Italy, the Netherlands, France and Spain.
So you know, to mix it up a little bit, I thought I'd showcase some of the his interesting analysis and I give full credit to the team of water experts in Europe who've been supporting this effort as well. But I've asked Antonio to join me to talk a little bit about the state of Europe's water sector. Key disruptors, things like blackouts, climate, energy prices and also things to look forward to as we go forward.
But before we get to Antonio, you're gonna have to bear with me just a little bit because I got one thing that caught my eye this past week and that is us ALCO earlier this month, June 2025, that is it made acquisition of Fontas Blue, which marks an addition to its recent focus on geographic and chemical capacity expansions.
What seems to be by making a deeper play into digital tech and overlaying that with its chemical product offerings with Fontas Blue's Decision Blue platform Mouthful, which is a software as a service solution that supposedly uses AI to optimize water treatment. Everybody seems to be using AI, but it's interesting to see this in the water sector and US Alcos is signaling its intent to integrate these digital software solutions into its core chemical offerings. So this is pretty interesting. And why am I interested? Well, partly because this development follows some earlier analysis by Bluefield and my colleague Ethan Edwards who highlighted us ALCO's I'd say relatively aggressive facility based M and a strategy under new private equity ownership and points a broader shift as the chemical suppliers are seeking differentiation to solve some of these chemical problems or opportunities address them. Why does this matter? Well, to that point this is a kind of a little bit of a shift as far as M and A for US Alco and acquiring Fontas Blue, it's overlaying digital on, like I said, an acquisitive growth Strategy that's expanded US Alco's facility footprint from nine to 33 facilities between 2020 and 2024 in the US alone.
So Bluefield had noted that the US Alco was really emerging as more than a regional chemical supplier and things like coagulants and flocculants. And now it's overlaying the software to seemingly elevated service offering backed by private equity firm TJC which acquired US Alco in 2024 for about 2 billion. This acquisition seems to align with a broader playbook combining operational scale with data centric capabilities and acquisitions.
Obviously TJC is pushing for growth and seems to be moving that forward. Then lastly, it looks like the US water treatment chemical market, which is projected by Bluefield to grow at about 1.8 to 2% through 2030. The path seems to be shifting towards integrated solutions. That makes sense, I get that. And US utilities, they are facing rising costs, regulatory pressures to some extent, but also resiliency needs and so bundling the digital chemical offerings together makes sense from a supply side. I think the other thing worth noting, which I don't have in my notes, and that is Ethan Edwards who I just mentioned, had done some analysis on different industries impacted by tariffs and just economic uncertainty particularly related to key markets like China, Canada, Mexico and the chemical sector production wise is being impacted. One, I know there are imports of chemicals from select markets like Canada, but also the US producers do export a fair amount of chemicals outside of the US to places like China. So if China has tariffs in place it makes for a less attractive market environment.
But we have some analysis on that. So if you're interested in that, always reach out to
[email protected] couple other things just so everybody knows from from the outset. Got some really interesting research we put out recently that thought everybody should know about. We just put out a data center report so water management across data centers.
I had my colleague on a couple weeks ago on the Future Water podcast to talk about that as well as semiconductors. Amber Walsh, she's a go to for that. And then we've put out our US water treatment facility CAPEX forecast and then our pipe forecast is coming out imminently. It's already in production. I know the dashboard is already up for clients and then for those interested in cips, we are currently working through all of our capital improvement plans in the US Right now, that's a big exercise for us.
And we've been at this for a while. We've been in this for about four or five years. It gets better every year. We can compare, you know, prior years to this year. We're adding utilities to the list as clients request them in different states where we may not be covering them, but they're interested in them. And so I thought those are a couple other things. And then we've got a lot of really good research notes. M and A related, I think we've got recent one on American Water buying Nexus Water groups assets, and I believe eight different states that comes out of our US Utility ownership and strategy service.
And then my colleague Mike Miroff is also doing some more analysis on M and A and company strategies as well. I, I know that the M and A Quarterly is about to hit the streets pretty soon, and it's like M and A, generally speaking, it's taken its lumps and hits. But with that being said, let's get to Antonio and talk about what's happening in Europe.
All right, so I'm joined here by Antonio Del Olmo. Antonio, what's going on?
[00:07:25] Speaker A: Hi. A lot of stuff going on in the water sector. So nice to be here again.
[00:07:30] Speaker B: All right, so for those who don't know, you're. You're in Spain. Where in Spain are you?
[00:07:35] Speaker A: I work in the Barcelona office for Bluefield, but I'm. I actually live in Valencia, which is about three hours away.
[00:07:42] Speaker B: All right, and so right before we got on, there's some hot news in Spain. If it's hot, it's about corruption. Give us a little tidbit. What, what are you thinking about as you go into the weekend?
[00:07:53] Speaker A: Well, yesterday, the equivalent to the FBI here in Spain published a 400 page review and recordings of conversations with the central government and some ministries all involved in bribery in civil works.
So, yeah, they were bribed for.
I think it was worth like 700 million euros worth of civil works.
So, yeah, there's now debate of whether or not the government, the president, should resign and call for elections and all that stuff. So it's going to be an interesting weekend for sure.
[00:08:33] Speaker B: With their companies wrapped up in it. No.
[00:08:35] Speaker A: Yeah, a couple. The most notable one was Axiona, honestly, which is already saying that they had no idea what was happening, obviously. What other thing would they say?
[00:08:47] Speaker B: Right, well, that'll be interesting. It'd also be interesting to see. I mean, obviously I bring it up also because Acciona is, is there in the water business or water sector. They're actually one of the, one of our top companies that we track every quarter through, our top companies deliverable every quarter that we look at. So it'll be interesting to see what Axiona says about it going forward. But that being said, that's not why we're here. We could probably talk about this a while, a bit longer. But let's talk a little bit about Europe. So let me frame it a little bit. So over the past couple months, you and the rest of the team in Europe, you guys have been digging into various countries, profiling countries, the water, wastewater, stormwater sector, and kind of what's happening, right, providing some context to the landscape in which companies are, are playing. So let's just start high level a little bit. So I mean, really the big question is I'm in the us, I'm in Boston, obviously, why should we care about or why should we be paying attention to what's happening in, in Europe's water sector now? What are some of the takeaways that you've seen?
[00:09:50] Speaker A: Well, I guess that to begin with, we should start by saying that many of our clients are increasingly interested in country specific details of Europe. So it's one thing to talk about the European Union policies and how things are evolving in the grand scheme of things, but when it comes to actionable insights, our clients want to know what is happening on specific countries.
That has led us to start analyzing most of the countries in the European Union. The thing is that when you start looking at them, I mean, everybody knows that the European market is very fragmented, but there are trends that are pretty common in all the countries. So every country is at a different level of, I'd say maturity in the water sector and the wastewater sector, but more or less the topics are quite common. We're talking about droughts, resilience, flooding events happening all over, all over the place, all over the continent. We're talking about digitalization, smart meters, all that stuff. It's drawing a lot of attention, right? And even the EU just launched water resilience strategy at the beginning of the month and they're talking also about already about funding almost 15 billion for 2025, 2027 in water projects. So yeah, there's a lot of money peering into the sector and I think.
[00:11:15] Speaker B: This is sort of playing out in our research a little bit. So earlier in the year we talked about, well, it's not even earlier in the year, has it only been a month? Maybe the blackouts in Spain, right? So that happened multi year droughts in France and then you've got water energy dependencies. Right. So if you're looking at natural gas prices, I mean it just in preparation for this conversation, just out of curiosity, I was looking at natural gas prices in Europe compared to the US and it quite honestly for any red blooded American, you'd fall out of your chair if you saw what people were paying for natural gas in Europe.
So consider yourself lucky. And I was the price I was seeing $35amegawatt hour. Was it a megawatt hour? 30 mmbtu. I can't remember what it was. That's about what it is. And in the US it's like 3 to 5 dollars mmbtu I think so. It's kind of amazing. Then I think as you mentioned, talking about the local issues is, you know, there's the EU resiliency plan. So our team, you guys are paying attention to that and that's wide sweeping, but it's across the eu.
But all these stresses, right? These issues within the system, they're localized, right. So a lot of that really falls on the local governments, whether it be not just the Spain, Spain's national government or the French national government falls on the localities themselves. So what are some of those cracks that we're seeing? I mean, can you provide some more detail on those issues and is there anything to be taken from what the local governments are doing?
[00:12:59] Speaker A: Yeah, I think one of the, one of the main things that governments are becoming more aware of is climate change, right. So they're being directly affected and impacted by extreme events.
So for example, we've seen like huge and very big episodes of flooding across Europe. So that is bringing a lot of attentions to towards flood management, towards nature based water retention solutions, anything involving early warning systems. So that's one line of work that local governments are trying to either look for funding or have like the, they're trying, they're looking for public private partnerships so that they can deploy tools that makes them more resilient.
[00:13:45] Speaker B: Right.
[00:13:46] Speaker A: And you see as well that drought is another issue that's hitting very hard in Europe. In fact, if you, if you saw right now the map of Europe right now in terms of drought, you would see like northern Europe is being struck very hard by drought. Well, the Mediterranean countries like Spain, Italy or Greece, they have more than average range of what they are used to. So it has inverted totally. So now you see like the northern countries are thinking about droughts, right? While the southern ones are kind of thinking more about flooding. It's kind of interesting to see the dynamics here and how climate change throws everything, everything is out of whack a little bit, you know, so you need to adapt and you need to have tools to at least predict or have some sort of mechanism to anticipate yourself to things that might not seem like they can happen today, but they are going to happen tomorrow in the following years, for sure.
[00:14:43] Speaker B: So with that being said, I mean, I mean, you've sort of talked around it a little bit, but what does that mean? Is there bigger opportunity in Europe for digital tools? I mean, I'm playing off of what you said, whether it's predictability, weather events or other applications for digital tools. I mean, are we seeing more of that in Europe than what we saw maybe five years ago? And maybe that's an obvious question.
[00:15:08] Speaker A: No, but you're on track. I mean, river basin authorities here in Europe are now asking. I mean, traditionally they were implementing censoring in their basins, right? Right now they're turning into those early warning systems that I was talking about. And those are huge projects. I mean, like Spain has, I think, eight river basin authorities, Italy has another eight. So we're talking about huge projects there. There's a huge demand for that right now.
[00:15:36] Speaker B: And is that when you say huge basin, are these, what does it include? Are we talking sensors, are we talking software? We talk other hardware?
[00:15:44] Speaker A: I think we're talking about a holistic solution that involves everything, right? So we do need sensors, obviously, but we need to have them integrated and in a, in some sort of data lake or something that is accessible by software, AI agents, flood models, you know, even software to operate dams and reservoirs. You need all this integrated and integrated solutions. So you're going to have digital, I mean, hardware for sure, software, and you're going to have engineering firms, you're going to have civil protection services involved. So, yeah, it has a lot of angles, there's a lot of stakeholders involved, lots of tools to implement.
[00:16:29] Speaker B: Apart from bribing politicians and regulators, where does, like, if I'm an outsider, where do I, in this case, stick with Spain for a minute? Where do I go to identify those projects or how do I identify them? And I would use this as an example, like in the US and this comes up time and time again. There, there are key gatekeepers to the sector, right? You figure out, you know, hey, there's a, there's a bid or a utility or a water authority has a project or an RFP out there and then you need to kind of, how do you get in there? Right? You can go direct to the End user. Is that the path? Or do you go to, as I said, gatekeepers? In the US you go to engineering companies or maybe distributors. Right. Those who are customer facing, who are helping select the tools and solutions or at least present them for procurement.
What do you do in Spain and is it the same across Europe? I don't know.
[00:17:28] Speaker A: Yeah, yeah, I guess, yeah, it's the same thing across Europe. So the situation is that every one of these solutions is going to be tendered at some point. It's going to be public facing. So you're going to, you have to look for the procurement platform of each country and you'll find it there for sure. And it's going to be, in my opinion, it's going to be quite open. So any company from any country, even the ones from the US or the big engineering companies, might attempt to bid for the contracts. The truth is though that either you are known at the local level or they're not going to, I guess, grade your proposal very positively. So the way to enter the market in my opinion, is with a local partner. That's going to be true for Spain, Italy, Portugal, France, uk, Germany. You need to go with a local, someone who knows the market, who knows the administration, who knows the engineers managing the contracts, all that stuff.
[00:18:29] Speaker B: Yeah. And so, and I think, I suspect within various countries there are key players that you can kind of, as I would say, hit your wagon too.
Spain would be the Tadaguas, the Cadagua.
[00:18:44] Speaker A: Of the world, that's for example. Or Ofiteco, a couple of engineering companies that work a lot with river basin authorities here in Spain would be two good examples.
[00:18:54] Speaker B: Okay. And so, I mean, you mentioned this. So we're talking there are different types of water problems or climate related problems in northern Europe versus Southern Europe. One of the things we looked at country wise was the Netherlands. Right. We've just put out a country profile on that. I mean, what's the, any takeaways from what's happening in the Netherlands? Because I think, you know, other than building barriers to keep water from, you know, overtaking Amsterdam and the rest of the country because it's all a lowland, what are the other water issues or challenges that they face in the Netherlands?
[00:19:32] Speaker A: The Netherlands is one of the most evolved countries in the EU water wise. So as you say, their geography and how the territory is vertebrated in the Netherlands, it's natural that they're very worried about flooding, flooding events. As you've mentioned, we're talking about barriers and you're talking about preventing Any extreme event from happening. They're very well protected in that sense.
When you take away that from the picture, we're talking the Netherlands have very few water utilities. They act regionally, they're public, and their goal right now is to become more efficient. So we're talking about solutions that will make them lose less water.
So basically they're concentrated on non revenue water and also on micropollutants, contamination of water sources.
You have to think of the Netherlands as a country that's receiving a lot of contaminated water from the rest of continental Europe.
So a lot of the stuff that's going on industry wise in Europe is ending up in the water in the Netherlands. So they need to tackle that. That's one of their main problems.
[00:20:54] Speaker B: Yeah, it's like living at the mouth of the Mississippi River. You're at the bottom, you're at the end of the line and you're getting all the crap.
[00:21:01] Speaker A: Yeah, yeah, that's it.
[00:21:03] Speaker B: Metaphorically speaking.
All right, well, so I mean it sounds like they're evolved. I mean, I don't know what their leakage rate is, but I know another country you looked at was Italy and we've just put out a profile on that, which if I understand it correctly, has super high leakage rates. I mean, it's Italy, right? Italy's an old country, it's probably got old infrastructure.
How do the Netherlands compare to Italy?
[00:21:29] Speaker A: Italy being so big as it is in terms of GDP in Europe, it's absolutely, I'm not going to say fascinating. That seems like a positive word.
It's very surprising that their non revenue water is about 40 plus percent network losses.
[00:21:50] Speaker B: I mean, that is great. That's all right. So is that non revenue water? Is that, that's not just water losses, that's also people not paying their bills. Right. That's the water loss plus unpaid bills. Or is that, Are we talking water losses?
[00:22:04] Speaker A: No, we're talking water losses. We're talking water losses. And one of the things that we thought when I, when I started studying this as well, traditionally Italy, there has always been differences between the north and the South.
[00:22:17] Speaker B: Right.
[00:22:17] Speaker A: The north is more industrialized, the south isn't. And when you look at the data, it's actually not much better for the north either. I mean the south has non revenue water losses of 60% in the south sometimes and the north is about 30 plus even 40%.
So I mean, they're not in a great spot either.
So the problem with Italy is that the pipe replacement rate, traditionally investment has been very low in Water.
So they're trying to adapt right now to a reality. They have noticed that they need to invest more money to become more efficient, but they're just realizing 10 years ago, so they have a lot of work to do, a ton of work to do. And the pipe replacement rate is still very low. They're very dependent on the eu, so they don't recover costs. They do recover opex, but they don't have enough money to cover Capex.
So they're in a huge, in a tight position.
The Netherlands, it's a completely different story. They're much more conscious about water. They do recover costs. It's another situation entirely, a very different situation.
[00:23:28] Speaker B: I mean, if you had asked me and I know nothing, I think that I would expect that to be the answer. I think that would be, that would be the assumption, right? It's Italy, you know, it's Italy, right? It's old, it's, you know, chaotic and, you know, not necessarily in a good way and a bad way, right. I have a brother in law who lives in Switzerland and shout out to Tio and he, as he would say, you know, everything is great in Switzerland, except when a pack of Italian tourists walk down the sidewalk, all hell breaks loose. It's total chaos.
But that's why people love Italy too, right? It's all about living. Tell another story is a colleague of mine, former colleague, who lives in Spain. As he said, the farther you are in time from world dominance, the happier you are.
And Italy, the Greeks, they kind of fit the bill, right?
They're old, ancient cultures that they're at peace with themselves. And then you can look at, let's say the US or China for that matter, at this point, and we're pretty uptight, we're not that much fun, I'd.
[00:24:41] Speaker A: Say more business oriented, let's put it that way.
[00:24:45] Speaker B: So I'm not knocking anybody here. So I don't want anybody to take this personally.
I wish the podcast was big enough that I could be aggregated. Don't aggregate me.
But that being said, so if I'm understanding this correctly, if you're looking at these two markets and maybe let's throw France in there, right? Because I know you've been doing analysis on France and Spain. So you got four countries, you know, and you're an outsider, is it easy? Do you think you could. If I'm selling, I don't know, pipes, pipes or pumps, you know, some hardware, you know, pick your poison.
What market would you look at first and for what reason? Do you have a Favorite is it sort of total dollars, you know, addressable markets. Larger is the bureaucracy, easier. In the Netherlands, it's more transparent. There's a plan. Whereas maybe since like Italy, it's a little bit. They're kind of behind the curve.
What would you think if I were.
[00:25:44] Speaker A: One of those companies you mentioned and I had to do, I was responsible business development.
Instead of looking at countries, I'd look at what the players are, who the players are. Right.
So everybody knows that like the French players, Veolia Swed are very big fish here in Europe. So you need to talk with them. I mean, you need to talk with them, enter their procurement, you know, chain of supply, supply chain, you know, all that stuff that that's key.
[00:26:15] Speaker B: And that's for all markets in Europe.
[00:26:16] Speaker A: Yeah, yeah, I guess, yes. Because I'm not going to give any specific numbers because I honestly don't know them by heart for the whole of Europe. But the French market is very privatized, same as the Spanish one. Right. And the rest of the market is public. There's going to be tenders for it.
So you have two ways of addressing the market. You can grow through the public tenders, which is fine, but it's going to take a lot. You're going to need local partnerships, local distributors. You're going to need that kind of, as I mentioned earlier about the river basin authorities, you need people that know the territory. Right.
And then you have the private players, in which case I'd start with those I mentioned in France, probably Aqualia and Spain as well. Global omnium. You know, these players, they are so huge and their market is global. So once you become a supplier for them, I'm not going to say that you've made it, but there's a big chance that you're going to grow exponentially in these countries, in the countries where they are present.
[00:27:25] Speaker B: All right, maybe this is in all cases, you've got your mousetrap that you're selling and you're trying to get it into the market.
And then I think if you're.
So you go to the companies, but if you're going to, let's say reuse or desalination in Europe, I mean, I. Is at the start, I mentioned, you know, and I think that you've mentioned this in some of the reports that in the profile, country profiles you've done, you know, like extended droughts in places like France, Netherlands. Sure. It's, you know, it's got its own water stress problems or Northern Europe, should I say, would you try to Market, reuse, solutions and tech to those countries? Or would you stick to southern Europe like Spain and Italy? Because that's really where the stress is and it makes more sense.
[00:28:15] Speaker A: Well, actually, like I was saying yesterday, if you look at the map today, it's inverted totally, like 100% inverted. Right. Like Spain and South Europe seem like they have no drought problems right now when we are starting to, when the summer is starting and you see Germany, France, northern parts of Europe having severe drought problems.
So I guess that right now the trend is going to be marketing my equipment and my devices, my technologies in the north.
You have to be opportunistic about these things as well, because droughts come and go and it's when the public is becoming more aware of these problems that you need to push your solutions to the market because there's demand for it and people are asking for those solutions.
I don't think you need to restrict the market to the south of Europe.
I think you need to go Europe wide.
You don't have to, because the fact is that if you try to tackle only Spain, maybe you find yourself in a period in which Spain is not suffering from droughts and you're not selling your stuff.
[00:29:25] Speaker B: Right.
[00:29:26] Speaker A: So you need to address several markets at the same time.
[00:29:30] Speaker B: So looking across the countries that you've looked at, I mean, maybe I should ask this first instead of using that reuse as an example, but what are the opportunities? Like instead of saying I've got a solution, looking for a problem, like if I have a reuse technology now, I need to go find the problem to solve.
Instead, let's look at whether it be these companies, like you said, or these markets, what are three areas of interest that you're seeing?
What are people focusing on? And whether it be investors or vendors and utilities alike, what are they looking at?
[00:30:06] Speaker A: So in terms of wastewater treatment, it's pretty clear that emerging contaminants and pfas and everything regarding water reuse is going to. There's going to be a huge investment going into that market, that sector. And that's is true for France, uk, Spain, Italy. Like the, the goals of that the European Union is trying to, to make the countries adopt, which is. That's another, another topic for another conversation. But at least the European Union is trying to push the specific percentage of water reuse across all the countries.
And Spain is one of the most advanced in terms of water reuse, but it's still lagging behind that goal. I think it's a 10% goal with memory serves.
So France is right now below 1%, same as Italy, for example. So that means. And they need to develop solutions, they need to invest fast into that type of solutions.
That's one key area for sure.
The other one, as I mentioned earlier, was any. All solutions involving flood and droughts, that's another area that's going to be.
It's going to be big for the following years.
And then anything that's related to water efficiency in the networks, like monitoring, leak detection, workforce management, anything that makes services more resilient and make them more efficient in terms of cost as well, I guess that would be like the third area that I would be watching for the coming years.
[00:31:44] Speaker B: And is that being driven by.
Is that the utilities or the cities themselves, or is that really eu, or is that both that are pushing for these things?
[00:31:54] Speaker A: I think the EU is pushing very seriously for these things. And then you've got the private players, I guess, that are the ones that are educating the, you know, the local administration on what they need, what. What the needs for those utilities are.
That's, I guess, the biggest share, because the private players are the one marketing the solutions. Right. So when you're at a small utility, 10,000 people or so, you don't have the luxury to keep researching every day what's going on in the market.
[00:32:33] Speaker B: Right.
[00:32:33] Speaker A: So it boils down to private players pushing their solutions towards the utilities, I guess.
[00:32:40] Speaker B: No, I think that makes sense. And I think one.
And to the extent you've looked at it, and I know the rest of the team has, I mean, there's also the uk, that's a totally different story from all. I mean, you mentioned the word.
I don't know if you said privatized, but Europe is not really what the UK, or maybe even the US would call privatized. These are really concessions, right? They're 25. How long are these concessions? 25, 50 years. I don't know how long they go out these days.
[00:33:10] Speaker A: Yeah, more or less. It kind of depends. But from a legal standpoint, you can only have a concession if there's a need for a sudden investment.
And then you have like a. You need to justify the period, you know, the contract length, so that the investor recovers the money.
So it could be. It could go from 10 to 20 years, 25 years, even 50.
Depends on this, on the case.
[00:33:37] Speaker B: And for all those interested in concessions in Europe and Spain, Antonio knows a lot. So if you're interested in it, let us know and we might be able to help you out.
All right? So I think this is Interesting. And I think one other thing I thought was interesting. I'm just trying to figure out how these countries differ. It's like the emerging contaminants. Sure, the EU is moving towards addressing things like PFAS and these in these contaminants, but it does vary wide. I mean is, is the market in Spain or Italy and the focus on PFAS the same as it is in Switzerland or the Netherlands or Northern Europe?
[00:34:14] Speaker A: No, not at all. Spanish and Italy are more in the R and D phase still. They're trying to bring their solutions to the market, but on a smaller scale than France, for example. France is super restrictive. They're pushing this from a policy perspective at every level of the administration.
Industries are, you know, they're like the people know which industries are contaminating their water resources. So it's also, I'd say it's people are becoming very aware, the public is very aware of what's happening in France, in Spain and Italy, not so much. So as I said, when you talk to engineers, they do know the problem, they are aware of the problem and they do have, they're, they are trying to bring solutions to the market in these countries, but their priorities do not match exactly that. You know, they have other, other stuff to worry about.
[00:35:15] Speaker B: Okay. No, I think that makes sense. That's sort of, I think our analysis has shown that. But it seems to be moving really quickly. This came up, I don't know, it was on a team call with everyone the other day, but we were talking a little bit about, I think it was PFAS in Europe and there's a lot of interest in that. Amazingly, the US policy wise is further ahead in some respects as far as addressing it, deploying it. It doesn't feel like when it comes to things like water quality that the US would be further ahead and anything at this point. But things can change quickly, right? You know, I think the EU can be very top down and sort of push these regulations down on all the member countries and states. So I think that's interesting and yeah, and I think I was bringing up the UK when it comes to concessions and such or privatization. I mean they're going through their own issues right now.
I mean, I think one thing about the UK that we've looked at is I thought it was interesting like KKR which was looking to buy Tim's order, refinance its debt and deal with that. They just backed out because of the uncertainty.
I think they even noted political uncertainty. Right where they. Was KKR going to become the owner of Thames Water and then be held accountable or at the whims of. Of government authorities and regulators that don't seem to have a plan. It's become such a.
I don't know, it feels like a bit of a hot potato. No one wants to be accountable for it, whether it be offwat or the government or the current Tim's water owner. So it'll be interesting to see how that's a totally different market. That's why I think this is all super interesting. You've got Spain, you got Italy, you got the uk, you got France, Germany. I mean, you guys have looked at Germany a little bit. I think we're sort of digging into that more. That's a totally different animal in and of itself, right? Yeah.
[00:37:16] Speaker A: Germany, we're looking into it. Right now, it's Germany. Then we'll go for Poland as well, then Romania. Probably still to be decided, but yeah. Germany is 100% public and most of the utilities are not only in charge of serving drinking water, but also heated water and electricity. So it's kind of a different situation entirely. And you have this entities that are big entities that are responsible bulk water supply and the smaller utilities, but in any case, 100 public, most of them. So interesting, but very.
[00:37:56] Speaker B: In typically German, I think, and maybe in a good way, but they're also way ahead. They're very planned, very. I think. I don't know if it was. We were doing analysis on deal metering or the metering sector, I can't remember exactly, but one of the challenges was their replacement rates are just so much higher than either other markets.
And maybe even. I don't want to say what is needed, but they're way ahead of that, of the replacement rate curve. Are you getting a sense of that as well?
[00:38:29] Speaker A: Oh, yeah, that's totally true.
[00:38:30] Speaker B: Yeah.
[00:38:31] Speaker A: Germany is like the prime example of how things should be done, or that's what we have always thought.
[00:38:39] Speaker B: Yeah. It's got its own challenges now, which maybe that leads to another question. Let's just talk a little bit about.
And I brought this up earlier, let's talk a little bit about energy prices. I mean, when it comes to OPEX in these different countries, are some of these countries more exposed than others? Like when it comes to energy prices? I mean, from afar, you hear what's happening with the energy prices, the cost of gas, the cost of power, they're super high in Europe. Is that influencing decisions at the utility level? And are some countries or utilities within certain countries more impacted?
[00:39:18] Speaker A: I always say this, but there's no bigger driver to R and D than cost.
Right. I mean everyone wants to be like climate, I'd say aware. Right. But when it comes to cost, that drives a lot of decisions. So the energy price being so high in so many member states, it's making utilities like for example wastewater treatment operators, they're censoring every piece of equipment so that they know when blowers have to work, when they can stop, when they can turn back on all that stuff. And it's one of the main drivers right now of investment.
Where or what can I do so that that energy component comes back down or at least I can mitigate the effects by, I don't know, 10, 20%, something like that.
You're obviously not going to cut it in half because you need energy for the facility, for the infrastructure to work. But yeah.
And yes, there are obviously countries that are more vulnerable than others. Those that have more are, I'd say energy producing. Like France for example, with all their nuclear are less prone to energy fluctuations than Germany. Right now Germany closed almost every nuclear facility they have. So they became energy dependent from other countries right now. So that makes a huge difference in terms of how utilities tackle problems in each country. Spain, for example, is very dependent on energy as well.
Every time there's a geopolitical conflict or tension, Spain gets hit, Germany gets hit, Poland gets hit, you know, but not for, not or I'm not going to say France doesn't, but it hits it, it gets hit less, right?
[00:41:14] Speaker B: Yeah. That its nuclear fleet insulates it somewhat. I mean it's got a solid base of nuclear and even internally, and speaking with our colleague Chloe Meyer, I mean as she said, even within France there it's, it's a fairly divisive topic, nuclear power within France. But you know, it's clean, it's built, it's expensive.
And the question is, is there, I don't know, it's being talked a bit about more in the US Nuclear power, whether it be small reactors, micro Systems or these 50 megawatts, 100 megawatts, I mean where some of these nuclear facilities are being like Three Mile island and I think I saw another one should know this, but one, you know, these data center, these big tech companies, they're signing power purchase agreements, Constellation Energy in particular signing power purchase agreements, some of these big tech companies for data center and or AI related demands. Are we seeing is that coming back, I mean Germany, nuclear is not coming back at this point. I mean coal is disappeared. I don't want to be interesting to See what happens. They're kind of, they've been in a vice for two years, the Germans have. But are you seeing more nuclear discussions in Europe at all with the blackout.
[00:42:42] Speaker A: That happened in Spain? There's definitely more discussions about nuclear right now. So the problem with the blackout on allegedly because there's no, there's no official explanation yet about what happened, but from what I can read from engineers, is that there was not enough inertia in the system. And you get that inertia with nuclear and natural gas.
So nuclear right now I saw that several energy companies are pushing to extend the lifetime of some nuclear plants. So that's definitely a topic that's, that's popping up more in Spain and Portugal as well. Portugal realized that it's extremely dependent from Spain, so they're trying to have their own thing and nuclear is one of the things they're looking into right now. So, yeah, I think it's in the table for sure.
[00:43:39] Speaker B: I suspect it's pretty tough to buy battery backup, battery power, the system in Spain these days after that blackout. Probably pretty high demand.
[00:43:49] Speaker A: Yeah, probably. But I mean you can only have as much batteries, right.
You need to count on the system to provide some sort of, I mean you can have an outage, but it has to last a decent amount of time. But not that much.
[00:44:08] Speaker B: Right.
[00:44:09] Speaker A: I mean, in Spain we were like for a day without energy. I don't know what would have happened if it was two days or three days.
[00:44:17] Speaker B: Well, I think to that point, I mean that sort of gets back to where this conversation began, was resiliency. And what are countries or cities or utilities doing to insulate themselves from these shocks? Right. And so one, if we talked a little bit about efficiency, power efficiency, energy usage. Right. So the less you use, you know, the better off you are. But that blackout in Spain I think, I assume did it shut down the decile plants and wastewater systems? I mean it definitely disrupted them. They have, I assume they have diesel generators that run for a little while, but how long? If it goes on for several days, that's a bigger problem.
[00:44:59] Speaker A: Yeah, you can only plan like for 24 hour interruption maybe. But if it goes beyond that, then you're as vulnerable as any others.
Public service. Right.
[00:45:13] Speaker B: So, all right, so we've sort of run across Europe, talked to, talked about water, try to tie it to it. I mean, if you had three things, I'll leave the number up to you. Maybe it's two, maybe it's four. If you had a couple to three or four things that you wanted to tell people about Europe, to think about as an outsider. What.
What would you tell them from a water perspective, other than lifestyle is really nice, weather's generally pretty good, food's good, et cetera.
[00:45:46] Speaker A: I think the main takeaway. I don't know if this should be 1, 2 or 3 points, but the main takeaway is that countries and politicians are becoming aware and there's demand driven not only by the eu, but also by their own citizens to address the water issue.
And the challenge depends on the country, obviously, but there's a common set of, let's say, themes or topics that everyone is looking into, and those are droughts, flooding, contamination and efficiency.
Those are like the four main drivers right now in Europe. Anything related to that is going to be of interest here in the eu. And the way of addressing the market, as I mentioned earlier, I think it's with either local partnerships or entering somehow the supply chain of this big, very big players that, you know, cover, like all of Europe. That's the way to enter. Those would be my thoughts.
[00:46:55] Speaker B: Yeah, no, I think that's super helpful because I. Europe's a tough market, right? It's not homogenous. Right? I mean, it is. It's a number of different countries, states, cultures, business practices. I think you alluded to that. And so if those are their broader key areas to look at, identifying the local partner, I think that makes perfect sense. And I actually liked your answer a little while ago. It's like, what country would you look at? He said, well, if you had to go somewhere, you actually hit your wagon to one of these companies that is actually already there and has influence on the decisions. Right. So whether it be Violi or Suez or others, I think that's super interesting.
Well, with that, I will let you be. Go enjoy your weekend. Your ahead of us in the US by six or so hours, but you're almost home.
And with that being said, I'll let you go. So thanks a million for joining.
[00:47:53] Speaker A: Thank you, Rhys.
[00:47:53] Speaker B: All right, man, take it easy.
All right, that's it for today's breakdown on Europe. Taking a look at a number of different countries that Antonio and the rest of the team have profiled. So if you're interested in any of these countries, I think I mentioned the uk, France, Italy, Spain, Germany. We're working towards Poland, I think you said, Romania, the Netherlands. We've looked at all these countries and more, but now we have individual reports because that's what people have been asking for. So go check out our
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or if you have questions about anything, we can always jump on the horn or the phone or Zoom for that matter and talk to you about it.
I am Reece Tisdall and I'll catch you next time as we keep watching the water sector, I guess one signal at a time as I say. So thanks for being part of the journey. As we move quickly towards the second half of 2025 and before we sign off, and I don't say this enough, and I'm going to do it every time now because they deserve it, I want to thank all the people involved in making this podcast and all the others. There are 120 of them before this. In those conversations, they make it happen. These people include Mike Gaylord, Ryan Sullivan, Kelly Talbot, Stef Aldock.
I'm not gonna lie, there are other people involved that I'll give a shout out some other time, I suppose, but I would be talking myself if it weren't for them.
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[00:50:23] Speaker A: Of Sam.
