Episode Transcript
[00:00:00] Speaker A: 26.
That's how many pumps Danish engineer Paul Dujensin produced of his first design.
Nicknamed the Pig because of its unusual appearance. Back in 1945, a local farmer needed a reliable water supply. But suitable pumps were seemingly hard to come by, so Jensen built one himself. That invention became the foundation of what is today Grundfos. Grundfos. They employs more than 21,000 people worldwide, generates approximately $5.2 billion in annual revenues.
2025 alone, Grundfos was granted 98 new patents and invested more than 6% of its revenue in research and development.
So from a farmer's water pump to intelligent digitally connected systems, it's an evolution that took eight decades.
I am Reece Tisdall and this is Future Water, which we talk about all the ways which companies, utilities, all those people are addressing the challenges and opportunities in water. This is episode 154. That's 1-5 4. And joined by my colleague Maria Cardinal, who has been looking at two sides of the same challenge. One is the UK's ambitious AMP8 leakage targets, and the other is the rapid expansion of digital water technologies across Europe.
So here's a number that jumped out at me and thinking about this conversation, and that is 28 billion. That much how much Europe could be spending ultimately each year by 2036 on digital technologies. Yet England and Wales, the utilities there, they've recently missed their leakage reduction commitments.
So here's my thought. The water industry doesn't just need the data which everybody talks about, it needs. Does need the people, it needs the incentives, it needs the oversight and ultimately the capacity to turn that data into results.
So I look forward to having a conversation with Maria to talk through some of these details, what's happening not only in the uk, but the rest of Europe, because she's been digging into all of this in recent months.
Separately, I just want to say apologies for missing this past week.
There was a bit of delay. I was on the road for two weeks, creating some logistical challenges between the Aspen Nicholas Institute Forum and Aspen, of all places, Rethinking Water in New York with Science Water, which was a fantastic event. And then Badgers engaged live in Milwaukee just before the World Series.
And so congrats to all the brewers fans out there. So it's been a busy couple of weeks and that was a big part of the delay, but we're back in action. So, as I said, this is 154 and we've got Maria Cardinal coming on in just a second, so get into it with her. And talk about digital technologies and leakage management in the UK and Europe.
All right. I'm joined here by Maria Cardinal. Maria, what's up? How are things in Barcelona?
[00:03:18] Speaker B: Hi, Riz. Well, all good here. Looking forward to the autumn and wearing finally some sweaters and jumpers.
[00:03:26] Speaker A: You know, it's a bit. There's a big difference between Barcelona and Boston. So we're kind of in this. Although it's going to be super warm today, I think.
But one of the depressing parts of this is that it doesn't get any better from here. It's. It's just going to get really cold and.
But that's the way it goes. That's why we live here. We get all the seasons and it is beautiful, so I really can't complain. So would it be Friday afternoon your time? Friday morning mine. And. But you've been doing some research, so let's maybe get into it. So I grabbed you earlier this week because I thought this would be an interesting conversation. You've put out some recent analysis on two specific areas. One is just looking at the UK and AMP8 and leakage targets and commitments, which I thought was really compelling and interesting. Then at the same time, a much bigger analysis is that basically a forecast of digital water solutions and technologies across Europe.
And that's really in depth, but there is an overlap. So I thought we could have a conversation maybe about both and maybe share with the listeners what's happening when it comes to digital tech and leakage and anything else we want to talk about makes sense to you.
[00:04:47] Speaker B: Definitely looking forward to it.
[00:04:49] Speaker A: All right, let's do it. So one of the things I was thinking about is. So it's. Which is odd to me, but it is true. So England is in a drought or has been in a drought and it could remain in drought until summer 2027.
So that's the challenge. Right. This is not uncommon around the world, although it seems weird for England, but yet its utilities are losing about 1/5 or 20% of its treated water. Right. So in some respects is on par with the us. But in case of the uk, how did we get here? And why does this even matter beyond the uk? Any thoughts on that?
[00:05:29] Speaker B: Yeah, no, that's a good. A good question and a good observation. We don't typically think of the UK as having water scarcity issues, but in fact, reservoir levels are roughly at around a little bit over 50%, with some utilities registering values as low as 35% as of this week. I think that data is from the 28th of October.
And this is crucial because they haven't really faced this in the past or in the recent past. And they haven't really built out their reservoir level capacity over the past few decades.
At the same time they have addressed leakage.
So during AMP8, the previous cycle investment cycle leakage fell by 9%, which is quite substantial, but the actual target was 16%. And now for the next period, the AMP8 utilities are being asked to reduce leakage further by 17% in fact.
So there is a mismatch between the targets and what utilities are actually achieving, even if they are moving in like in the right direction.
[00:06:46] Speaker A: Can I. One question just for everybody understands this. I think that amp8 because we throw these acronyms around. So asset management plan, right, and they go in what, five year cycles in the uk?
[00:06:59] Speaker B: That's right, yes.
[00:07:00] Speaker A: So we are now in asset management planning cycle eight and I think. Are we a year into it?
[00:07:09] Speaker B: That's right, we're. We're a year into it.
And implementation has also been a little bit of challenging to get that going.
So there's that added challenge as well for utilities.
But all these like these different aspects of the reservoir levels, the capacity of water retainment, the targets for leakage as well as consumption patterns in the UK illustrate this supply pressure that utilities are facing.
And there are on top of that other pressures that are applicable elsewhere in Europe as well, such as aging infrastructure, climate pressures, affordability constraints, and one very important, particularly for digital solutions, workforce shortages.
[00:08:03] Speaker A: Yeah, I was going to say, I mean it's like when you talk about aging infrastructure and maybe affordability, let's talk infrastructure. I mean this is something that came up not long ago and that is a place like the UK similar to the US in some respects or Europe for that matter. And that is kind of victims of our own success.
Right. All these, these are countries or regions that have been able to build out infrastructure. Most people are connected to water systems.
And now we're kind of on the other end of that life cycle curve on the other side of the hump, where it's getting pretty old. So I think that's what's really interesting about that. And maybe that's the big challenge. So interesting.
[00:08:43] Speaker B: Yeah. And on top of that, so indeed the, the UK is one of those countries that has like a very extensive network now and utilities know where the water is going. They know also what's the, what are the like most likely issues now that happen along the useful life cycle of a network? And as well, what are the key like pain points and so on. But knowing, for instance, where the water is lost is not the same as fixing it.
So while utilities know that their networks are likely to fail at some point or another, there are In England about 40% of water mains that were laid out or refurbished before 1960.
That feels sometimes that we're talking about yesterday, but that's over 60 years ago.
So there are significant maintenance and replacement requirements that come with this.
And identifying the leaks is only part of the challenge. Whereas the repairs require skilled personnel, excavation, customer coordination and service disruptions.
So the EC leaks are fixed first. But as you advance in your leakage reduction journey, leaks get more difficult to identify and to repair as well, and they get more expensive.
[00:10:13] Speaker A: So amp8 is somewhat unique though. Right. And as I said from the outset, we've done a dive into looking at the asset management planning cycle.
And so looking at your other research, Is this, is AMP8 a preview of where the rest of Europe is heading or, you know, and I guess is there something that continental utilities can learn from amp8 or what's happening in the UK?
[00:10:39] Speaker B: In a way, yes.
So Europe is moving toward similar leakage thresholds and requirements by the EU Commission to have member states share national action plans towards leakage reduction.
And once the EU threshold leakage threshold target is set, these national plans need to be put in place.
But there are also other aspects to it. So England shows us how hard it is it can be to turn targets into results, even when funding is secured.
And there are different incentives that can act in fact, counterintuitively. So off what incentives can pull utilities in different directions?
For instance, utilities are pushed to cut leakage, but penalized for interruptions that are caused by the works to reduce these leakages.
[00:11:41] Speaker A: Yeah. So yeah, no, I guess a quick question for you is.
So, I mean, you mentioned Offwad is a regulator. Right. And so that's in the uk.
So there is another struggle between.
I don't know if there's a struggle or the friction, maybe that's. And change happening. Right. Given what's happened with like Tim's water, there's a lot of questions and it's financial stability or viability, this point. But Offwat is also under its own pressure, the regulator. Right. The question has been, is offline actually being hard enough on these utilities to comply with targets?
Are they, you know, providing enough oversight? So. But the same doesn't happen in the rest of Europe. It's more fragmented and it's less stringent. Could I say that?
[00:12:36] Speaker B: Yes. Or indeed there's not such a Target setting phenomena going on, so to speak. So there are differences in terms of regulation as well as utility fragmentation. European utilities, there are way more in number and also more fragmented compared to the uk, and financial systems work differently as well.
So indeed, the investment path for the European countries will likely not be the same as in the uk.
[00:13:09] Speaker A: So, all right, so carrying it forward. So we're looking at the uk. We've got leakage, they've got other targets as well. You've got the fairly structured asset management planning cycle, which really targets, I don't know how many, 15, 17 utilities. I don't know why the number escapes me. But, you know, you've got a pretty defined number of utilities that have to comply with these targets. You go to Europe and so transitioning to not only the continent, but also to the research you've done recently, and that is Europe's digital water market.
I think it's supposed to more than double to about 28 billion. I think that's us annually by 2036. So let's talk a little bit about that. What's. What's driving the growth of digital tech, which also includes leakage management and other other areas with that growth, what's driving it and who's positioned to benefit?
[00:14:06] Speaker B: Yes, so here we definitely zoom out from leakage and we include meters, we include sensors, we include the SCADA systems, pump optimization systems, etc. And indeed, we have forecasted an annual spending rising from nearly 13 billion in 2026 to about the 28 billion figure that you mentioned in 2036, which is more than double.
Indeed. But having said that, it's true that we have also noticed that utilities have been a little bit slower now to adopt digital tools than what we expected back in 2022.
Yet there are several different pressures that are pushing towards an even accelerated digital adoption.
These are quite numerous, but I'd like to highlight four of them which are, I'd say, the key drivers. One is that water quantity and quality have become political issues and are in the political agenda and public debate.
High energy costs as well as workforce shortages are making tools that cut energy use and site visits more commercially attractive for utilities.
Then there's also a very important aspect for Europe, for the European Union, which is funding EU funding, particularly for southern and Eastern Europe, has kickstarted adoption of digital solutions in the water sector. This is particularly important for smart metering and sensoring along the water networks and treatment plants.
The water resilience strategy, which is coupled with the forthcoming leakage targets that we were commenting on earlier should bring more funding into the water sector.
Not necessarily focused on water, but there are new cybersecurity standards as well as the sunsetting of 2G, 3G that is the shutdown of older networks that is forcing hardware upgrades as well.
And so in fact we expect that about 40% of the total forecasted spending is associated with replacing the already existing digital systems. And this creates opportunities for technology providers that can pursue both new digital deployments as well as upgrades to existing installed base.
[00:16:40] Speaker A: So, and I just thinking about those four things, water quantity and quality.
You say that's become political. How much of it I assume that is that climate related is that, you know, you read the news at least from afar and you know from the US and you look and it's whether it's, you know, whether rivers in Germany like you can't send barges down there. Is that part of it or is it.
I mean are there towns and communities just running out of water? Or is. Or are you just referring to London's or the UK specifically?
[00:17:12] Speaker B: No, that's sadly that's Europe wide. Indeed. We have cases like the Danube Rhine river where like transport is also being affected just by like low levels of water in the rivers. We have also increased contamination levels of not just PFAS now and micropollutants but also well known pollutants such as nitrates and phosphorus phosphates. Sorry.
So there's more. Because there's more knowledge about these things. There's also more attention put into them and there's also this increased awareness that we have the water that we have and we need to manage it better and ensure human safety standards for.
[00:18:03] Speaker A: Yeah, and then I, I think that the high energy costs obviously I think people who've listened to this podcast before know this sort of gets me a little bit animated, particularly when you compare Europe energy costs to the U. S Energy cost.
The, the wild difference in how high energy costs are in Europe. Not only natural gas but also you know, diesel or gasoline. In fact I had a, I've had a family from the UK over for the visiting for the past week and we're driving down the road this past weekend and just commenting on like fuel prices. You know there's obviously the. Oh it's diesel is outside of, in Boston or outside of Boston. I think it's about 6.56.75 a gallon for diesel fuel which is incredibly high relatively speaking. And then she was doing the conversion. All right, well this is what we're paying a liter. I think they would be paying closer to 12 to $13 a gallon for diesel fuel, so it's twice as much.
And so what does that mean? I mean, that's obviously putting pressure on utilities somewhat indirectly. Right, for diesel, because they have to buy supplies, whether they're getting chemicals delivered, pipes delivered, meters delivered, it all needs to be transported and deliver.
And yeah, that's something that really kind of gets me excited because one, I think it's interesting, but also it's a little scary when you look at the difference.
So this is great, right? So we've done this deep dive into all these different segments of the Europe water sector in terms of digital solutions, but one of the challenges is, you know, so maybe bringing this together is utilities now or increasingly have more information about their networks than ever before, but they're still losing enormous amounts of water. Right. And maybe this is all relatively new phenomena, but are we getting better at measuring problems than solving them?
[00:20:14] Speaker B: We're definitely getting better at measuring them and we're getting better at measuring more of them as well.
So that might actually artificially make the same problem look worse.
But it's always the first step. Smart meters and sensors improve visibility, but then we need to act on that data, otherwise it's useless. And utilities still need the analytics, the efficient processes and workflows and the crews to go and physically find and fix leaks or any other event that is impeding the normal functioning of the network.
So we do see that investments are actually shifting that way more towards the analytics part of it, the automation and the network optimization.
Having said this, it's not entirely all on the utilities or the digital solutions. There are other factors in play as well. So, for instance, going Back to the UK, it is estimated that about 20% of leaks take place on the customer side.
And so fixing those leaks is actually the property owner's responsibility and prerogative, not the utilities.
Yet the utility is the one losing the water in the end and not being able to provide that to another user, for instance.
So utilities, they've come up with different methods of addressing this issue and one of them that is working quite well is the use of financial incentives. For instance, Northumbrian Water has a water leak allowance program that lowers the bill for customers who repair supply pipe leaks within 30 days of detecting them.
[00:22:03] Speaker A: Oh, that's super interesting. So this is, you know, I mean, we're talking about fixing toilets, leaky toilets, flapper valves could be just faucets that drip and lose over time, or maybe taps outside for lawn care irrigation potentially. But so does that mean I'm gonna throw this at you, you know, and, and admittedly, it's not like we cover some of this at Bluefield. You know, I think this conversation has so far been on, like you said, the utility side, when you get to the customer side, there are a number of companies that are targeting the home. Right. We've worked with, you know, consumer goods companies that are trying to figure out, figure out leakage, leakage rates, water usage in the home and how to manage that. There are software companies. I mean, we have Nest Thermostats and Echo B Thermostats, and I'm sure they're Honeywell. A number of other companies provide these sort of in home monitoring systems that compare one home to another.
Can we expect to see more of that going forward?
What do you think?
At least as far as a business opportunity goes,
[00:23:19] Speaker B: I'd say so, and I think definitely more so on the industry side. In the industry sector, beyond households, they're also going to be more interested on monitoring how their water is managed within their facility and how they can improve their efficiency. And at the household level. I mean, there are suppliers that I don't know if even Ikea has a leak detector tool that they're selling. So definitely I think it is becoming more accessible to the household user.
And with AI as well, they can do and run more analytics on the network and be able to control when they put the washing machine, how much water they're actually consuming, when they shower, et cetera. So anything that provides more information that the user can act on, the better.
[00:24:27] Speaker A: Yeah. And I think the key is demonstrating to the customers. I mean, like you said, you've got the municipal utilities sort of the main or, you know, outside the fence. You've got the industrial community or segment which, you know, they've got. If they're particular, they've got bottom lines they're trying to protect. And if shaving off, you know, dollars or euros in this case to reduce their, you know, cost, then they're absolutely going to do that. Once it reaches a certain point, then you have the household, right, which is incredibly fragmented. It's all over the place as far as adoption rates for certain tech, you know, and you have to be careful, you know, as far as, you know, I don't necessarily think you want the household touching the water per se, right. When you start doing that, but it happens, right? They're under, under counter filters or RO systems that people install in their homes. They just have to make sure to change out the filters. When it comes to leakage management, they're not going to tap into the pipes or anything like that, but if there are ways to monitor it. I think your point about IKEA is really interesting, right? So is the consumer. I guess this is a rhetorical question perhaps, but is the consumer sector really ripe for consumer product?
Consumer products that are sold through places like Ikea or in the US Home Depot or other sort of retail outlets, particularly if it can show customers that, hey, not only are you, how do you compare to your neighbors, but also how much money are you or could you be saving if you not only just took shorter showers or if you fix the leaks in your toilets and faucets? I think it's super interesting.
It makes me think of some research that can be done breaking into that sector. It's a hard segment, right, because it is fragmented and we've got a lot more information than I think we tell. So if anybody's interested in that or interested in talking about it, I'd be all for it.
All right, so one of the things is, and you know, alongside all these changes is artificial intelligence. So AI is everywhere in the water sectors, conversation, everywhere you go.
I don't know if at the beginning, sort of in my intro to this, I was talking about the travels that I've been having, and AI came up, I think, every single day.
But is a real opportunity artificial intelligence or is it simply helping utilities operate with fewer people? Hard question no one wants to hear.
What do you think about that?
[00:27:26] Speaker B: I think a little bit of both.
And it depends. Typically we've seen that workforce has limited the digital adoption in water utilities because there's this resistance to change and this risk adversity.
But as well as costs, just the whole process and the cost of adopting those new technologies have been a bit of a barrier, particularly for smaller utilities.
But when it comes to this issue around workforce that's now been flipped, basically because due to the workforce shortages and the difficulty of hiring and keeping new staff, this is accelerating the interest in remote monitoring, predictive maintenance and automated controls. Because anything that you can do better and more of with the same or fewer resources will help you ultimately be more efficient.
And so AI and machine learning can accelerate and help identifying anomalies, predicting failures can also help with the decision support, prioritizing repairs and optimizing operations, which makes overall the utility more effective. On top of that, advanced applications that enable this optimization depend on good data and connected infrastructure. And systems need to be integrated within existing operational systems.
So AI is also helping in that now it's AI is transforming how we tackle data management, how we do system implementations and integrations, and how we even train people. So it is improving that typically painful process of data license workflows and assets.
So in essence, AI is helping utilities operate also with fewer people.
And there is a real opportunity.
It has lowered software costs, skill barriers and speeds up in general technology adoption.
But, and this is a big but, operators should distinguish between algorithms that support current operations and help them make operational decisions today from tools and capabilities that are still in development.
And in the water sector, conventional monitoring and inspection solutions and methods remain key.
Those are not going away anytime soon.
[00:30:21] Speaker A: Yeah, I think to your point, it feels like we're in this, I don't know, I don't want to say valley of death, right. I'm sort of thinking about sort of business evolutions, right. There's this new technology and it's being adopted, but it hasn't really played out at scale. Right. And I think there's a lot of uncertainty about what it all means. I think the promise is that it will help. It will ideally make utilities more efficient for a, like you said, for a number of reasons, whether it be doing, you know, providing predictive maintenance, remote monitoring, all of which I think everybody agrees needs to happen. Workers or no workers, at the end of the day, someone still needs to make judgment calls, right, about what does this mean.
And I think that's really where the worker opportunity is and it requires different kinds of training and, and, and shifts as far as like focus for workers potentially. But yeah, I think, and utilities are, I think historically known to be these, you know, they're very mature, they're very, it's not fair to say straightforward, but workers stay there. They stay there a long time historically stay there for their careers. But the world's changing quickly, right? And even in recruiting new, new workers, right, Young people, I think part of the challenge is do they want to go work at the water utility? I don't know if Europe is the same as the US but it feels that way in the US But I could be crazy.
Maybe it's just depends on demographics and locations.
[00:32:08] Speaker B: No, we've also heard similar concerns here and different markets are seeing the impact of this already versus others that still have some time to go, let's say. But in countries like the Netherlands or the UK, where the perception as well on water utilities is vastly different, they face the same issue when it comes to workforce. And looking down the line 10, 15 years from now, how are they going to manage their assets?
Here is where digital solutions will play a key. Role, I'd say
[00:32:45] Speaker A: yeah. And I don't know if this, this probably will not make very much sense to you. Something that actually came up, the Badger Engage Live event. And it had to do. We're talking about the use of digital solutions and what it all means for the utility. And I think you've essentially said this, that right now we're in this data collection, data organization phase, right? Because in the US we have this. There's a store, it's called the Container Store. I don't know if you've ever know of this, ever heard of it? Supposedly it's one of the happiest places to work in America, at least it used to be ranked very highly. But they make containers, right? All sorts of storage units, all sorts of how to organize your home.
So my comment to the audience in Milwaukee was, and I've said it to colleagues, right? Just because you go to the Container Store doesn't mean you're organized, right? You can buy all of these tools, all these utilities still have to get organized first, right? You know, otherwise it's garbage in, garbage out, or it just runs off the rails. Bluefield faces the same challenge. We collect a lot of information, collect a lot of data.
We need to organize it and get it in its respective packages before you roll it out into data visualization platforms or APIs or MC. You know, a lot of things need to happen. Utilities are no different, right? So there you have it. Just because you go to the Container Store doesn't mean you're organized.
[00:34:16] Speaker B: I can relate to that.
[00:34:18] Speaker A: Exactly.
So, all right, well, so you've done this forecast across Europe, looking ahead 10 years, will the digital winners in water be, Will they be companies selling equipment, software providers, or those controlling how utilities actually operate? What do you think?
[00:34:41] Speaker B: So here, when it comes to the market growth, it really depends on the country and utility adoption. Like the utility tiers, top tiers are often more digitally mature generally than smaller utilities. So there are different opportunities for different players here.
And for instance, when it comes to equipment vendors, they will benefit for sure from near term capital cycles. The 2G 3G ongoing sunsets that we mentioned earlier, the need to replace all the hardware with new ones. Either be it because of cybersecurity concerns or just because they've already, you know, fulfilled their useful life cycles.
But equipment without integrated software risks becoming a commodity nowadays. So utilities are looking for interoperable brand agnostic platforms that can help them hone all this data that these different like sensors and meters, et cetera are collecting.
And this is Opening the door for software providers and specialists.
So in our view, the nature of the water sector is that most of the deployments will be multi vendor. In essence, no utility will be very few. Utilities will be putting all their eggs in one basket in that sense. So the opportunity is rather how to combine all this data from all the different suppliers and specialist technology providers here can use this opportunity to help utilities make this data lake and make sense of it. So the question will not be who can sell the most of something, but how can they help utilities manage it better and acts on it better. So the importance will be on data ownership, the interoperability between systems, the integration with the operations in place, and how the workflow is managed within the utility, thanks to the solutions.
[00:37:02] Speaker A: All right, this is interesting. So just so, because I think we've gotten similar feedback in the US as well, right? Utilities, at least through voice of customer conversations and talking to utilities themselves. That many or some have said we don't want to rely on one vendor. That makes us nervous. You said it all eggs in one basket. Yet at the same time there are, there are larger companies, diversified water pure plays or others that are sort of, you know, going through, that are acquiring other smaller systems to provide this vertically integrated platform to kind of hit all steps. I mean, I think they're perfect world. A utility would go to them and say, give us everything you got. But it's a hard process and we don't see lots of that.
So there's this sort of conflict, right, or friction happening, right, where utilities say, hey, I don't want it all in one basket. So as a result, you're telling me that actually a big opportunity will be someone, a company who can then kind of tie all these individual systems, analytics platforms, et cetera, into one platform. And so therefore it reduces operation risk. But at least as far as visibility goes, it funnels up into one, one platform. Does that make sense?
[00:38:34] Speaker B: Yeah, I think that's accurate.
[00:38:36] Speaker A: Okay. Yeah, it's, that's what's interesting to see. It's interesting to see how it unfolds, right.
I think maybe 10 years ago, I don't remember when it was, but you know, I was talking to a utility, I think, and the issue was, you know, it could be pumps, right?
Whether you want a smart pump or more connected pump, you're getting it because that's what the vendors are providing, right. And so all the hardware and equipment vendors are moving in that direction and partly so then they can start layering on other capabilities, analytics as well.
Irrespective of who manages it. So, yeah, it's fascinating to see how the value chain is shifting competitively, but yet the market is kind of pushing back in some respects, at least as far as we're seeing at this point. But, you know, will that change? What will the market look like in 50 years? Right. You know, it could be a whole nother ball game. It could just be big tech managing it all. Once they're done, once they're done building out all their data centers, we'll see.
All right, Maria, what's next? That's my last question of the day. What do you got on your agenda other than just taking a breather after the heavy lift?
[00:39:59] Speaker B: Well, I'm actually diving deeper into metering.
So we are currently looking into the different metering solutions, both on the hardware side, but also the software analytics side.
What the different key players are doing, what is it going to look like as well now, five, ten years from now?
And it's interesting that you mentioned big tech because, yeah, that's definitely like technology players, not necessarily big tech, but technology players that weren't typically in the water sector are gaining some important weight in the market. So telecom providers, when it comes to connectivity and connecting, all those smart meters, that's one of the interesting questions that were also answering in that report.
What about the connectivity layer? So you have the hardware, you have your data and you have your platform, but how, how does it all connect? And what are the decisions that a utility, what are the questions rather that a utility needs to answer before deploying smart meters?
And one of them is that connectivity layer as well. If it's Lorawan and biot, a mix of both, or going to wise or Sigfox, etc.
There are many nuances to the water metering market. That's what we're doing right now, going into all of them.
[00:41:33] Speaker A: I like it. Another thing, I'm going to put another thing on your list of things to think about also. What I'm interested in also is looking at these metering players and how do they get to market, right? What are their channels? Do they go through distributors? Do they have exclusive with distributors? Do they do it themselves? Do they do a mix of both? Because that's always a question or oftentimes a question that comes up when you think about digital tech. Meters are well established and sort of a key. I mean, there's a lot of money and spend that goes towards the metering space. But nonetheless, it's interesting.
We get a lot of questions about what are the channels to Market. How are companies, the tech players, the hardware vendors, how are they getting their kit into the hands of utilities? You know, is it, like I said, distributors, direct engineers, construction companies? What are those relationships that they have and what are their strategies? So, love it. I think it's super interesting.
But thanks to Maine for your time, and I know you have to go present on this in a little bit to a bigger team than just me. So I will set you free and hope you have a fantastic weekend and we will talk again soon.
[00:42:52] Speaker B: Great. Thank you, Rhys. Thank you for having me.
[00:42:54] Speaker A: All right, see you, Maria. Take care.
All right. That was super interesting. It's always great to catch up with Maria. She knows a lot about digital water and tech.
And I think the recent analysis she's done of the Europe sector and digital solutions, but also the uk, I thought sort of bringing those both up, I was actually surprised that they both, you know, were released pretty close to one another because I know she's super busy, so I appreciate that. All right, so as we do, what caught my eye this past week? Well, I was reading a Bloomberg article about the. The deteriorating water situation in Johannesburg, South Africa.
This jumps out at me because I've said this before, not often, but I think the first research note I ever wrote for Bluefield Research was about Cape Town and its water supplies in day zero. That was, I believe, 2013.
And I always thought it was really interesting. But.
So South Africa is.
The challenges have not gone away this time in Jo Burke. And you know, the city, it's home to 6.2 million people. And quite honestly, it's one of Africa's most important economic centers, particularly sub Saharan Africa, but is facing all these water shortages.
And the city faces an estimated, I think, one and a half to $2 billion infrastructure backlog.
So at its current pace, replacing its aging pipe network, I think the article said it's going to take about 200 years. And I can't believe it's only one and a half billion dollars, because about 50% of the water being pumped in the system is lost through leaks. As Marie was saying, the UK is about 20%. The US, as I've said, is about 20%. They're at about 50%, and it's a problem. So I'd say first, infrastructure needs don't automatically translate into market opportunities.
You know, a $1.6 billion backlog looks like a significant opportunity for pipe manufacturers and engineering firms and construction firms.
But the real question in this case, and probably in all cases, is who's going to pay for it the challenge isn't simply identifying what needs to be fixed. It's really the funding side of the equation that is the problem. And then the cost of failing to invest doesn't disappear.
As I mentioned to Maria, anywhere that has existing infrastructure, particularly if it's been in place for decades, failing to invest doesn't eliminate the cost, it just gets shifted or deferred. And businesses and households are increasingly paying for, in this case, private storage tanks, pumps, boreholes, backup water supplies. And you know, some businesses are even having to close when the water runs out. Right. If that happened in, let's say, 6 million people, what's the city in the U.S. it's 6 million people.
I don't know, does Dallas have 6 million people? Depending on where you draw the boundaries.
But so that's a real challenge. And I think people would be raising cain if that were the case. We've seen it happen in places for other reasons, like Jackson.
Thirdly, I'd say there's an enormous opportunity to get more out of infrastructure when half the water entering the market is a loss. Investments like leak detection, pressure management, network monitoring, that could all make a meaningful difference. So that benefits technology providers that do this, but it also saves money, I think. I don't know if I mentioned it on the podcast. I definitely mentioned it in several presentations over the past couple weeks. But we're seeing cities in the US that have water losses of 70%, one being New Orleans, others being identified in investor and utility acquisition dockets where they're trying to buy a system. And the targeted system that's up for sale has said, oh well, 70% water loss is fine, we're able to address our community's needs as is, but they're treating the water, they're pumping the water, and in some cases they're purchasing the water.
So sometimes, you know, what struck me most about Johannesburg's problem isn't necessarily a lack of water infrastructure. It's the inability to maintain and finance what it already has.
And that is the age old question.
And in these developed cities, and it's particularly problematic as populations continue to shift towards urban areas, which you know, is a significant problem going forward. So the question is, how do we turn growing infrastructure needs into actual investment before the cost of doing nothing becomes greater? And I think that's really what this conversation with Maria has been about. So I appreciate her sort of laying out what's happening in the UK and Europe, but I think there are applications for the rest of the world. And like I said, the challenge in South Africa is problematic.
All right, so that is it for episode 154. If you like this episode or any of the other 153 episodes, give us five stars. I should probably mention this at the beginning of the podcast before you listen to it, give us five stars. It really helps. It pushes up up the rankings.
It lets others know that people like the podcast. So if you like it, just hit the five star.
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We already talk about it internally, so let us know. And how do you do that?
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Ra.
