Executive Summary

Water is both challenging to manage and increasingly precious. Within the next decade, approximately
1.8 billion people worldwide will be living in areas of absolute water scarcity1.
As a finite resource, access is at risk from a growing population and an increase in need that will continue
to put pressure on infrastructure requirements, particularly in cities.
The water industry is aware of the issues it faces including environmental impacts, an aging infrastructure
and increases in energy prices. Globally, utilities are spending nearly $184 billion each year related to the
supply of clean water—$14 billion of which is spent on energy costs just to pump water around the current
networks.
Water not only feeds bodies, it also feeds countries. Given the link between gross domestic product (GDP)
and the availability of drinking water, this vital resource is both a source of life and livelihood.
The human, environmental and financial stakes couldn’t be higher.
Smart water networks provide the right opportunity ■■ Streamlined network operations and maintenance:
right now. By implementing smarter technology that provides
the critical data, via remote operations, utilities
Smart technologies can be leveraged to help address
can save up to $2.1 billion annually, or up to 20
these water challenges. Advancements in technology
percent savings in labor and vehicle efficiency
that deliver enhanced data make that possible today.
and productivity. A smart water network solution
To understand the business case for smart water
can help streamline network operations and
networks, we conducted in-depth interviews and
maintenance by automating tasks associated with
comprehensive surveys with 182 global water utilities
routine maintenance and operation of the water
and analyzed utility operations and budgets. Our
distribution system.
analysis found up to $12.5 billion in annual savings from
a combination of the following:
■■ Streamlined water quality monitoring: Smart water
■■ Improved leakage and pressure management: networks can save up to $600 million annually, or 70
One-third of utilities around the globe report a loss of percent of quality monitoring costs, and far more
more than 40 percent of clean water due to leaks. in avoided catastrophe. A smart water network
Reducing leaks by 5 percent, coupled with up to a solution for water quality monitoring would enable
10 percent reduction in pipe bursts, can save utilities utilities to automatically sample and test for water
up to $4.6 billion annually. By reducing the amount quality and intervene quickly to mitigate potential
of water leaked, smart water networks can reduce issues. By implementing such a system, utilities
the amount of money wasted on producing and/ can incur lower costs from labor and equipment
or purchasing water, consuming energy required needed to gather samples, as well as a reduction in
to pump water and treating water for distribution. the amount and cost of chemicals used to ensure
Intelligent solutions can make a difference. The use regulatory quality standards.
of different types of smart sensors to gather data
and apply advanced analytics, such as pattern The right players must take action.
detection, could provide real-time information on
Our research found key challenges to implementing
the location of a leak in the network.
smart water networks. However, those challenges are
■■ Strategic prioritization and allocation of capital not insurmountable, provided the right players join
expenditures: Employing dynamic asset forces.
management tools can result in a 15 percent
savings on capital expenditures by strategically ■■ Lack of a strong business case: Sixty-five percent
directing investment. Such tools can save up to of survey respondents frequently cited unfavorable
$5.2 billion annually. To close the gap between economics or the lack of a solid business case as
the capital spending required and the amount key barriers to adoption of smart water networks.
of financing available, utilities need access to But it is important to understand the business case
information to better understand the evolving to use smart water technologies as an alternative to
status of their network assets, including pipes. investing heavily in capital expenditures.

1
 ■■ Lack of funding even if there is a business case: Regulators can reward and incentivize improvements
Possible solutions to lower the barrier to entry in operational efficiency. Simply diverting savings
include risk-sharing contracts to lower upfront captured by utilities to other municipal operations
investment required and third-party suppliers who or reducing tariffs and price increases leaves little
manage and analyze the data. incentive for utilities to seek additional productivity
improvements. If water utilities have the capability to
■■ Lack of political and regulatory support: Utilities monitor water on a real-time basis, regulators could
suggested that regulatory support at all levels – as consider defining new standards which require more
well as incentives – would be critical to kick-starting frequent reporting and testing.
smart water management, beginning in water-
scarce areas where the need for water efficiency Just as industry associations and individual industry
and conservation is greatest. leaders played a significant role in encouraging
legislation needed to push adoption of electric smart
■■ Lack of a clear, user-friendly integrated technology grid solutions, the same approach should be taken for
solution: Fragmented product and services smart water solutions.
offerings from various vendors make it difficult for
utilities to integrate a common business plan across Now is the time to act.
their disparate operating divisions.
All of our findings on smart water networks point to
a massive opportunity for utilities and could truly
People and technology will bring smart water
revolutionize water distribution networks around the
networks into focus.
world – many of which have remained largely static
Moving smart water networks past the barriers and and untouched for decades.
taking it from promising experiment to widespread
The world can adopt smart water networks if we focus
reality will require engagement across a diverse set
on partnering the right technologies with the right
of stakeholders including utilities and municipalities,
stakeholders.
regulators, investors, industry and utility associations,
technology providers and academia. Collectively, Through innovative partnerships, the situation could
these industry leaders can address the environmental be drastically improved; utilities and municipalities,
and financial needs for smart water networks to regulators, investors, industry and utility associations,
revolutionize the water distribution infrastructure of the technology providers and academia have an
future. opportunity to affect change.

Utilities can partner with technology providers to Approximately two-thirds of the world’s population,
develop and refine solutions and establish benefits or 4.6 billion people, face water stressed conditions in
of smart water networks. They can also explore the next decade2. With the human toll and and the
opportunities to learn more about the benefits of financial well-being of utilities at stake, the time to act
investing in holistic solutions to smart water networks. is now.

1 and 2
http://www.un.org/waterforlifedecade/scarcity.shtml

2
CONTENTS

Introduction 4
What is a Smart Water Network? 8
Financial Benefits of Smart Water Networks 9
Opportunities and Solutions 11
Required Technologies for Smart Water Networks
22
Tailoring Smart Water Networks
24
Barriers to Adoption
28
The Path Forward
32

3
INTRODUCTION

Water scarcity and water quality are emerging as key issues

of public concern and more pressing inhibitors of growth in

cities and countries around the world. As a result, the market

for safe, available water and for the infrastructure and

technologies that treat and transport water is expected to

continue to grow rapidly as stakeholders look for new solutions

and approaches to integrated water resource management.

4
5
 Smart water networks offer utilities a tremendous
opportunity to improve productivity and
efficiency while enhancing customer service.

Yet, despite the market’s increasing size and incentives for investment in infrastructure modernization
significance, many utilities continue to struggle with that helped drive development of the electric smart
forming a convincing business case to replace and grid. A utility in Asia reported that “water scarcity and
upgrade aging and inefficient distribution networks. low water tariffs have starved our utility of revenue
According to Growing Blue, a consortium of industry and so investments to improve infrastructure fall to
colleagues, scientists, academia and environmental
lowest priority.” Indeed, the top priority of water utilities
professionals at leading NGOs, one-third of reporting
is far more basic: to simply build and expand the
countries lose more than 40 percent of the clean water
infrastructure needed to supply surging populations
pumped into the distribution system because of leaks
before that water reaches end consumers.3 with safe drinking water.

However, the same utilities have been unable to obtain While many utilities have identified the need for smarter
the financial resources or the political support to tackle infrastructure and technological investments, few
these inefficiencies. Insufficient public and private have embraced an end-to-end smart water network.
financing for infrastructure improvements has long Smart water networks offer utilities of all varieties a
been recognized and continues to be constrained. tremendous opportunity to improve productivity and
Utilities are forced to seek creative sources of savings efficiency while enhancing customer service. Smart
in order to fund capital expenditures. Estimates show water networks also have incredible potential to help
that the cost of repairing and expanding the potable
alleviate the impending water scarcity.
water infrastructure in the United States alone will
exceed $1.7 trillion in the next 40 years4. Yet, many This white paper outlines the potential benefits of smart
regulatory policies fail to reward cost-conscious efforts water networks, such as increased efficiencies and
to upgrade or better manage networks. In addition, productivity enhancements that smart water network
water conservation efforts often result in lower utility technologies can unlock. It also presents the benefits
revenues. of smart water networks to various industry stakeholders
Around the world, consumers and regulatory bodies and identifies the path forward in achieving widespread
have been slow to demand and create the types of adoption of smart water network solutions.

3
http://growingblue.com/wp-content/uploads/2011/04/Growing-Blue.pdf
4
American Water Works Association (AWWA) report: “Buried No Longer: Confronting America’s Water Infrastructure Challenge”

6
7
WHAT IS A SMART WATER NETWORK?
A smart water network is a fully integrated set of products, solutions
and systems that enable water utilities to:

■■ Remotely and continuously monitor and diagnose problems,

pre-emptively prioritize and manage maintenance issues, and
remotely control and optimize all aspects of the water distribution
network using data-driven insights

■■ Comply transparently and confidently with regulatory and policy

requirements on water quality and conservation

■■ Provide water customers with the information and tools they

need to make informed choices about their behaviors and water
usage patterns

The following sections explain how smart water networks require

people and technology to help utilities benefit from implementing
these solutions at scale.

8
FINANCIAL BENEFITS OF SMART WATER NETWORKS
As illustrated in figure 1, utilities worldwide spend nearly $100 billion on water-related operations and almost $90 billion
on capital expenditures each year. Based on interviews with utilities, much of the spending is inefficiently allocated
and savings opportunities are lost because utilities:
■■ Do not have access to sufficient information regarding leaks, status of pipes and water quality
■■ Do not have data and knowledge integration across multiple operating divisions
■■ Are not capable of analyzing the information to drive decisions
■■ Lack sufficient access to automated technologies that could turn information analysis and decisions into network
improvements in real time

Figure 1. Cost breakdown of global water utility expenditures by process step

Water Opex Breakdown for a Typical Utility Water Capex Breakdown for a Typical Utility

Production Distribution Customer Service Pipes Pumps/Other

Total $35 $52 Total
$40 $52 $5 $87
$97
Smart water networks
Network can allow for more
Labor $8 (20%) $5 (10%)
Pressurization efficient spending on
pipes in the network.
Field Operations
Energy $14 (35%) $10 (20%)
and Maintenance

Material $12 (30%) Leakage Detection $3 (5%)

Sludge $2 (5%) Quality Monitoring $3 (5%)

Other $4 (10%) Repairs $16 (30%)

Chemicals $3 (6%)

Other $12 (24%)

Smart water networks can Smart water networks can prevent the
prevent the significant (20% on significant (20% on average) network
average) production costs due pressurization and chemical costs lost due to
to leakage. leakage. Smart water networks can also reduce
the cost of field operations and maintenance,
leakeage detection, quality monitoring and
repair.

Note: Operating expenditure forecast and water and wastewater capex forecast, derived from Global Water Intelligence,
“Global Water Market 2011-Meeting the World’s Water and Wastewater Needs Until 2016,” (March 2010), overview available at
http://www.globalwaterintel.com/publications-guide/market-intelligence-reports/global-water-market-2011/

9
 Utilities can save between $7.1
and $12.5 billion each year by
implementing smart water solutions.

Figure 2. Summary of global savings by smart water solution

Category Savings as Percentage Description

of Baseline Cost
Reduction in leakage levels by precise detection of leaks;
Leakage and
2.3 - 4.6 (3.5%) predictive modeling to estimate potential future leaks and
Pressure Management
pressure managment
Improved dynamic assessment, maintenance, replacement,
Strategic Capital
3.5 - 5.2 (12.5%) planning and designing of network to optimize spending on
Expenditure Prioritization
infrastructure needs

Automatic water sampling, testing and quality monitoring;

Water Quality Monitoring 0.3 - 0.6 (0.4%) reduction in costs from labor and truck rolls for manual
sample collection
Real-time, automated valve/pump shutoff to facilitate flow
Network Operations
1.0 - 2.1 (1.6%) redirection and shutoffs; more efficient and effective
and Maintenance
workflow planning

Total Smart Water

7.1 - 12.5 (7.4%)
Savings Opportunity
$U.S. billion

Globally, water utilities stand to realize

significant savings from technologies
and solutions designed to manage
and monitor smart water networks. Our
research shows that utilities can save
between $7.1 and $12.5 billion each year
from implementing smart water solutions
that reduce operational inefficiencies
and optimize capital expenditures.
As illustrated in figure 2, more than
5 percent of current operating and
capital budgets could be repurposed
and reinvested in network upgrades or
given back to water users in the form of
lower rates and tariffs.

10
OPPORTUNITIES AND SOLUTIONS
Consistent with the findings in the global water utility survey, leakage and pressure management, capital spending
optimization, streamlined water quality monitoring, and network operations and maintenance represent the
biggest opportunities to improve utility performance.

Figure 3. Biggest opportunities to improve the performance of utilities

Base as a Savings Potential Basis of Savings

Levers
Percent of Total Opportunity Savings Opportunity 3

Reduced waste Production Global Water Intelligence,

2 - 5 percentage point “SWAN’s way - in search of lost
of produced/ costs = 41% of $1,400
reduction in leakage water,” (June 2011) A
purchased water Water Opex

Network
Reduced waste Global Water Intelligence,
pressurization 2 - 5 percentage point
of energy costs $182 “SWAN’s way - in search of lost
= 5% of water reduction in leakage
from pumping water,” (June 2011) B
Opex

Leakage D.C. Water case study, referenced

Reduced Leakage 20 - 25 percentage
and in AWWA Webcast, “AMI Improves
leakage detection = 3% point reduction in $584
Pressure Customer Service and Operational
detection costs of water Opex leakage
Mgmt. Efficiency,” (February 2012) C

Malaysia case study, referenced in

Pipe repairs
Fewer pipe 5-10% reduction of Global Water Intelligence,
= 16% of water $1,168
bursts pipe bursts “SWAN’s way - in search of lost
Opex
water,” (June 2011) D

Reduced waste Chemical Global Water Intelligence,

2-5 percentage point
of chemicals treatment 1 $109 “SWAN’s way - in search of lost
reduction of leakage
from leakage = 3% of Opex water,” (June 2011) E

Capital Pipe Capex Alaskan water and wastewater

Reduced pipe 10-15% savings on
Allocation = 40% of water $4,348 utility case study, derived from
Capex pipe Capex
Optimization Capex interview with an industry expert

Reduced costs Sample

30-70% savings on Estimate based on industry
from manual collection = 1% $197
sample collection costs expert opinion
Water samples 2 of water Opex
Quality
Monitoring Chemical Estimate based on opinion of a
Reduced 5-10% of savings on
treatment = 3% $234 representative water utility’s
chemical costs chemical costs
of water Opex lab expert

Network D.C. Water case study, referenced

Fewer Network O&M
Optimization O&M-related 10-20% savings on in AWWA Webcast, “AMI Improves
costs = 8% of $1,557
and Maint. truck rolls network O&M costs Customer Service and Operational
water Opex
Efficiency,” (February 2012) F
1
Applies only to chemical treatment in water distribution network
2
Excludes U.S.
3
Savings opportunities represent conservative estimates derived from existing cases or expert opinion

References
A, B, D, E
http://www.globalwaterintel.com/archive/ 12/6/market-profile/swans-way-search-lost-water.html
C, F
http://www.acwa.com/events/awwa-webcast-ami-improves-customer-service-and-operational-efficiency

11
IMPROVED LEAKAGE AND PRESSURE MANAGEMENT: $2 BILLION TO $4.6 BILLION IN SAVINGS

Opportunity
Water leakage in the distribution network is difficult to limits on the ability to monitor and control water
detect and is an important issue that will draw increased pressure in real time can lead to pipe bursts that cause
attention in the coming decades. Globally, one-third of major water losses and significant disruptions in service.5
all reporting countries face leakage levels of more than As demand for clean water increases in the coming
40 percent of the clean water treated and pumped decades and supply remains stagnant or shrinks,
into the distribution system. Figure 4 outlines leakage solutions to manage and minimize leaks will become
rates by country. increasingly critical. As we have learned, many water
Many utilities currently manage leakage and pressure utilities struggle to even measure and locate leaks in
primarily on an ad-hoc and reactive basis, responding their distribution networks, let alone implement leak-
to visible or obvious leaks and bursts and repairing reducing solutions. Most utilities have little or no visibility
infrastructure as needed. This approach is not only into the amount of water leaked in their networks. Only
costly and time consuming, due to the mobilization of 40 percent of water utilities reported they have leak
large field forces to address problems after they occur, detection devices, according to our survey of global
it is also extremely risky, with water losses going on for water utilities, though the need is recognized by all
months potentially leading to flooding in houses and respondents. Surveyed utilities identified fixed-leak
stopping traffic for days or weeks at a time. In addition, detection devices as their most desired technology.

Figure 4. Leakage rates by country

Leakage Rate (Percent)

South Korea 5
Germany 7
United States 11
India 18
Australia 18
Russia 19
Average 20
United Kingdom 21
France 27
South Africa 29
Saudi Arabia 35
China 36
Brazil 39
Mexico 45
Bangladesh 48

Source: GrowingBlue, “Water. Economics. Life.” pp. 22-30, available at http://growingblue.com/wp-content/uploads/2011/04/Growing-Blue.pdf.

Average based on country-level leakage percentage estimates weighted by water opex spending by country.

5
Smart Water Networks Forum, “The Value of Online Water Network Monitoring” (January 2012), available at
http://www.swan-forum.com/uploads/5/7/4/3/5743901/the_value_of_online_monitoring.pdf.

12
 Globally, one-third of all reporting countries
face leakage levels of more than 40 percent.

Collectively, water utilities lose an estimated $9.6 billion water, consuming energy required to pump water and
on an annual basis because of leaked water. Of those treating water for distribution. These solutions include
losses: the use of flow sensors to gather data, analyze the data
■■ Nearly $8 billion is attributed to wasted operational using algorithms to detect patterns that could reveal
expenditures on water production a leak in the network, and provide real-time data on
the location of a leak. In addition, pressure sensors and
■■ More than $1 billion of energy pumping costs are
pressure-regulating valves can allow for automated
wasted
feedback and controls to ensure that pressure does
■■ More than $600 million of chemical costs are spent not reach a level high enough to cause a pipe burst.
on lost water These technologies can provide additional savings by
In addition to the nearly $9.6 billion, approximately $2.5 reducing the cost of leak detection and decreasing
billion is spent annually on leak detection efforts. pipe repair costs by preventing pipe bursts. Many
utilities recognize the benefits of improved leakage and
The economic drivers for these losses were identified
pressure management, including a large utility in the
by our water utility survey, during which utilities around
UK: “Real-time data will allow us to take leak detection
the world consistently highlighted wasted energy costs,
and response to the next level by allowing us to react
wasted water treatment costs and misdirected network
quickly and eliminate reliance on customer alerts.”
repair and maintenance as the three most significant
challenges for network leakage. It is estimated that current technologies can reduce
Solution leakage by 2 to 5 percentage points globally. This
underlying assumption was echoed in the global smart
The desire for real-time data on leakage and pressure water survey, where approximately 68 percent of
management emerged as a key finding from our
respondents indicated a desire to reduce leakage by
global smart water survey. A real-time, accurate
5 percent over current levels during the next five years.
approach to leakage and pressure management
can drive significant savings against the $10 billion of As illustrated in figure 5, global operational expenditures
estimated losses. Smart water networks can identify related to water production, energy consumption and
leaks early. This early detection reduces the amount water treatment could be reduced by approximately
of water that is wasted and saves utilities money that $1 to nearly $2.5 billion. Including the reduction of leak
would otherwise be spent purchasing and treating detection and pipe repair costs, the total aggregate
additional water. By reducing the amount of water savings opportunity from leakage and pressure-related
leaked, smart water networks can reduce the amount improvements ranges from $2.4 to $4.8 billion. The most
of money wasted on producing and/or purchasing significant challenges are illustrated in figure 6.

13
Figure 5. Savings from leakage and pressure management

Category Baseline Cost Savings Opportunity Calculation Potential Savings

2 - 5 percentage point
Production $40,000 $40,000 x 2 - 5% $800 - $2000
reduction in leakage1
Reducing
leakage by
Network 2 - 5 percentage point
$5,000 $5,000 x 2 - 5% $100 - $250 5% can
Pressurization reduction in leakage1
save $2.4
billion
2 - 5 percentage point
Chemicals $3,000 $3,000 x 2 - 5% $60 - $150
reduction in leakage1

20 - 25 percentage point
Leakage $3,000 $3,000 x 20 - 25% $600 - $750
reduction of all leakage
Detection
detection costs2

Repairs $16,000 5 - 10 percentage $16,000 x 5 - 10% $800 - $1000

reduction of pipe bursts3

Note: Values are rounded and thus may not match other values in this paper Total $2,360 - $4,750
1 Based on Global Water Intelligence, “SWAN’s way - in search of lost water,” (June 2011), available at
http://www.globalwaterintel.com/archive/12/6/market-profile/swans-way-search-lost-water.html
2 Based on D.C. Water case study, referenced in AWWA Webcast, “AMI Improves Customer Service and Operational Efficiency,” (February 2012), available at
http://www.acwa.com/events/awwa-webcast-ami-improves-customer-service-and-operational-efficiency
3 Based on Malaysia case study, referenced in Global Water Intelligence, “SWAN’s way - in search of lost water,” (June 2011), available at
http://www.globalwaterintel.com/archive/12/6/market-profile/swans-way-search-lost-water.html

Figure 6. Most significant challenges from leaked water

What are the most significant challenges to your business from leaked water?
Number of times selected as the first, second or third most important opportunity
Total N=182

Wasted energy costs 139

Wasted water treatment costs 126

Misdirected network repair and maintenance activities 122

Regulatory risks from poor water conservation 83

Environmental damage from bursts or leaks into

62
freshwater sources

Other 14
Source: Smart Water Global Survey, July 2012

Figure 7. Funding availability for capital infrastructure projects

How available is funding for capital infrastructure projects for your utility during the next 5 - 10 years?
Percent of respondents
Total N=182

Funding will just meet requirements 42

Funding will be sufficient 28

Funding will not be enough 20

I’m not sure 10

14 Source: Smart Water Global Survey, July 2012

 Water utilities lose an estimated $9.6 billion
on an annual basis because of leaked water.

STRATEGIC PRIORITIZATION AND ALLOCATION OF CAPITAL EXPENDITURES: $3.5 BILLION TO

$5 BILLION IN SAVINGS
Opportunity
In addition to operational inefficiencies, utilities face 20 percent who believe they do not have sufficient
deteriorating network assets and a lack of funding for funding. Figure 7 outlines availability of funding for
maintaining and improving those assets. The American capital infrastructure projects.
Water Works Association (AWWA) has estimated that Our utility research shows that more than 50 percent
the cost of repairing and expanding the potable of respondents reported funding constraints for
water infrastructure in the United States alone will top capital infrastructure projects. Most utilities also lack
$1 trillion in the next 25 years and $1.7 trillion in the next the ability to anticipate network deterioration and,
40 years. In addition, a recent survey conducted by as a result, cannot strategically plan for necessary
Black & Veatch shows that 34 percent of U.S. utilities repairs and replacements. While many of them have
surveyed believe that they will not have sufficient embraced geographic information systems (GIS)
funding for their capital infrastructure projects. On in order to map maintenance work orders, they
a global level, our smart water survey identified a often lack the ability to prioritize and properly time
similar gap, with only 28 percent of utilities indicating maintenance to deploy capital expenditures more
sufficient capital to meet their infrastructure needs efficiently.
during the next five to 10 years, and approximately

15
 Utilities need access to information to
better understand the evolving status
of pipes throughout the network.

To close the gap between the capital spending Solution

required and the amount of financing available, utilities
Utilities can optimize capital expenditures by leveraging
need access to information to better understand
data to identify the “right life” of assets, incorporating
the evolving status of pipes throughout the network.
parameters such as criticality, age, material, soil
Improved understanding will allow utilities to avoid
condition and pressure and maintenance history to
premature replacement and to identify problems that
determine the appropriate risk profile of pipes in the
require replacement of equipment before catastrophic
network. Advanced modeling software can leverage
failures occur. Figure 1 shows that approximately $35
that data to estimate the remaining life of assets,
billion is spent on capital expenditures directed toward
integrating with GIS and other mapping tools to help
pipes in the water distribution network annually; this
utilities prioritize maintenance activities and understand
area represents a major spending driver for utilities.
the potential risk and impact of asset failure. Interviews
with utilities revealed great interest in the opportunity
for improved capital allocation through smart water
Figure 8. Savings from capex allocation optimization
networks. “Collection of real-time flow and pressure
87,000 data will enable easier pressure adjustment, inform pipe
replacement and energy management,” expressed a
52,000
large German utility. A large Australian utility reiterated,
Pumps, “This information would be a huge help with capital
other
investment decision making.”
Savings Potential By leveraging its database of asset conditions and
Opportunity1 Savings updated risk profiles, utilities can use predictive analytics
35,000
10 -15% Savings on
for the most critical locations. This is far more cost
Pipes 3,500 - 5,000 effective than the current method of systematically –
capital expendatures
and perhaps unnecessarily – replacing miles of pipe
and other assets. A prioritized approach also ensures
Water Capex
that capital expenditures are optimized with minimal
Note: Values are rounded impact and disruption to communities and customers.
1 Based on Alaskan water and wastewater utility case study

For example, recent efforts by a utility in Alaska illustrate

the potential impact of smart water networks on
capital-asset management. Using risk-based algorithms
to prioritize network renewals, the utility has been
able to save $30 million of $130 million over six years.
As illustrated in figure 8, improved asset management
could reduce capital expenditures on pipes in the
water network by 10 to 15 percent and the use of such
algorithms could result in global savings ranging from
nearly $3.5 billion to more than $5 billion.

16
STREAMLINED WATER NETWORK OPERATIONS AND MAINTENANCE: $1 BILLION TO $2 BILLION IN SAVINGS

Opportunity Solution
Given the complexity of water distribution systems A smart water network solution can help streamline
and the need to maintain water service to network operations and maintenance by automating
consumers at all times, routine utility operations and tasks associated with routine maintenance and
maintenance can be costly and time-consuming. operation of the water distribution system.
Today, few water utilities can adjust and control While supervisory control and data acquisition
distribution system operations remotely and in real (SCADA) and other solutions used today allow water
time. Utility personnel often must shut off valves utilities to control and operate assets remotely in
manually and perform other operations in the field, the distribution system, the level of control is limited
slowing repairs, installations and maintenance and not enabled in real time. Many maintenance
activities. In addition, inefficient allocation of human activities involve the use of labor-intensive, time-
resources leads to higher numbers of repair crew consuming truck deployments to operate physical
truck deployments and higher costs to address hardware.
various issues in the network. “We are in the stone
age for our work orders management,” reports A smart water network solution for streamlined
a Belgian utility. It comes as no surprise that field operations and maintenance would extensively
operations and maintenance costs exceed $10 deploy automated and remote-controlled valves
billion per year globally, representing a significant and pumps that can be used to quickly shut off
portion of utilities’ operational expenditures. flow and adjust pressure to facilitate maintenance,

17
installation and asset replacement activities. Business intelligence and analytics software and robust dashboards
can bolster transparency on key performance indicators in real time and can also integrate with SCADA systems to
enable remote control of the distribution system.
A more robust distribution system with remote-controlled assets would help utilities save on labor costs, optimize
maintenance needed and reduce disruptions to customers and communities from water shutoff. One case study
in our survey demonstrates that through improved efficiency of field operations and maintenance, 10 percent to 20
percent savings on these costs could be achieved, saving utilities approximately $1 billion to $2 billion on an annual
basis.

Figure 9. Savings from streamlined field operations and maintenance

Baseline Cost Savings Opportunity Calculation Potential Savings Field operations and
$10,000 10 - 20% $10,000 x 10 - 20% $1,000 - $2,000
maintenance costs
Note: Values are rounded
exceed $10 billion
1 Based on D.C. Water case study, referenced in AWWA Webcast, “AMI Improves Customer Service and
Operational Efficiency,” (February 2012), available at
per year globally.
http://www.acwa.com/events/awwa-webcast-ami-improves-customer-service-and-operational-efficiency

STREAMLINED WATER QUALITY MONITORING: $300 MILLION TO $600 MILLION IN SAVINGS

Opportunity
Ensuring that consumers receive clean water that German utility. A large Brazilian utility expresses a similar
meets stringent quality standards is another important concern, “With our extended distribution network and
concern for both water utilities and regulators. Many aging infrastructure, we need to better understand
regulators are imposing higher water quality standards water quality in the pipes.”
and focusing increasingly on managing security Need versus reality
risks and vulnerabilities in the distribution system.
Our global smart water survey revealed that 41 percent
There is a greater need to conduct frequent and
of utilities still rely entirely on manual collection of water
rigorous assessments to protect against threats to the
quality samples, which can take several days, while only
water supply as a result of rapid population growth,
16 percent rely exclusively on automated sampling.
urbanization and the dangers of contamination and
Despite this current lack of automated sampling,
bioterrorism. “Measuring water quality in the network
utilities expressed a strong desire for real-time data on
near hydrants has become increasingly important
water quality in the near future, demonstrating a large
because it would allow us to identify any possible
gap between need and reality. While more than 40
security breaches to the network,” explained a large
percent of utilities would like to have hourly or real-time
U.S. utility.
data measurement for water quality, only 17 percent of
Aging and oversized water infrastructures have also them currently do.
emerged as a water quality concern. “We have
Solution
Roman pipes that are oversized, and with lower water
throughput due to conservation efforts, water is sitting Automated sampling will require near real-time
longer and longer in the distribution system,” explains a water quality monitoring solutions, both to ensure the

18
 Forty percent of utilities desire hourly or real-
time data measurement for water quality.

security of clean water supplies and to help utilities those agents would be preceded by a detectable
allocate scarce budget resources more efficiently and dechlorinating agent or change in pH levels. These
effectively. With annual costs related to ensuring water sensors would transmit in real time to a centralized data
quality at approximately $3 billion and heightened hub, where analytic software would compare water
regulatory pressure that could potentially increase costs,
quality against regulatory requirements and locate
more than 50 percent of global survey respondents
potential hazards. Analytics and pattern detection runs
believe water quality regulations will become stricter in
using historical data could help minimize false alarms.
the next five years.
A water quality dashboard for utility operators can
A smart water network solution for water quality
support automated and remote-controlled hardware
monitoring would enable utilities to automatically
in the distribution system to shut off water flow and
sample and test for water quality and intervene quickly
contain hazards.
to mitigate potential threats. By implementing such a
system, utilities can incur lower costs from labor and Sample collection typically makes up an estimated 20
equipment needed to gather samples, as well as a percent of the average utility’s water quality monitoring
reduction in the amount and cost of chemicals used costs. Such costs, according to water experts surveyed,
to ensure regulatory quality standards. Furthermore, could be reduced 30 percent to 70 percent by moving
automated sampling throughout the network will
from manual sampling to online monitoring; global
broaden utilities’ knowledge of how water quality
annual costs could be reduced approximately $120
changes as it travels through the network. “I’d like
million to $270 million.
to measure chlorine levels in the network, and the
placement of velocity probes throughout the network Having better knowledge of chemical levels in the
would be helpful to understand how hydraulics impact network will enable utilities to moderate spending on
water quality,” explained a large utility in the U.K. This substances such as chlorine, resulting in additional
knowledge can enable utilities to further optimize their
savings of $150 to $300 million. Thus, automated water
water treatment and quality-testing processes.
quality sampling could save utilities approximately
A smart solution to water quality monitoring includes $270 to $570 million in aggregate as seen in figure 10.
sensors for pH,
biological indicators,
chlorine and other Figure 10. Savings from water quality monitoring
chemicals as well
Category Baseline Cost Savings Opportunity Calculation Potential Savings
as heavy metals
along vulnerable Reduced costs from
30 - 70 percentage point
network locations $3902 reduction in sampling $390 x 30 - 70% $120 - $270
manual samples
costs1
(e.g., hydrants).
Strategic placement Reduced chemical
5 - 10 percentage point
of sensors along the costs from better
$3,000 reduction in chemical $3,000 x 5 - 10% $150 - $300
information about
network can be very costs1
chemical levels
effective in detecting
contaminants or Note: Values are rounded Total $270 - $570
1 Excludes U.S.
biological agents, 2 Assumes sampling costs represent 20% of total water quality monitoring costs
since many of 3 Estimate based on industry expert opinion
4 Estimate based on opinion of a representative water utility’s lab expert

19
ADDITIONAL BENEFITS OF SMART WATER NETWORKS BEYOND UTILITIES

Smart water solutions will help regulators, lawmakers modernize infrastructure. Smart water networks can
and municipalities: help regulators and municipal governments slow
such increases by reducing the amount of water
■■ Achieve greater transparency into water quality
wasted, improving utility efficiency and ensuring
and network safety. Regulators and municipalities
that capital expenditures are prioritized.
want to increase safety, but they also want to
reassure the public in an era of increasingly open ■■ Minimize community disruptions. Water main bursts
government. Smart water networks help regulators and other major system failures lead to disruptions in
quickly and immediately learn of quality issues and daily life – thousands of hours of lost productivity on
potential contaminants. In addition, sensors on the top of the costs of repair. Better predictive analytics
market today support regulatory efforts to impose and real-time issue identification will reduce the
higher water quality standards as well as manage number and severity of these disruptions.
security risks and vulnerabilities in the distribution Smart water networks will help consumers:
system.
■■ Receive water with fewer disruptions. By managing
■■ Conserve water. Reducing leaks and bursts, leaks and pressure continuously, water utilities
minimizing the amount of water wasted and are able to supply water to customers with fewer
boosting operational efficiency will become disruptions from service shutoff and traffic-disrupting
increasingly critical regulatory priorities in light of water main bursts.
looming concerns over water scarcity and rising
prices. ■■ Pay for and manage water service easily and
transparently. A smart water network solution
■■ Deliver improved customer service. Leading that includes smart meters enables e-billing and
regulators are increasingly focused on measuring e-payment options and allows consumers to
and tracking customer service experiences. interact with utilities via web portals for service
Britain’s Ofwat, for example, has recently changed requests and billing inquiries. Smart metering also
its water regulatory requirements to emphasize enables detection of consumer-level leaks and
customer service as a key performance indicator. ensures that consumption is billed accurately and
Given increasing consumer engagement on water precisely.
conservation and billing, Ofwat’s focus is a likely
indicator of a broader regulatory shift that will take ■■ Manage water consumption more proactively
place across markets in the coming years. to conserve water and pay less. As water prices
increase and scarcity constrains consumption,
■■ Maintain price stability. Water prices are increasing smart water networks that enable customers
in many parts of the world due to scarcity, high to view and manage their usage will become
demand and the cost of capital projects to increasingly valuable.

20
21
REQUIRED TECHNOLOGIES FOR SMART WATER NETWORKS

In order to achieve these goals effectively, smart also include data warehousing and hosting,
water networks must draw from a wide spectrum cybersecurity of computer systems and basic
of technologies. The good news is many of these business function support tools (e.g., work order
technologies are available today. Others are in management and customer information systems).
research and development. As outlined below and in ■■ Real-time data analytics and modeling software
figure 11, these can be viewed as components within enables utilities to derive actionable insights from
five interconnected layers of functionality needed for network data. This layer serves as the central source
a comprehensive smart water network solution. of the economic value of smart water networks for
■■ Measurement and sensing devices, such as smart utilities. Dynamic dashboards allow utility operators
water meters and other smart endpoints, are the to monitor their distribution network in real time for
physical hardware within the water distribution hazards or anomalies. At the same time, network
network that collect data on water flow, pressure, modeling tools can help operators understand the
quality and other critical parameters. This potential impact of changes in the network and
foundational layer includes electromagnetic and analyze different responses and contingencies.
acoustic sensors that can help detect potential Pattern detection algorithms can draw on historical
leaks and abnormalities within the distribution data to help distinguish between false alerts and
system. genuine concerns, and predictive analytics allows
operators to consider likely future scenarios and
■■ Real-time communication channels allow utilities
respond proactively and effectively.
to gather data from measurement and sensing
devices automatically and continuously. This layer ■■ Automation and control tools enable water utilities
features multiple communication channels that to conduct network management tasks remotely
are used for two-way communications to instruct and automatically. This layer provides tools that
devices on what data to collect or which actions interface with the real-time data analytics and
to execute (e.g., remote shutoff). modeling software, leveraging communication
channels and the physical measurement and
■■ Basic data management software enables
sensing devices within the network. Many utilities
utilities to process the collected data and
have existing SCADA systems that can be
present an aggregated view via basic network
integrated with smart water networks to further
visualization tools and GIS, simple dashboards
enhance their control over the distribution system.
or even spreadsheets and graphs. This layer can

Smart water networks must draw from

a wide spectrum of technologies.

22
Figure 11. Five layers of comprehensive smart meter network solutions

Physical Infrastructure Software and Services (e.g., data infrastructure and hardware, software,
(e.g., pumps, pipes, valves) professional and managed services)

Monitoring of flow Data hosting and Senior management

(volume, pressure, storage, basic data dashboard; tools for
temperature), quality accessibility and pattern detection,
(effluent, chemicals display (e.g., interface predictive modeling, and
and contaminants, to access data-driven decision
chlorine, pH), Data communication consumption data), support (e.g. energy,
acoustics (leak infrastructure (e.g. network visualization leakage, assets, water
detection), supply two-way radios, and GIS/schematic supply and pricing,
(reservoir water level) cellular networks) tools, cybersecurity capex, labor)

Measurement and Basic Data Real-time Data

Communication
Sensing Management Analytics and
Channels
Instrumentation Modeling

Automation and Controls

Automated physical network infrastructure (e.g. pumps and valves) and

software to manage pressure, quality, flow, shutoff, etc.

23
TAILORING SMART WATER NETWORKS

To help drive adoption of these technologies and solutions or cloud-based network and software hosting.
services across different markets and ensure maximum Larger utilities, in contrast, prefer to keep data and
effectiveness and return on investment, smart water software on site when possible and only use a third-party
network solutions will likely need to be tailored according supplier for insight generation for highly complex data
to economic and non-economic utility circumstances. analytics. Large utilities also benefit from economies of
Innumerable mindsets, incentives and interests shape scale and larger budgets that enable them to invest in
the opportunity for different utility segments. Utility smart water network solutions, while smaller utilities may
interviews and surveys provide insights into some of the not be able to afford the large fixed costs of meters and
likely factors under consideration. other advanced sensor networks. For this reason, a risk-
sharing contract may be a preferred option for small-
Economic considerations
to mid-sized utilities, where they pay a smaller flat rate
Smart water solutions will need to be tailored according to a smart water network solutions provider and then
to economic factors such as utility size (i.e., population share a portion of their additional revenue or saved
served), demographic and population shifts, and costs with that provider. As illustrated in figure 12, survey
macroeconomic conditions. For example, interviews findings reiterated that 20 percent of respondents from
with utilities suggest that smaller utilities lack in-house both large and small utilities are currently engaged in
IT capabilities and personnel. “We get overwhelmed a risk-sharing contract, while an additional 40 percent
with all the data we collect because we don’t have said they would consider entering into one in the future.
anyone who can do anything with it,” shared a small
Interviews also suggest that macroeconomic conditions
utility in the U.S. A large U.S. utility agreed, “I don’t know
could play a significant role, with utilities in some
if the economics make sense for small utilities if you
developing countries having an excess of funding
don’t address the fact that they don’t have sufficient
available for infrastructure investment for a variety of
IT capacity and data analytics in-house.” They went
reasons (e.g., access to EU Cohesion Fund grants),
on to say, “Small utilities will have varying interest in
while many utilities in developed countries remain
smart water. It’s less about size and more about level of
heavily budget constrained. This gives utilities in these
existing technological sophistication.”
developing nations a unique opportunity to “leapfrog”
As a result, some small utilities say they are likely to favor the challenges faced in many more established markets
technology providers that offer “software-as-a-service” by investing in smart water network technologies.

Twenty percent of respondents from both

large and small utilities are currently
engaged in a risk-sharing contract.

24
Figure 12. Reasons for entering a risk-sharing contract

If you said you would consider entering into a risk-sharing contract, why?
Number of times selected as the first, second or third most important reason
Total N=110

Reduce risk of not getting any benefit (e.g., financial

89
benefits, higher customer satisfaction, cost reduction)

Reduction of upfront investment 83

Guarantee through ongoing product testing 70

Turnkey solution that covers all contracting and project

management across multiple municipal projects 52

Reputational protection through using a large and

well-known company 35

Other 1
Source: Smart Water Global Survey, July 2012

25
Figure 13. Barriers to smart water network adoption

What are the major factors that prevent you from adopting these smart water technologies and/or services?
Percent of respondents who answered ‘very significant’ or ‘significant’
Total N=182

Business case for investment is compelling, but lack of

89
funding

Business case for investment in smart water technologies

65
and/or services is not compelling

Business case for investment is compelling, but lack of

62
political will

Interest exists but technology/service does not exist 53

Not aware of the potential solution 50

26
 Approximately 65 percent of respondents cited an
uncompelling business case as a ‘significant’ or ‘very
significant’ barrier to adopting smart water networks.

Non-economic considerations
Non-economic factors affecting the design and for example, has long focused on enforcing water
deployment of smart water solutions include local quality standards (e.g., microbials or water treatment
topography, water scarcity levels and regulatory byproducts) while Britain’s Ofwat has set price limits
conditions. One Australian utility, for example, to aid consumers and threatened major utilities with
explained that it would want smart water networks to fines for failing to meet mandated leakage reduction
improve recovery/measurement of non-revenue water
targets. Europe’s Water Framework Directive requires
and it was less focused on opex-related costs because
countries to pursue water charges that reflect their
the utility serves a low topography region where very
costs and heavily promotes water efficiency, which has
few areas need pumping. Since most of the distribution
is done via gravity, in this case, smart water would be spurred interest in metering from European regulators
tailored for different terrains so that the business case and governments. China has focused on drinking water
would deprioritize costs related to wasted energy from standards and wastewater treatment. In 2006, China’s
pumping. drinking water regulation was updated to the level of
The European Union’s drinking water standard, which
As another example, in some highly water-scarce areas,
utilities may rely heavily on technology for wastewater has the most stringent standards in the world. Meeting
treatment and reuse, desalination or wholesale these standards now requires a significant investment
purchasing of water from other locations. In fact, 43 in Chinese water infrastructure, including upgrades
percent of all respondents in the survey indicated to advanced water treatment technologies and
that they purchase water from a wholesaler. These rehabilitation of the water distribution network. Chinese
factors may dramatically alter utility water economics regulators have also been improving wastewater
and lead to different incentives and decision-making treatment regulation in the past 10 years and mandated
criteria. in 2010 that all new wastewater treatment plants must
Regulatory environments also differ significantly by have sludge treatment capacity and existing plants
geography. The U.S. Environmental Protection Agency, must retrofit sludge treatment by the end of 2012.

27
BARRIERS TO ADOPTION
Smart water networks have existed conceptually for around a three-year payback, avoidance of fines or
years but have failed to gain traction among utilities, ecological payments, better satisfying our customers and
technology providers and other industry stakeholders. improving labor conditions,” explained a Russian utility,
Some innovative companies have taken steps to “but the payback has to make sense.” Similarly, a French
integrate various solutions and offer an end-to-end utility explained, “We worry the cost of a communication
smart water platform to utilities, but adoption of these infrastructure and support of other systems (e.g.,
solutions has been slow. advanced metering infrastructure) is too high.”

Based on utility interviews and surveys, smart water The recurring cost of maintenance, support and
networks have not been widely adopted because services added another hurdle. “Offsetting costs
of lack of consensus or of understanding about the against maintenance of this technology is key. Data
business case, lack of funding, lack of political support quality is only as good as you maintain it,” expressed
and disparate product and solutions. Approximately 65 a large utility in the U.K. Finally, some utilities suggested
percent of respondents cited a business case that fails that it would be difficult for technology providers to
to be compelling as a ‘significant’ or ‘very significant’ make an accurate business case due to the existence
barrier to adopting smart water networks, while 74 of non-economic variables such as opportunity costs,
percent and 62 percent of respondents said even conservation benefits and other “soft” considerations.
given a compelling business case, lack of funding and A small U.S. utility commented, “Smart water networks
of political support, respectively, would be challenges will need to have a very strong business case to gain
to adoption. Figure 13 illustrates those barriers. traction.” “We need a compelling business case to
convince decision makers to move away from small
Lack of a strong business case operational investments over a long period of time,”
Sixty-five percent of survey respondents frequently reiterated a large utility in the U.S. Without a compelling
cited the unfavorable economics or the lack of a business case, there is little political appetite to eliminate
solid business case as key barriers to adoption of smart jobs and increase automation in the distribution network
water solutions. As illustrated in figure 14, of the 119 via smart water network solutions, utilities said.
respondents who answered they weren’t sure if there Lack of funding even if there is a business case
was a compelling base, 57 percent said the benefits
Lack of funding emerged as a key constraint, even if the
were not high enough to justify the investment.
business case is compelling. “It’s too hard and expensive
In addition, approximately 39 percent and 43 percent to buy all at once and manage lifecycle costs because
of respondents said the cost of communications vendors want to sell a 20-year investment all at once,”
infrastructure and automatic/smart meters, explained a large utility in the U.S. Small utilities echoed
respectively, were prohibitively high. Indeed, during the same message, but with even greater concerns
interviews, many utilities mentioned that the cost around gaining access to financing and mobilizing
associated with enabling smart water network solutions sufficient funds for an upfront investment. Possible
– such as investments in sensors and hardware, IT solutions to lower the barrier to entry include risk-sharing
infrastructure and software – was perceived to be very contracts to lower upfront investment required and
high and the value or return on investment would be third-party suppliers who manage and analyze the
difficult to quantify. “We make our decisions primarily data.

28
Figure 14. Why the business case may not be compelling

If you answered “significant” or “very significant” that the business case is not compelling, why?
Percent of respondents
Total N=119

Benefits are not high enough to justify the investment 57

Cost of automatic/smart meters investment is too high 1 43

Cost of communication/infrastructure
39
investment is too high

Cannot quantify the benefits 28

Cost of sensors investment in the network is too high 2 21

Unable to derive insights from the data 16

1 E.g., Remotely collect data on water consumption at least 4 times per day
2 E.g., Pressure and flow sensors
Source: Smart Water Global Survey, July 2012

29
Technological solutions need to be user-
friendly, especially for small utilities.

30
Lack of political and regulatory support
Political support consistently emerged as a theme In the U.S., utilities noted that on the whole, existing
preventing the adoption of smart water networks, both regulations lacked “teeth” for reporting and
internal to utilities and external through municipalities compliance, providing little impetus to switch to new
as well as regulators. smarter approaches. Water utilities drew parallels with
Internally, key decision makers need to be convinced the Energy Act of 2005, which they said was essential
of the potential for smart water network solutions. in driving development of the electrical smart grid in
In particular, higher-level utility executives should the U.S, and suggested that a similar approach would
be targeted for decision making. Forty-five percent be needed to foster adoption in the water market.
and 54 percent of survey respondents identified the In the United Kingdom, where environmental rules
chief operating officers and chief executive officers
accelerated smart metering, the latest stipulations by
of their water utilities as key decision makers on large
the Department of Energy and Climate Change (DECC)
investments.
are spelling out an aggressive technology approach
Internally, it was also highlighted that a smart water that will push shareholders to fund smart metering via
network leader is needed within the organization. “You
distribution utilities. The European Union broadly has a
need someone who is technology oriented and can
mandate to reach full smart electric metering by 2020.
champion the idea,” expressed a Chinese utility.
Externally, political support of municipalities is needed, Lack of a clear, user-friendly integrated
especially where utilities are publicly owned. “Once technology solution
you have political support, you can do what you Interviews with utilities also revealed concerns regarding
need to do, (e.g., invest) to pull it off in the market,” perceived deficiencies in smart water technologies on
explained a large utility in the U.S. In many cases, this
the market. They emphasized in particular the lack of a
will involve engaging city councils to understand the
quality, integrated solution. Proprietary vendor solutions
big picture, as they often make the final decision on
large investments. Approximately 40 percent of utility were difficult to integrate, utilities said, and different
respondents identified their city councils and mayors vendors had different strengths in their offerings. The
as key stakeholders who need to be influenced and lack of international open standards for devices posed
supportive of the decision. an additional challenge. “Systems don’t mix. We have
Generating political support will involve overcoming a data warehouse with encryption and had to create
the current lack of regulatory support for smart water a workaround to integrate/de-encrypt with another
networks, as survey respondents identified regulators system. We need international standards,” said a U.S.
as either key decision makers or influencers (25 and utility.
36 percent of respondents, respectively). Utilities
Finally, there was a clear message from utilities that
suggested that regulatory support at the state and
federal level—as well as incentives—would be critical technological solutions need to be user-friendly,
to kick-starting smart water management, beginning in especially for small utilities that have limited IT staff and
water-scarce areas where the need for water efficiency don’t have the capacity to train multiple operators in
and conservation was greatest. data interpretation and analysis.

31
THE PATH FORWARD
Smart water networks will begin to take hold when the spending on infrastructure improvement as well as
potential value for utilities becomes abundantly clear their budget for operations and maintenance.
and the ability to capture that value is made easier. This ■■ Identify an internal smart water network champion.
white paper aims to bring to light the various barriers Identify an existing senior manager or hire a
and opportunities that exist to help utilities around the champion who is excited by new technologies,
world make smart water decisions based on a rigorous, seeks opportunities to introduce innovative
analytically sound approach. technologies or services and is willing to explore
This shared understanding, while necessary, is not the business case for smart water networks and
sufficient to drive widespread adoption of smart water champion discussions on the topic with key
networks. Only with a concerted effort from all major decision makers within the utility.
stakeholders can we truly redefine the water industry as
Regulators
it stands today and overcome the looming challenges
posed by water scarcity and water quality. Below, we ■■ Reward and incentivize improvements in
provide some initial thoughts on ways in which industry operational efficiency. Simply diverting savings
stakeholders can help catalyze adoption of smart captured by utilities to other municipal operations
water networks. or reducing tariffs and price increases leaves little
incentive for utilities to seek additional productivity
Utilities and municipalities improvements. In countries such as Ireland where
■■ Help technology providers pilot solutions and regulators decide on tariffs and validate utility
establish benefits of smart water networks. Utilities, investment decisions, potential new investments
while rightfully wary of change and concerned and adoption of smart technologies should be
about return on investment, should recognize the approached with an open mind. In areas of
potential for tremendous value from smart water high water scarcity, regulators should prioritize
networks and take measured risks. At a minimum, favorable economic conditions and reward utilities
utilities can aid technology providers by sharing that conserve water by implementing smart water
data and reaching out to technology providers network solutions.
to help innovators understand utility needs and ■■ Leverage smart water technologies to achieve
mindsets. higher water quality standards. Regulators have
■■ Explore opportunities to learn more about the an obligation to ensure the establishment and
benefits of investing in holistic solutions to smart maintenance of water utility services and to
water networks. Utilities need to actively learn ensure that such services are provided to deliver
about smart water networks and how end-to-end water quality at rates and conditions that are
solutions can holistically support improvement in fair, reasonable and nondiscriminatory for all
key areas of their utility’s performance. As part of consumers. If water utilities have the capability
this assessment, they should explore to what extent to monitor water quality on a real-time basis,
an investment in smart water network solutions regulators could consider defining new standards
could impact their budget for traditional capital which require more frequent reporting and testing.

32
33
Investors
■■ Apply a results-driven investment approach to in encouraging the legislation needed to push
technologies across the industry. To achieve adoption of electric smart grid solutions, and the
maximum impact, smart water networks will require same approach should be taken for smart water
innovative approaches and solutions in all aspects solutions. Industry associations can reiterate the
of the value chain, from ubiquitous, battery- value of smart water network solutions to utilities
powered measurement and sensing devices to and regulators by serving as a powerful outlet
software with pattern detection and predictive for promoting the business case for smart water
analytic capabilities. Investors should approach technology and sharing successful case studies and
technologies across the entire spectrum with an results. They can also reiterate the value that smart
open mind, funding the most innovative and water networks deliver to consumers by creating
promising solutions but closely monitoring impact fewer and shorter service interruptions, advancing
and financial success. water quality and improving the availability and
transparency of information that consumers
■■ Offer financial products, such as long-term, low-
need to manage their water consumption and
interest loans. Financial support can be funded by
associated costs.
payback from technology investments that enable
utilities to realize up-front savings from major ■■ Facilitate communication, idea sharing and
technology installation investments. partnerships between various stakeholders (e.g.,
technology providers, universities, investors,
Industry and utility associations utilities). Successful smart water networks will require
■■ Promote innovative solutions and publicly capabilities drawn from a currently fragmented
champion smart water networks. Since the market landscape of technology providers, and industry
for smart water network solutions is still in its infancy, associations will play a critical role in driving
industry associations will play a critical role in collaboration. Some consortia have made positive
encouraging utilities, regulators and technology strides in defining smart water networks and in
providers to coalesce around a shared vision for bringing technology players and utilities together.
smart water networks and their potential benefits These consortia can expand their impact through
for all parties. Indeed, industry associations and a more significant effort to educate regulators and
individual industry leaders played a significant role utilities.

34
Technology providers
■■ Continue developing concrete, marketable smart smart water networks, leveraging the widespread
water network products and solutions. Working use of electric smart meters and increased
closely with utilities in research and development conservation efforts. Consumer engagement
and pilot phases will be critical for success, as will and awareness of the need for conservation has
collaborative efforts to influence regulators and increased significantly in certain geographies.
other key stakeholders. In Belgium, for example, wastewater reuse and
conservation strategies are prevalent among
■■ Collaborate to develop and adopt open standards
consumers. Simply providing consumers with water
and ensure interoperability of different hardware
usage data helps drive increased conservation
and software offerings. Such standards will be
and improves public awareness of water
critical to driving smart water network adoption
challenges. Technology providers can also help
since many utilities remain wary of entering into
consumers understand how concepts in electric
long, costly contracts with individual technology
smart meters (e.g., their ability to help consumers
and service providers. Interoperability also ensures
manage consumption and simplify billing) apply to
backup providers and provides peace of mind
the water industry as well.
that comes from guaranteed continuity of service.
Academia
■■ Broaden awareness of smart water network
technologies and solutions among regulators ■■ Foster awareness and understanding of water
and the general public. Industry players in the economics, challenges and innovative solutions
market today are heavily fragmented and lack including smart water. Like industry and customer
established channels for communication and idea associations, academia can serve as a powerful
sharing. Successful smart water network solutions forum to facilitate rigorous conversation,
will require end-to-end capabilities that few encourage partnerships and collaboration and
players in the industry can provide independently validate business cases.
today. Technology providers should foster a ■■ Fund smart water research. University research
collaborative “smart water ecosystem” that begins could serve as a launching pad for innovative
with advocacy and lobbying work with regulators smart water technologies, on both hardware and
to increase awareness around the opportunities for software. Some universities are increasingly paying
smart water networks and encourage regulatory back the costs of their research by monetizing
changes that could stimulate adoption. For the patents. Universities can also invest in educating the
general public, technology providers should next generation of smart water network engineers,
conduct public outreach to bolster awareness for managers and leaders.

35
 The future of smart water networks will require a
partnership between people and technology.

CONCLUSION
Smart water networks represent a tremendous opportunity for water utilities to realize
significant financial savings, address global concerns on water safety and quality, and
position themselves for an increasingly resource-constrained future. The time is right for
utilities to seize this opportunity, but that success will require the collective effort and
collaboration of stakeholders across the water industry.
In this paper, we have drawn on market analyses and a range of utility interviews and
survey insights to craft a vision for smart water network solutions and their potential
benefits for utilities and their stakeholders. While smart water networks will continue to
evolve as industry players innovate and utilities discover new needs and challenges,
many of the technologies critical to building smart water networks are in development
or already on the market today. Utilities will need to consider carefully which solutions
to implement and work closely with technology providers to create the right set of tools.
The future of smart water networks will rely on the partnership between people and
technology to address one of our most precious resources: water. The vision of safe,
clean drinking water for all is one that smart water networks can help us keep in focus.

36
SURVEY METHODOLOGY

A team of experienced consultants was commissioned by Sensus to conduct a survey of utilities in more
than a dozen countries around the world. As a first step, a number of screening questions were posed to
more than 1,000 utility executives to ensure they had sufficient information and perspective to answer
questions that would be representative of utility views. The survey included a mix of multiple choice
and open-ended questions. Results included 182 completed surveys from around the world and from
various size water utilities.

Interviews of utilities- The consultants then conducted blind interviews (i.e., no mention of Sensus) of
more than 20 utilities around the world. These interviews covered questions about the financial and
operational challenges facing utilities, existing utility activities in smart water systems monitoring and
optimization, data analysis, decision-making and controls, implementing these measures and about
the projected return on investment. Finally, the questions addressed barriers to implementation of smart
water networks. All interviews were conducted for 60 minutes, via telephone with an experienced
consultant.

Industry analysis- Industry financial statements were analyzed. Conclusions were formed based on the
shared experiences with hundreds of utilities around the world analyzing the operations of utilities and
determining the size of the opportunity to improve different financial and operational metrics. Industry
experts were interviewed to derive and test assumptions in the models. The global utility market size
data was analyzed based on operating and capital expenditures. The numerical ranges used in this
paper are due to different assumptions about smart water network adoption.

Overview of technologies- In-depth research was conducted into the technologies of several dozen
smart water technology companies. This included a review of reference case materials, available
product demonstrations and patents and interviews with utilities that utilize products from smart
water technology companies. The research also included interviews with smart water companies via
telephone and at industry trade shows.

ABOUT SENSUS

Sensus is a leading utility infrastructure company offering smart meters, communication systems,
software and services for the electric, gas, and water industries. Sensus technology helps utilities drive
operational efficiency and customer engagement with applications that include advanced meter
reading, data acquisition, demand response, distribution automation, home area networking and
outdoor lighting control. Customers worldwide trust the innovation, quality and reliability of Sensus
solutions for the intelligent use and conservation of energy and water. Learn more at www.sensus.com.

North American Headquarters Europe

8601 Six Forks Road, Suite 700 Industriestrasse 16

Raleigh, NC 27615 67063 Ludwigshafen
(800) 638 - 3748 Germany
+49 (0)621 6904 1255
© 2012 Sensus