20 urgent questions for the US water sector

Published August 9th, 2018

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Insight from Christopher Gasson, GWI publisher

The early bird booking deadline for the American Water Summit is tomorrow. With that in mind, I have drawn up my list of questions that I would like to see answered at the Summit. We are lining up experts to answer each of them during the round tables session on the first morning of the conference. If I have missed anything, do send in your suggestions to me at cg@globalwaterintel.com. Here they are:

1) What does the macro-economic outlook say about the future of water spending? The economy is growing strongly, and spending on water seems to be healthier than it has been since Obama’s stimulus package came to an end. At the same time, municipal finances are structurally more vulnerable than ever. What should we plan for?
2) How big will the midstream be? Investors have been piling into businesses that provide pipelines, storage and recycling facilities to manage water in America’s hottest shale play. Are we at the beginning of something that is going to be huge, or is this as good as it gets?
3) What will $4 billion do for rural water? For years, sub-scale rural water systems have been an accident waiting to happen. The federal government is now addressing the issue with $4 billion of new funding. The money is undoubtedly welcome, but will it get to the root of the problem?
4) What is Washington’s next move in infrastructure? President Trump’s $1.5 trillion infrastructure plan has seemingly made little progress since it was announced in February this year, but behind the scenes, the White House has not given up on the idea of a big stimulus supported by the private sector. What will the new proposal look like?
5) How is California spending $29 billion on drought-proofing? After agreeing a $4.1 billion water bond in a ballot in June, the state will vote on an $8.9 billion bond in November, and is moving ahead with the $16.3 billion WaterFix improvements to the State Water Project. Where will the money go?
6) How do we beat falling water demand? The latest data from the USGS and EPA show that while urban demand for water is falling at a rate of 1.4% per year, the need to invest in water systems is growing at 7.1% a year. Making the numbers add up is the most fundamental challenge facing the US water industry today.
7) What water technologies does the oil and gas industry need now? Both upstream and downstream, the boom in unconventional production is reshaping the North American energy sector, and indirectly creating new markets for water technologies. Where are these markets, and what do they need?
8) Is “fair value” the game-changer for private water? More states are changing their accounting rules to allow cities to sell their water systems for whatever price private buyers are willing to pay, without the buyers being penalised through the rate-setting mechanism. How will it open up the market for investors in the sector?
9) What is Suez’s big plan? The acquisition of GE Water by Suez is the biggest deal in the water business since Vivendi bought USFilter in 1999. The latter deal is a poor precedent, and most analysts are cold on the GE/Suez deal. How will the management of Suez Water Technologies & Solutions outperform expectations?
10) Is there a solution to stormwater funding? Green infrastructure is opening up new alternatives for stormwater management, but funding remains problematic, not least because stormwater rarely has its own revenue stream. The combination of climate change and combined sewer overflows is bringing new urgency to the challenge.
11) What is water’s answer to cybersecurity? As digital systems have spread across the water industry, everyone from equipment suppliers to engineers to industrial water users needs to have an answer to the cybersecurity question. It is a complex and fast-moving area, but without a strategy, you are probably at risk.
12) What will make utility consolidation happen? There is a huge opportunity in consolidating America’s 56,000 utility systems, for utilities and their customers alike. We’ve always assumed that small town politics are the main obstacle. At ground level, however, change is looking increasingly inevitable.
13) Does water need to worry about the Trade War? Whether you are importing equipment for US projects or exporting technologies to the global market, the sudden increase in protectionism is playing havoc with fixed-price contracts and supply chains. How are water-related companies adapting their strategies?
14) Can outsourced operations rediscover growth? The traditional contract operations market has stalled, but not everyone is looking for the door. Instead, we are seeing excitement build around new business strategies. What are they?
15) How do you explain the M&A market? There’s been a lot going on, but the focus of activity has moved. Consolidation in the engineering sector looks played out, but there is a lot of movement in chemicals and technologies. How is the water business being reshaped through M&A?
16) Why is the Department of Energy splashing out on desalination research? It is the biggest government investment in early-stage desalination research in a generation: a $20 million commitment to a desalination research hub (with a $21 million side order for solar thermal desalination technologies).
17) What will be done about nutrient pollution? Algal blooms blight America’s surface water bodies in much the same way that industrial pollution scarred them in the 1960s – until the passage of the Clean Water Act. With outrage building in Florida in particular, concerted action on addressing nutrient pollution seems inevitable.
18) What is the secret of selling smart water systems? Digital systems change the paradigm for water management, but in doing so they also require a new paradigm for sales, as software-as-a-service finds its place in a world more accustomed to purchasing physical capital equipment. How can it be made to work?
19) What is the hottest technology: high recovery or brine concentration? The last five years have seen massive interest in high-recovery desalination technologies aimed at maximising industrial water reuse, while demand for brine concentration technologies has faltered. Going forward, needs are changing and technologies are evolving, particularly on the resource recovery side. Who will come out on top?
20) Is Miami’s real estate market a water play? With sea level rises, some of the most expensive real estate in the country is at risk. Investing in water-related infrastructure might be the solution. Is there a trade to be done?