Sliding sideways to growth
Published June 15th, 2017
This month we are publishing an update to our Global Water Market Forecast. The aim is to revisit the forecast we published in March last year in light of what has changed in the market since then. The top line doesn’t look too great. The biggest adjustment is in the US, where there has been a considerable – and unexpected – fall-off in investment, although the BRIC nations have also been disappointing, but for different reasons. Europe is recovering, but the overall trend is sideways. Here are the top ten trends covered in the update:
1. From concrete to smart: The city of South Bend in Indiana is facing an $861 million bill to sort out its combined sewer overflow problem. Instead of simply pouring concrete, it has been working with a technology start-up from the University of Notre Dame to develop an artificial intelligence-based solution that will cut the total bill to $200 million. Utilities in this situation – where heavy infrastructure spending is required – are finding that technology is presenting them with more low-cost alternatives.
2. From new-build to retrofit: In both Europe and North America, public funding for new infrastructure remains tight, but the necessity of upgrading or expanding systems is not going away. It means that creative retrofitting is becoming more popular, while larger new-build projects remain on hold until the public funding environment improves.
3. From public to private: The alternative to waiting for public finance is to promote private sector participation. We are seeing that happening in Saudi Arabia, Japan, Peru, Colombia, and in a whole swathe of African and Asian countries with bad credit ratings. Although it is likely that Trump will promote the P3 (public-private partnership) model, we do not expect results in the short term.
4. From new to reuse: The theme of making the most of existing resources extends to a preference for reuse over developing new water resources. This is particularly true in California, where the end of the drought has not dampened interest in reuse projects. It is also true in the industrial market in other water-scarce regions, where the economics of recycling – even zero liquid discharge – are beginning to be more widely appreciated.
5. From wastewater to sludge: The area of the water cycle which offers the highest return on investment is sludge management. Technologies which reduce volumes or recover more energy more than pay for themselves at a time when disposal is becoming more of a challenge worldwide.
6. From upstream to downstream: Water management in the upstream oil and gas industry has remained a reasonably strong market in the Gulf region, and it is recovering (with a heavy emphasis on cost savings) in the US shale plays, although offshore and heavy oil remain very weak markets. Meanwhile, the downstream industry appears to be thriving.
7. From Mercosur to the Pacific Alliance: Mercosur members Brazil and Venezuela are essentially non-markets, paralysed by the low oil price and political unrest. Argentina has potential, but the financing model has yet to be developed. Meanwhile, Latin America’s other trading block, the Pacific Alliance, seems to be creating more opportunities, with desal for the mining industry in Chile doing well, and Pemex in Mexico contemplating major investment in water facilities.
8. From heavy water users to specialist water users: The big water-using industries (energy, power, and mining) are undoubtedly well below their peak, but industries with smaller volumetric needs are investing in water systems. We held an extremely successful ultrapure water conference in Portland, Oregon earlier this month which was abuzz with opportunities in microelectronics and life sciences. The food and beverage sector appears to be perennially buoyant.
9. From engineering to boxes: This trend reflects the increasing attractiveness of pre-engineered systems delivered on skids or in shipping containers compared to traditional built-on-site and made-to-measure systems. It brings together three themes that are current in both the industrial and municipal markets: decentralisation, flexibility, and cost control.
10. From delay to crisis: The Pennsylvania legislature voted this month to put the Pittsburgh Water and Sewer Authority under state authority as the utility’s underperformance shaded into crisis. It is likely to be an increasingly common theme in utilities around the world where the rate of investment has failed to keep pace with the rate of depreciation of the existing assets.
The forecast update is available to order here at a 15% pre-publication discount. If you have already purchased our Global Water Market 2017 report and would like to purchase the update, please contact firstname.lastname@example.org to receive a 50% discount.