In the debate on centralized versus decentralized water, we need to recognize that in the 21st century, we suddenly have a menu of technology options and business models available to us that we’ve never had before.
As it stands, the Romans would recognize our water infrastructure in terms of extracting it, moving it, treating it, using it, and discharging it — which means that nothing significant has really changed.
Now, we have localized, decentralized water technologies that provide us with a hybrid technology opportunity to deliver water in a more cost-effective, sustainable, and resilient manner than we’ve ever had before.
Below, I share my thoughts on:
- How a water utility and smart home should look today
- How a utility can thrive when the goal is to use less water
- The opportunity for developing countries to leapfrog developed countries
- The exponential role of digital technologies today
How water utilities and smart homes should look today
If, in 2022, we had a blank sheet of paper, what would we say a utility looks like, and what should it look like?
When we consider the impacts of climate change, an increasing population, and aging centralized infrastructure, would we build infrastructure exactly the same way as we did in the past?
I certainly hope not, since this would mean that we haven’t learned anything about what works well and what doesn’t work well. I’m a big advocate for not throwing everything out: Let’s keep what works but also seize the available opportunities in the technology sector to move towards localized systems and even extreme decentralization — which is increasingly becoming top of mind.
In terms of smart homes, I’d personally start from the bottom up and ask what a water-smart home looks like, and what would you do in that home. How would you integrate it with renewable technologies? Then, we can start building it block by block and ensure that the city we’ve created is water efficient and can reuse water. Plus, it should have alternative sources of water — whether that’s rainwater capture or air moisture capture — as a way to build a city that is much more mindful about the way we manage and use water to be more sustainable and resilient.
Current revenue models: How can a utility thrive when the goal is to use less water?
One of the challenges is that we have an installed base which means big investments and centralized infrastructure that is not incentivized to change and move towards a more radical view of looking at what’s possible when it comes to water utilities in a decentralized, hyper-localized world.
The way you get utilities — both power and water — to change is through changes in public policy. This requires courageous public policy leaders to really challenge the current model and consider that currently, utilities make money by selling water at volume at incredibly low prices to the point where it’s almost free.
So, how do you create a pricing structure that values water, and how do you decouple the financial health of a utility from selling more and more water at heavily discounted prices? What needs to change is the decoupling and the creation of really innovative public policy mechanisms to ensure that the utility thrives in a world where the goal is to use less water and reuse water as much as possible.
This is not a technology solution: It is a public policy incentive strategy that needs to be implemented to reverse the course of being stuck with these big investments that we’ve had for decades that are no longer ideal.
The opportunity for developing countries to leapfrog developed countries
The opportunities for emerging markets to do better than we have done — in terms of building a water utility and an integrated energy utility — is incredibly significant, because they essentially have a blank sheet of paper and a series of choices.
Instead of continuing to invest in incredibly costly centralized systems, do they build water infrastructure in the same way we’ve been doing it for decades? Or do they look at what’s available from a technology perspective and decide that this is a better way to build it from scratch or even create a hybrid?
I’m a firm believer that leapfrogging is the real opportunity. In addition to Africa, I would say that Latin America is in a somewhat similar position in terms of really rethinking what a water utility looks like from a technology perspective, from a financial-business model perspective, and they also have the ability to tap into the lessons learned.
This is something we’ve already seen in the telecom sector in places like Africa where they’re investing in mobile phone technology over landlines. Essentially, they are tapping into very innovative technologies that are potentially more cost-effective.
The exponential role of digital technologies today
For me, the most exciting trend opportunity in the water sector is the application of exponential technologies and digital technology. What digital can now deliver through technologies such as satellite data, on-the-ground sensors, and artificial intelligence applications is the ability to understand water quantity and quality on a real-time basis, as well as the ability to forecast how a system will operate.
This includes how a watershed might operate, how a utility might operate, and how a manufacturing plant will operate in a world that is water-constrained and impacted by climate change. This real-time forecasting capability that comes from a number of different data and information sources is the game changer in the world of water and absolutely critical at this moment.
However, technology in and of itself is not going to solve our problems. We really need to be sure that we understand how to facilitate digital transformation in both the public and private sectors. This all begins with people: How do you create a strategy and a culture where digital technologies are embraced and embedded into that enterprise and their operations within a utility or private sector enterprise?
A good friend of mine, Jonathan Copulsky, wrote a book titled “The Technology Fallacy” where he talks about not adopting digital but being digital, and if an enterprise becomes digital, it means that it’s aligned with their strategy, and the workforce has the right culture and tools to ensure that digital technologies are delivering the value that is needed.