First published on the Cleantech Investor website, February 2013.
Ian Bernard, Technical Manager at British Water, shares his views on water management and technical innovation in the UK water industry with Cleantech magazine. Ian Bernard will speak at Water Tech Invest on 14 February 2013.
Good water management, in the view of Ian Bernard, requires a holistic approach to water management and an increase in innovation if the industry is to be sustainable. The industry must incorporate the water cycle in its entirety in water management and take more risk with innovation, an approach which, in the past 20 years, Bernard believes has not been adopted in the UK. However, times are changing as water utilities are working more on ‘upstream’ projects and surface water drainage schemes, while the water utilities and the supply chain companies are communicating much more ‘face to face’ on emerging technologies. In Bernard's view, the government bodies Ofwat, Defra and the Technology Strategy Board should take note.
Bernard identifies three distinct water industry services:
- Utility delivery services (water supply and sanitation);
- Customer focused services (in–house water treatment, smart metering and flood protection);
- Catchment management services (land use, recreation, floods and water resources).
All these services are interlinked through the water cycle and Bernard claims that, ideally, policy for all these should be joined up. However, he says this has rarely been the case, although we are turning a corner. Water utilities, government and the supply chain are now working closer together to move towards integrating water management. With a successful innovating integrated management UK water industry we can exploit ‘home grown’ technologies throughout the world.
The holistic approach (integrated water management) Bernard advocates is being adopted by some, with an increasing focus on upstream management of resources by the utility companies which are working on catchment management and focusing on areas such as surface water management and sustainable drainage systems. There is also a growing emphasis on carbon sequestration and instrumentation and monitoring tools.
With respect to upstream activities, Bernard points to examples of Yorkshire Water, Anglian Water and South West Water, which are working in areas that, although they could sit outside the company’s regulatory remit, are part of a broad approach entailing an understanding of the management of water in its entirety.
Is Water Valued?
In Bernard’s view, a major part of the problem in the UK is that water is not really valued highly. Utilities are responsible for two core services: the provision of drinking water and the management of wastewater. The UK’s unique, privatised, regulated water model (overseen by Ofwat), incorporates an inbuilt mandate to keep the price of water low. While acknowledging the validity of this aspiration, Bernard points out that the result has been to depress the profits of the water supply chain. Low profits leave little budget for R&D and as a result, Bernard claims, this has curtailed the potential for step change innovation within the supply chain.
Effects of 5 year AMP Roller Coaster
In Bernard's view, the water industry in the UK needs to address the “five year roller coaster” imposed by the AMP (Asset Management Plans) regime. According to Bernard, the five year planning regime of the UK AMPs is a deterrent to risk taking. The typical pay-back period of a research investment in the water utility industry can be around twelve years (the average time required to take a new concept stage to the market) – but there is a window of just five years for a utility company, which means that a procurement manager is more likely to advocate a traditional solution with little engineering risk.
Again there are signs that the government and utilities have recognised this issue, and in July 2012 HM Treasury published a report entitled ‘Smoothing investment cycles in the water sector’. Bernard is optimistic that things are changing – albeit slowly. He points to the establishment of a UK steering committee aimed at looking into the smoothing of the AMP cycle. This group is chaired by Richard Coackley, former president of ICE.
Let’s Talk More
A further challenge within the water utility industry, in Bernard’s view, is that there has been little communication between utilities and the supply chain in the past. Bernard is a proponent of increased engagement, both internally within utility companies and also through the supply chain, with Tier 1 and Tier 2 suppliers. Understanding user technology needs and matching these with technology offers is best carried out face-to-face. Despite his criticisms, Bernard believes that communications are getting better in the water industry and people are talking to each other: the utilities are talking to the supply chain instead of talking down to them.
Great Research but not enough Step Change Innovation
In Bernard’s view, the UK is “great at research and development – there’s no problem with research”. However, the system poses a challenge in taking this research and converting it into innovative products, services and systems. He comments that: “We don’t turn enough of this great knowledge into products and processes”. The innovation that is occurring in the water industry is incremental: although this is good and steady efficiency savings and increased effectiveness, it is not step change.
Some UK universities – in Bernard’s view – are more pragmatic than others. He cites Cranfield as an example of a university which has adopted a pragmatic approach and is working with the supply chain to develop novel processes. Generally speaking, however, Bernard believes the UK is not doing sufficient work in terms of step change innovation relative to other countries. One area where Bernard believes there is scope for additional work is sewer mining (extracting sewage from sewers to reclaim resources of nutrients and energy). Sewer mining, which has the additional benefit of reducing the hydraulic load in the sewer, is being pursued in Australia. Bernard considers the UK (and England in particular) to be the “poor cousin” in terms of water sector innovation relative to countries such as Israel, Singapore or Australia. He does point to the Hydro Nation programme launched in Scotland, where water is viewed as a valued asset .
Water and Carbon, Water and Agrifood
Focusing on the water/energy nexus and the water/agrifood nexus is also a must. The Carbon Disclosure Project (CDP) has driven down greenhouse gas emissions in industry and it has commenced a Water Disclosure Report which focuses on disclosing sustainable water use by businesses. Bernard notes that the larger companies are increasingly signing up to the Water Disclosure Report: in particular he points to the UK supermarkets, which aim to be water neutral, as an example.
In addition to the nexus between water and energy and water and waste, Bernard also points to the nexus between food and water – which has implications for the upstream management, since it involves land users and farmers. For him, a focus on upstream activities is one of the key components needed for the more holistic approach to water management.
Sharing the Financial Risk of Innovation
Bernard acknowledges that turning research outputs into valuable knowledge and tools tends to be top-down driven and often fails to focus on “end user bottom-up needs”. Compared to our European compatriots, funding provided directly for water by the Technology Strategy Board is minimal. However, there are UK competitions such as the recent Greenius (Green Genius) funding scheme, which focused on water alongside food and energy. This integrated approach, although extremely important, diminishes funding for dedicated water projects.
According to Bernard, the lack of funding for demonstration projects is a major bottleneck within the UK. Demonstration budgets sit in the middle of the value chain and in the water industry – as he points out – demonstration for step change usually needs to be on a large scale, which is often more costly than the research and development. As a result, the development of new treatment processes capable of making step changes in the industry is extremely challenging.
Given what Bernard describes as the UK Government’s price control of water services, he argues the Government has an obligation to provide financial support to fund innovation and demonstration projects. A fair compromise, in his view, would be to split the burden and risk of financial support three ways, between the technology end user (e.g. a utility), the supply chain companies and the Government.
Ian Bernard will speak at Water Tech Invest on 14 February 2013 on the need for a holistic approach to water management in the UK and the opportunities arising for technology companies as the water utilities move upstream.
British Water is the trade association for the supply chain for the water industry. With the exception of Scottish Water, its membership does not include utility companies. The organisation aims to complement the work of Water UK, which is the organisation for the utilities.