northeast group, llc Global Smart Water Infrastructure: Market Forecast ( ) October

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1 northeast group, llc Smart Water Infrastructure: Market Forecast ( ) October

2 Smart Water Infrastructure: Market Forecast ( ) Water scarcity is a growing non-revenue water (NRW) rates problem across the globe, compounded by climate change and population growth. All signs indicate that this scarcity will only continue to grow more severe. Even as countries scramble to build water treatment and desalination plants and impose consumption restrictions, countries globally are still on average losing 28% of their water due to leakage, theft, and Source: IBNet, Northeast Group inaccurate metering. This lost water or non-revenue water (NRW) creates additional needs for costly treatment plants, increases the demand for energy from pumping stations, and puts added stress on already strained infrastructure, communities, and environments. Meanwhile, lost revenue from this water only increases the need for government subsidies, which already are necessary to cover a significant portion of the costs of water in many countries. Under many current water tariffs, this lost water is undervalued. All infrastructure investments and conservation programs aimed at addressing water scarcity have real costs, and therefore so do the billions of cubic meters of water that are lost to leakage and theft each year. A key component of this study s methodology is the calculation of the savings potential in each country from smart water infrastructure based on the full cost of water. The full cost of water is a metric that takes into account water scarcity, water-related energy and labor costs, as well as implicit and explicit subsidies not captured by existing tariffs. Total smart water market value ($M) cumulative smart water deployments by region 2015 Source: Northeast Group 2016 Southeast Asia South Asia Oceania North America MENA Latin America Europe East Asia Africa Smart water infrastructure such as smart metering, networks, and analytics will improve water sector efficiency by reducing leakage, waste, and theft. These components represent cost-effective solutions that have already been applied in many regions across the globe and show enormous potential for growth. The price per cubic meter saved/created through smart water infrastructure is often better than

3 larger, more challenging solutions (for example desalination), and smart water projects frequently have favorable payback periods. Countries with largest annual savings from smart water solutions (average of actual tariff and full cost of water) Smart water infrastructure solutions alone will not be sufficient to address water scarcity issues in the hardest $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Source: Northeast Group Annual savings per home from smart water metering and networking hit countries and regions. But they will be a critical first step and will complement other solutions. Even in water-abundant regions, smart infrastructure shows strong potential. For all utilities, leakage reduction will help improve utility efficiency, while IT and analytics will also improve operations. Using an average of the full cost of water, as calculated by Northeast Group, and current tariffs, smart water infrastructure could save $27.5 billion per year across the 125 countries covered in this study if fully implemented. Key questions answered in this study: What are the savings potential of different smart water infrastructure solutions? How large is the market for smart water metering, networking, and IT across 125 individual countries? What is the full cost of water in water scarce countries? How do smart water infrastructure costs compare with alternative water scarcity reduction solutions? northeast group, llc Smart Water Infrastructure Existing tariff/full cost of water (US cents/m 3 ) $0.00 $0.50 $1.00 $1.50 Actual tariff Full cost Total annual savings per home (using average of full cost and tariff) $ Smart Water Infrastructure Country dashboards Who are the major vendors active across smart water segments and geographies? Total smart water ($M) Population: 9,383,000 GDP/capita (2014): $12,332 NRW$ Scarcity$ Income$ Capacity$ GDP growth (Avg ):4.1% Residential meter market (2015): Projected meter market (2025): 497, ,818 (12.0% annual growth) Market Indicators Non-revenue water (NRW) Consumption Monthly household consumption (m 3 /month) NRW % Consumption per renewable resources (% scarcity) 0% 20% 40% 60% Annual household NRW (m 3 ) 0% 10% 20% 30% 40% Consumption by segment 4% 18% Municipal Industrial % Agricultural Smart water savings potential Smart water market forecast $7 IT $6 Smart networks $5 Smart metering $4 $3 $2 $1 $ Table of Contents i. Executive Summary 1 ii. Methodology 7 1. Introduction What does smart water infrastructure entail? Smart water infrastructure within the larger smart infrastructure landscape The case for smart water infrastructure Defining the full cost of water 20

4 Table of Contents (cont.) 2.2 Smart water infrastructure business case Comparing smart water infrastructure with alternative solutions Hurdles to smart water infrastructure deployments Case studies Israel California Australia São Paulo, Brazil Smart water infrastructure market forecast outlook for smart water infrastructure Water scarce countries High non-revenue water (NRW) countries High consumption countries Agriculturally intensive countries Smart water vendors Vendor segmentation smart water vendors Country dashboards Africa East Asia Europe Latin America Middle East & North Africa North America Oceania South Asia Southeast Asia Appendix List of companies covered in this report List of acronyms 218

5 List of Figures, Boxes, and Tables Smart water infrastructure: key takeaways 3 The full cost of water 4 Calculating the full cost of water 4 Countries with largest annual savings from smart water solutions 5 non-revenue water (NRW) rates 5 cumulative smart water deployments by region 6 smart water forecast 6 Figure 1.1: Smart water value chain 10 Figure 1.2: Water supply value chain 11 Figure 1.3: Five layers of smart water networks 12 Figure 1.4: water metering 13 Table 1.1: Benefits of different water metering technologies 14 Figure 1.5: Smart infrastructure overview 17 Figure 2.1: Calculating the full cost of water 21 Figure 2.2: The full cost of water 21 Figure 2.3: Largest % difference between full cost of water and actual tariffs 22 Figure 2.4: Difference between actual tariffs and full cost of water in largest markets 23 Figure 2.5: Smart water savings example: Egypt 25 Figure 2.6: Countries with largest savings from smart water 26 Figure 2.7: Savings from smart water solutions in largest markets 27 Figure 2.8: The costs of water saving solutions across four regions 31 Figure 3.1: Water scarcity case studies 35 Table 3.1: Water scarcity in Israel 37 Table 3.2: Desalination projects built in Israel since Table 3.3: Current water tariffs in Israel 39 Table 3.4: Costs of water scarcity solutions in Israel 40 Figure 3.2: Water saving solutions in Israel 41 Figure 3.3: Calculating the cost per m 3 of smart water infrastructure 42 Figure 3.4: US drought monitor 43 Table 3.5: Existing and renewable water supplies in California 44 Table 3.6: Costs of water scarcity solutions in California 45 Figure 3.5: Water saving solutions in California 47 Table 3.7: Water capacity in Australia 49 Table 3.8: Water allocation trading in Australia 50

6 List of Figures, Boxes, and Tables (cont.) Table 3.9: Water scarcity in São Paulo 54 Table 3.10: Economic costs of drought in Brazil 56 Table 3.11: Costs of water scarcity solutions in São Paulo 56 Figure 3.6: Water saving solutions in São Paulo 57 Figure 4.1: cumulative smart water deployments by segment 60 Table 4.1: smart water infrastructure forecast by segment 60 Figure 4.2: cumulative smart water deployments by region 61 Table 4.2: smart water infrastructure forecast by region 61 Figure 4.3: Cumulative installed base of all residential water meters 62 Figure 4.4: Annual AMI/AMR water demand by region 63 Figure 4.5: Annual shipments in largest communicating meter markets 63 Figure 5.1: Water scarcity 65 Figure 5.2: non-revenue water (NRW) rates 66 Figure 5.3: High NRW and electricity loss countries 67 Figure 5.4: Correlation between NRW and power distribution losses 67 Figure 5.5: Monthly household consumption by region 68 Figure 5.6: Water scarcity by region 69 Figure 5.7: NRW by region (%) 70 Figure 5.8: Annual NRW by region (m 3 per household) 70 Figure 5.8: Countries with highest % water used for agriculture 71 Figure 6.1: Major smart water vendors by segment 73 Table 6.1: Smart water metering vendors 74 Table 6.2: Smart water networking vendors 76 Table 6.3: Smart water irrigation vendors 77 Table 6.4: Smart water analytics vendors 78 Table 6.5: Smart water services vendors 79 Figure 6.2: Notable smart water vendor activity 80 Table 6.6: Examples of notable smart water vendor presence 81 Table 6.7: Smart water vendors by region 82

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