opinions 

Intro: Water is essential for life – all life, not just human. Energy (electricity, gas and oil) is not essential for life. It is a luxury that we humans have come to expect. Our lifestyles depend on energy but our lives depend on water. So why is the water industry lagging behind other utilities when it comes to smart metering? 

The Environmental Angle

The serious point about water is that it’s not a luxury, and in some areas of the world it’s running out. We are over-extracting ground water, depleting rivers and destroying habitat by building reservoirs. For those who live by the sea and are affluent enough to afford desalination plants, we are polluting the atmosphere by building and running them. 

Where are the problems?

In many economies we have plenty of water for our own needs but we import water-intensive products such as vegetables and, in so doing, we ‘export’ water consumption. Such trade is growing rapidly and sometimes underpins economies in areas where water supply is more marginal. Any region where water availability is only just enough for the local population, or which exports water-intensive products, needs to think carefully about the water supply-demand balance. Couple this with increasing populations and climate change, and you can see that where we have plenty now, we might well have scarcity in the future.

In addition, water is expensive and energy intensive to move and consumers (except agriculture) tend to group together geographically, thus driving a long term trend of urbanisation. So where there may be plenty at a national level, there may be scarcity at a local level.

Supply-side measures

Where we have suitable catchment areas we can build more dams. Where we have seawater, we can build desalination plants. Both of these have large environmental downsides. We can recycle waste water into medium quality water and use it to displace consumption of drinking water for industrial uses, garden irrigation and flushing loos. This option is more environmentally sound than the other supply-side measures but it needs a big investment in plant and a secondary distribution network. Finally, we could purify the waste water completely and distribute it as drinking water, but this needs even higher investment in plant and the co-operation and trust of consumers.

The underlying nature of all these measures is big capital expenditure up front and long term operating costs that are mainly energy-related and therefore likely to rise over time. 

Consider also the programmatic issues. These supply-side measures need to be big to achieve the necessary economies of scale and therefore involve large amounts of capital. But how big? How much excess capacity do you need, just to be sure you have enough for the whole period you are planning, building and operating your project? How will the population grow? Where will they live? What appliances will they use? How will natural water availability change? Clearly, a ‘predict and provide’ strategy must allow a generous safety margin, as illustrated below.

Whatever supply-side technology you prefer, in the long term, a simple ‘predict and provide’ strategy is not environmentally sustainable or economically efficient. We need to consider demand-side measures too.

Demand-side measures

We shouldn’t think of any demand-side measure as a ‘fix’. There is a minimum consumption per capita per day that we can reasonably expect to achieve over the long term and we cannot (in most countries) cut off supplies, nor can we do the water equivalent of electrical ‘load control’. So, we have to get consumers to reduce their own consumption.

We can do this by regulation (usage restrictions) or by persuasion (financial incentives, public education etc). However, what do these tactics actually do? They do not charge the ‘true cost’ of water. Where meters are installed, tariffs do not create effective financial incentives to conserve water. Instead, water companies rely on usage restrictions but have no way of policing them effectively.

So, how can we engage consumers through persuasion rather than regulation, yet still achieve significant and reliable reductions in demand when we need them? The solution to this must involve information at two levels:

• Evidence that reducing consumption is genuinely necessary
• Information that allows consumers to engage effectively – changing their behaviour in ways that make a significant difference without an unreasonable impact on lifestyle.

The first of these needs public awareness campaigns. But it will certainly help if the water company can demonstrate that it has already done everything it can to minimise its own wastage. Smart meters can help in this.

The second of these needs accurate and time-related consumption information that can only be provided by smart meters.

Where to invest

Firstly, let’s look at the costs of supply-side investment.

Let’s take a real city of 4 million people and do some very rough numbers. The desalination plant to provide 30% increase in supply capacity cost $4bn to build. It wasn’t cost effective to build a smaller one, and it will be necessary to keep it working all the time at an operational cost of, say, $100m each year of its 20+ year life ($2bn in total). So, 30% spare capacity cost $6bn to deliver, or $200m for every percentage point of new water capacity.

Now let’s look at the demand side. How much would smart metering cost for our city of four million people? They live in approximately 1.5m homes (average 2.6 people per home). A smart water meter might cost $150. That’s $225m. Experience from rolling out smart electricity meters suggests that meters make up around 80% of the total project cost. So, our $225m becomes $281m. Let’s add something to cover public awareness campaigns and a big contingency. Call it $400m. Even at this price, we only need to deliver 2% spare capacity to provide comparable value to desalination.

On this evidence, smart water meters seem to have a strong financial case. Supply-side measures just deliver additional water capacity. In contrast, smart meters should deliver spare capacity more cheaply and might bring other benefits too. 

Smart meters might reduce water company operational costs. They will save meter readings and reduce reading errors, so bills can be more frequent and should be challenged less often.

Smart meters might help identify waste. They might be used by the water company to identify network leaks and by householders to identify leaks in their properties. They might help households identify unnecessary consumption and, with the application of a little intelligence, identify inefficient appliances.

Smart water meters are an essential part of the intelligent water network concept (a ‘smart grid’ for water) and, like in electricity, you cannot know all the ways in which the data they provide will help in the future. However, it’s widely accepted that you can’t manage what you don’t measure and, once we have smart metering data, we will surely find new and better ways to manage our water.

Collect the proof

In electricity, smart metering is usually judged on three factors: security of supply (i.e. maintaining the supply-demand balance), cost and carbon emissions. We should look at these same factors in water but broaden ‘carbon emissions’ to ‘total environmental impact’. Smart metering should contribute to security of supply but this needs to be tested. It is probably cheaper than supply-side measures, both to buy and to run. It is almost certainly friendlier to the environment.

So why don’t we try it? Soon, and at scale. Trials might take two years and system implementation might take eight years to complete. If we don’t start now, we may be forced into yet more expensive supply-side measures with yet more environmental impact.  Utilities and governments world-wide seek to manage our vital water resources in the best possible way.  Surely a policy of ‘measure to manage’ should be top of that agenda?

Table - Comparison of demand-side and supply side-measures