In a time when sustainability is at the forefront of public agenda, water companies are under a great deal of pressure to find affordable solutions which also protect the environment. But when faced with the scale of the cost cutting challenge set by the regulator Ofwat, you can see where the difficulty lies. So how can water companies deliver more for less?
To rise to the sustainability challenge, water companies are met with the conundrum of having to potentially cut back on anticipated programmes and not live up to promises, or raise bills at a time when customer affordability is particularly sensitive in the wake of Covid-19. Pair that with the fact that we are seeing an upward pressure on the cost of raw materials, construction materials and labour, as we enter an inflationary environment.
Water companies are already being called out for increases in spend, when the reality is many are striving to do the right thing and put sustainability at the heart of their strategies, introducing initiatives such as smart asset operations and large investment in clean energy. Ultimately, the challenge has to be met by innovation.
How to attract bright minds
One trend emerging in AMP7 is water companies are focusing on building in house expert client teams, with services that had historically been outsourced. Many see this as “owning the knowledge” of their assets and feel that greater ownership equates to more control over the successful delivery of programmes. A challenge here is that the water industry has becoming a diminishingly attractive place for the supplier market in certain areas. So how do water companies make their expert client aspirations work without stifling innovation from across industry? And how does the industry attract bright minds who may end up finding companies like Amazon more appealing?
It is important that consulting companies remain relevant by finding ways to show more niche and specialist areas that water companies may not be best equipped do themselves. One example of this is having global knowledge and expertise, as well as insight into different industries. Consultants are good at finding the right people to deliver outcomes, which could be described as ‘innovation detectives’. After all, many exciting innovations already exist and are not being used to their full advantage. But with the support of consultants who really understand a problem, they can use their global reach and multi-sector knowledge to detect the biggest “bang for your buck”.
Innovation is key
Looking at other countries, we can see that Spain and Australia are being particularly innovative, both countries being water scarce environments with a lot of relevant capability. Australia has developed a base of knowledge around maximizing value and intrinsic energy of wastewater processes, for example hydrogen from wastewater processing. Meanwhile, countries around the world are looking to the UK to see how we deliver our programmes. Practices such as raising green finance through natural capital could certainly be explored further, as well as considering land-based solutions and making the most of the land bank owned by the water companies.
As water companies are acutely aware, their relationship with customers has evolved in recent years. As part of this process, companies need to become more sophisticated at demonstrating value to multiple stakeholders, such as the end users, employees and communities who may see value in different ways. Customers, for instance, are now able to contact water companies publicly with their concerns via social media. It is fascinating to see how start-ups such as ISeeChange can essentially crowd source feedback utilities can use to target network investment.
And increasingly, apps are being developed to ensure customers are able to see how much water they’re using and this could go further by showing the impact on the environment. It is certainly important to consider how digital tools can bring water companies closer to their end users, who are increasingly – and understandably – concerned about where their money is going. Ultimately, we must continue our journey to improve transparency around where the customers’ money is being spent. Understanding their concerns and responding will be fundamental.
