In the past, the water and wastewater industries were relatively slow moving. Their technologies traditionally have been used for decades and trends that have marked the business for many years — water conservation, reduced chemical usage, and reduced energy consumption — are likely to continue.

But the fast-changing pace of technology is having its impact. What we’re likely to see over the next few years in the industry is significant growth in data collection and the management of that data, more technology used in the areas of water quality and purity, and solutions that address contaminant-specific problems or areas of concern.

Geographically, we’re seeing water-related industrial demand in underdeveloped regions leapfrog to newer technologies. Specifically, China will see demand coming from all industry sectors, with the Asia-Pacific region more generally seeing demand from the power generation and semiconductor industries, as well as pharmaceuticals and biotechnology. In Europe, biotech and pharmaceuticals clearly are areas where there seems to be the most attention, largely due to the strong environmental pressure for reduced carbon footprints, reduced chemical usage, and energy conservation.

In North America, all markets are focusing on wastewater, energy consumption, and converting waste to energy. And with the move of manufacturing back to the U.S. in certain sectors, volume is picking up. In the Middle East, demand is coming from growth in swimming pools and theme parks. The region with the least expected growth is South America.

Industrial Water and the Internet of Things

Equipment, components, and services constitute the three chief segments of the water industry, and it is in the components area where technology change probably is coming most quickly. Components — especially in the instrumentation and controls area — are where the Internet of Things (IoT) is gaining the most traction. It is now impossible for component makers to sell a control device or an instrument that does not have the ability to communicate either with a central computer system or to the cloud via some connected remote sensing device.

The next step in IoT will involve data collection, analysis, and then service, where on-site repairs will be integrated into the process since most problems detected by data collection and analysis can’t be remedied remotely.

The area of predictive analytics now allows service companies to be proactive and anticipate the service needs of customers based on data gathered remotely and then analyzed. As fewer end users now have water experts on staff, there is a growing reliance on service providers — increasingly armed with remote sensing devices and predictive analytics — to provide that level of expertise.

Wastewater Changes

Other big changes are coming to wastewater. In the past, wastewater was simply a cost, and often a regulatory headache. Now there is the possibility of reusing and recycling wastewater and even using it to generate energy. The semiconductor industry, which requires a prodigious amount of water to manufacture chips, now is building manufacturing facilities in the deserts of Arizona because it has spent a significant amount of money on recycling and has reduced waste drastically.

Another change is the substitution of technology for chemicals in the treatment of wastewater. Electrochemical technologies (example: electrodialysis) can make more than 80% of treated water reusable. Ultraviolet light and ozone also are being used in place of chemicals.

These changes, when considered together, could form the basis for greater industry consolidation, particularly at the component and service levels, which increasingly will be viewed as complementary. Companies that can introduce, maintain, and service interconnected products and processes will have an edge in the marketplace. There is also room for increasing regional specialization, which permits greater levels of service over a more concentrated installation base.

From an investor point of view, therefore, the winners are likely to be those water and wastewater companies that have a differentiated strategy and a laser-like focus on a region and application. Providing service in the specific and general senses of the term will become essential as customers will be looking for solution providers, not just vendors.

About Stefan Abramo
Stefan Abramo, currently an independent business consultant, was formerly Vice President and General Manager at Evoqua Water Technologies for over 26 years. He also worked for Evoqua’s predecessor companies, USFilter, Veolia, and Siemens Water. Prior to working for Evoqua, he was Vice President of Operations at Prosys Corp., from June 1989 until December 1994.

This water industry article is adapted from a GLG teleconference. If you would like access to events like this or would like to speak with water industry experts like Stefan Abramo or any of our more than 900,000 industry experts, contact us.