Water & Wastewater Treatment

WWT May 2019

Water & Wastewater Treatment Magazine

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www.wwtonline.co.uk | WWT | MAY 2019 | 21 I N A S S O C I A T I O N W I T H transi on of u li es. Rated on a scale of 1 to 10, respondents believe compe ve pressures will increase from 6.4 currently to 7.0 in fi ve years. Similarly, the evolving role of the consumer will shi from 6.1 currently to 7.4 by 2024. Other major areas likely to impact u li es include changing policy and regula on (6.1 to 7.2), sustainability considera ons (5.7 to 7.1) and Big Data (5.6 to 7.1). And it is clear that most businesses an cipate the eff ect of these trends to intensify over the next fi ve years. On average, the impact of industry trends is expected to be 23 per cent higher by 2024, according to the survey. Both energy and water companies are grappling with environmental, security and aff ordability requirements at a me when the poli cal landscape remains uncertain and the long- term impact on business is unclear. In the energy sector, the UK's controversial nuclear power strategy is fraught with obstacles. Following a series of blows to the government's commitment to a new genera on of reactors, Hinkley Point C remains the only project currently under construc on. Unsurprisingly, this has raised concerns about how the UK's long-term baseload will be provided. For the water sector, the future is no less challenging. Just last month (19 March), the Environment Agency's chief execu ve, Sir James Bevan, delivered a rallying speech at the annual Waterwise conference in which he warned chronic water shortages could plunge England into the "jaws of death". Adding to the complexity of industry trends impac ng u li es, organisa onal stability is a signifi cant challenge faced by both energy and water companies. "In the energy market, conven onal business models are increasingly being challenged by agile businesses adept at naviga ng the new energy landscape," says Ted Hopcro , energy and u li es expert, PA Consul ng. "For water companies, the background threat of re-na onalisa on, aligned with what looks to be a tough price control, is causing companies to review their business fundamentals." According to Hopcro , both water and energy companies are seeing regulators tackling the cost of capital with a renewed vigour. There is a clear determina on not to repeat the post- fi nancial crash scenario where perpetual low interest rates provided great opportuni es for asset businesses. U li es are facing immense cost pressures at a me when customers are also expec ng an increasingly personalised service. Toby Siddall, managing director and UKI u li es lead at Accenture, says that energy suppliers in par cular are tackling a complicated environment. Suppliers must respond to the price cap, while also mee ng obliga ons from the smart meter rollout, and commitments to faster switching in a marketplace awash with new entrants. NEW APPOINTMENTS AND VARIATIONS SCHEME Ofwat's New Appointments and Varia ons (NAVs) scheme allows limited companies to provide water and/ or sewerage services to customers in an area which was previously provided by the incumbent monopoly provider. A new appointment is made when a limited company is appointed by the regulator to provide water and/or sewerage services for a specifi c geographic area. A varia on is where an exis ng appointed company, described as an "appointee", asks Ofwat to vary its appointment so it can extend the areas it provides services to. A new appointee has the same du es and responsibili es as the previous statutory water company. A Nav, therefore, involves one company replacing another as the appointee for a specifi c geographic area. Ofwat introduced the scheme to promote compe on across the water industry, while encouraging effi ciency, innova on and lower costs. CONTRACTORS AND SUPPLY CHAIN TRANSITION To be er support transi oning u li es as they tackle the challenges ahead, the wider supply chain is similarly restructuring and diversifying. This shi is illustrated by engineering fi rm Black & Veatch which recently launched a smart maintenance business to be er support its u lity clients. The new off ering builds on the company's technology- led asset management consul ng experience to create digitally-enabled onsite maintenance teams. The business will combine established technology-driven maintenance methodologies and smarter instrumenta on, control and automa on technology. This will be enabled by Black & Veatch's own data analy cs capabili es and visualisa on dashboards; and the capabili es of its new ar fi cial intelligence and machine learning strategic partner Emagin. Development of the smart maintenance business is a further extension of Black & Veatch's UK u lity off ering into the infrastructure and capital maintenance sphere. By focusing ini ally on water but with a view to broadening to other sectors, the new venture also supports a drive for greater diversifi ca on across the business.

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