Originally published on the Alliance for Water Efficiency Financing Sustainable Water Blog (19/10/15)
What if your building, home or office, was also a water company that
could enable innovative decentralized water management approaches? In
the UK and Australia, changes to the water competition regime are enabling new
companies to provide water services at an individual building scale, for
neighborhoods and towns or as strategic new supplies available for existing
water companies. This post explains the approaches behind these at the building
and neighborhood scale and outlines two case studies.
A fourth generation of water infrastructure has been identified by the Institute for
Sustainable Futures Sydney as an emerging, efficient, decentralized,
integrated and fit-for-purpose approach (Figure below). We have seen increasing
costs from centralized options, including desalination and other drought
resilient measures, that can no longer be afforded by utilities and local
government in a US context or passed on to customers in an Australian and UK
context. Enabling competition in water service provision is one model that can
finance this fourth sector of water infrastructure.
Figure: Four
generations of water infrastructure (White and Turner, 2014)
Competition explained
In a previous post, I outlined retail competition as the customer-facing
services that can help improve water efficiency. Upstream competition (in the
economic, not catchment or watershed sense) includes sourcing and developing
water resources for public supply, water and sewerage treatment services, or
managing a network to transport water and wastewater (see orange arrows in
figure below).
Figure: Overview of
the value chain and difference between upstream and retail competition
Examples of competition could include, but aren’t limited to:
●
A new supplier of water and wastewater for a property
development using recycled water or a new source of water
●
A wastewater recycling operator who provides a source of
water for a new factory, which could include “mining” and treating water from
an existing sewer system
●
A local authority that harvests stormwater through
sustainable drainage systems/ green infrastructure and provides this as a
source of water to an existing water supplier
●
An innovative demand management company that reduces
commercial or domestic demand for water and sells this to a utility as a
“source” of water
An analogy from the energy sector could be the selling of renewable
energy into the grid. For example a new wind farm could be built by a private
developer and the existing energy utility would buy from this. Or a new factory
could purchase energy from this wind farm directly to augment its power supply.
The situation for water can be more complicated due to the different levels of
water quality matched against different end water uses.
Case Study: Central
Park Sydney
This innovative new development is served by Central Park Water, servicing 4,000 residents and
15,000 workers and visitors daily. The world’s largest membrane bioreactor
system, with ultraviolet and reverse osmosis treatment in the basement of the
building, provides water to 50-70% of
non-potable uses including toilet flushing, washing machine use and
garden/green wall irrigation.
Figure: Central Park
Sydney showing green walls (Photo: Hans Veneman, Creative Commons, Flickr)
●
Rainwater from roofs
●
Storm water from impermeable surfaces/planter box drainage
●
Groundwater from basement drainage systems
●
Sewage from an adjacent public sewer
●
Sewage from all buildings within the Central Park
community
●
Drinking water from the public water main
Wider benefits stated by Central Park Water include lower infrastructure
charges for developers, quicker land release speeds for development and lower
bills for customers. Central Park Water also supply recycled water to
surrounding buildings, including the Institute for Sustainable Technology.
A range of similar schemes are developing in New South Wales, including
an additional eight communities and more than
25,000 dwellings. As of April 2015, the economic regulator IPART reported 28 current licences under the Water
Industry Competition Act 2006.
Case Study: Inset
appointments UK
Through the process of inset appointments, Albion Water was one of the
first companies in the UK to provide an alternative water service to a new
development. At Knowle Village, they supplied the
wastewater and sustainable drainage infrastructure to 750 residential homes
with a saving of £2m for the developer and reduced customer tariffs compared
with the existing monopoly water supplier.
After six years, research into wetland wastewater treatment with
Cranfield University has identified a wider range of benefits, including
improved water quality and biodiversity outcomes along with improved monitoring
of activities to reduce energy use and managing flood risk during storm events.
As of August 2015, there are 5 small water and
sewerage companies, including Albion
Water, providing these inset schemes in the UK.
Learning from case
studies and questions for competition
The case studies above have been enabled by competition regimes. These
require innovation in the ways we see customers and move away from traditional
centralized water utility regimes. The case studies also link with transitions
towards resilience by providing semi-autonomous
areas
that are more resilient themselves and reduce the impact of new development on
existing centralized systems. The UK Water Efficiency Network (WATEF) is currently
considering these issues through its service innovation technical committee,
which I chair. Further innovation could include companies providing water efficiency
retrofits of existing areas with guaranteed water savings similar to water neutrality approaches.
Competition isn’t the only option. An alternative community model is
taking shape in the South West of England. This is called Rain Share and involves
connecting those with excess water, including roof runoff, with those who need
water. The first example of this will be
between householders and an adjacent allotment for growing vegetables. In the
UK, innovative approaches on water reuse have been implemented by water
companies in the North West Cambridge development and at
the London Olympic Park. However, both
schemes required innovative thinking from water companies but also clear
partnerships with the developer, the University for Cambridge and the Olympic
Development Authority in London.
Competition may provide a way forward for development of innovative
water supply options. This has been applied within the privatized UK context,
as well as the public utilities in Australia. Some questions that arise are:
●
Will upstream competition be successful in the UK and
Australia in the face of long-term maintenance and operation requirements?
●
How can we consider upstream competition and nested
semi-autonomous water supplies within wider planning to ensure optimal
economic, social and environmental outcomes?
●
Will community based approaches or those led by more
institutional developers (e.g. universities or legacy sites) provide the same
level of innovation as new private water companies?
●
Can existing monopoly water service companies provide similar
innovations through partnership working and funding approaches?
Notes and further information:
●
The Water Industry Act 1991 in
England enables customers using over 50 million litres of water per year to be
supplied by a new water service company or gain access to wholesale prices form
the current provider in the area. The Water Act 2014 opens this up to
enable the supply of water to an existing water utility by an entity or person
other than a water utility.
●
The Water Industry
Competition Act 2006 in New South Wales sets out similar regions for this
state in Australia. The act provides for licensing third party providers of
water services, access for these third parties to existing infrastructure and
enables the regulator IPART to arbitrate disputes in this area.
