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Wednesday, July 23, 2014

Modernization of Water Infrastructure Means Enormous Equipment Changes

The U.S. water supply and wastewater systems have been the focus of recent legislation intended to upgrade their infrastructure and, in the case of potable water, protect quality. As a result, manufacturers of valves, pumps, and actuators, along with digital controls that improve their performance, could see major demand for their equipment in the coming years, as public and private enterprises launch revitalization projects.

Chief among the legislation is the Water Infrastructure Finance and Innovation Act (WIFIA). WIFIA, which is part of the Water Resources Reform and Development Act that President Barack Obama signed on June 10, will provide, through the Environmental Protection Agency, low-cost federal credit assistance for water and wastewater infrastructure loans, among other project expenditures, that for the most part exceed $20 million.

The frequency of broken water pipes -- some of which have been in use for decades or centuries -- is driving federal programs to incentivize infrastructure revitalization. Credit: U.S. Water Alliance

The frequency of broken water pipes — some of which have been in use for decades or centuries — is driving federal programs to incentivize infrastructure revitalization. Credit: U.S. Water Alliance

According to a report in WaterWorld magazine, the credit assistance will reduce the cost of local projects. This is important because 70 percent of U.S. communities use bonds to finance infrastructure work, according to the American Water Works Association (AWWA), an industry group.

AWWA says that reducing the cost of borrowing by 2.5 percent on a 30-year loan can lower total project cost by 26 percent. Credit guarantees secured through WIFIA perform essentially as grants, AWWA explains. However, since the low-interest loans will be repaid to the government, “they will not add to the long-term deficit” the group says — nor, presumably, to the federal tax bill.

The need for infrastructure repair and modernization of water systems is enormous. Much of what the United States has in place dates back at least 100 years. Pipe replacement will be the major need when it comes to rehabilitating systems — and with new pipe networks will come demand for valves, pumps, actuators, and controls.

The AWWA forecasts in a study that infrastructure projects involving potable water alone will cost more than $1 trillion between 2010 and 2035. Through 2050, AWWA’s estimate exceeds $1.7 trillion. The study adds that the $13 billion of current average annual spending in the United States on water infrastructure will by the 2040s rise to $30 billion (in 2010 dollars).

This investment, moreover, must be ongoing to maintain the performance of water systems, much less meet demand for new infrastructure, which will to a large degree be driven by demographics (more people, population shifts, etc).

Sustained spending on new and modernized infrastructure will for the most part be locally funded. As a result, consumers can expect to see water bills increase by $300 to $550 annually (in 2010 dollars), AWWA predicts. This is one area of opportunity for manufacturers of smart controls. As water costs rise, consumers will want precise, current information on consumption, as they seek ways to reduce their bills — a trend seen with other cost-sensitive utilities such as electricity.

In fact, a report last year by Global Water Technologies Inc. of Indianapolis, echoed this point: “[C]ustomers will start demanding better information on their usage and ways to lower bills. Instead of being charged for hundreds of cubic feet [of water] used 60 days ago, they will want to know how many gallons they are using this week.”

Consumers and utilities will also want valves, pumps, and actuators that reduce or eliminate leaks and other waste. Global Water Technologies’ report stated that 20 percent of potable water is lost before it reaches consumers. As “we are entering a new period where water prices will increase on a regular basis, losing 20 percent of that … product before it reaches customers will no longer be sustainable.”

In addition to the value of smart controls for consumers and utilities, the report predicts that smart grid technology will be a part of new and upgraded infrastructure projects. And this will, of course, rely on advanced engineering design and control technology from manufacturers of fluid flow equipment.

Consultant Ernst & Young has observed that the United States is among the countries that are adopting and implementing advanced water and wastewater strategies. These developments require “innovative market mechanisms,” the company says, and “cutting-edge engineering practices and efficiency technologies, along with standards and regulations that enhance accountability.”

With WIFIA in place and accountability for costs and expenditures inevitable, equipment and controls manufacturers will be salivating at the opportunities that will emerge for their products in water systems and develop strategies to exploit them.

 

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