Paul O’Callaghan, CEO of O2 Environmental and BlueTech Research, shares his views on which water technologies could prosper in the UK.

The globe is facing serious challenges when it comes to water with increasing water scarcity, urbanisation and ageing infrastructure. As a result, there is strong demand for water technologies to meet these challenges and the UK is no exception. For the UK, because it has a relatively stable population and existing infrastructure, O’Callaghan sees an opportunity for technology companies that can reduce the operational costs of assets through increased efficiency and reducing unaccounted-for water loss. Companies involved in pipeline monitoring, such as Syrinix, could have a key role to play. He says that 70 per cent of the costs in water industry are operational and so the majority of the savings can be made in this area.

Another sector of the market that has been earmarked for growth by BlueTech® Research is generating energy from biogas, notably sludge pre-treatment technology. BlueTech® Research estimates that by 2020 up to 20 per cent of all UK sludge will have undergone pre-treatment.

A further opportunity lies in energy and resource recovery. With skyrocketing energy costs and climate change regulation in place, the water companies are increasingly turning to generating their own renewable energy, often through innovative processes. O’Callaghan mentions Zeropex as a company to watch in this area.

In terms of resource recovery, phosphorus and ammonia need to be removed from wastewater before it is returned to the environment. Recovering both phosphorus and ammonia and selling it to farmers as fertiliser can bring a financial windfall.

These drivers in the UK market are reflected by the areas of water technology the money is going into across the world. According to BlueTech® Research, 27 per cent of investment is going into energy and resource recovery, 19 per cent into Smart Water and 11 per cent into nutrient removal. Other technologies that are attracting significant investment include sludge disposal (8 per cent), low-energy desalination (8 per cent) and technologies associated with produced water in the unconventional fossil fuels sector (9 per cent).

Though energy resource and recovery leads the way, O’Callaghan believes Smart Water is attracting a fifth of the investment because it is less capital intensive and technologies involved are ‘investor friendly.’ Because the majority of the costs in the water industry are operational, investors in smart water technologies are tapping into a very large slice of the market.

Increasing interest from overseas companies

The UK water industry is attracting a lot of interest from overseas companies despite it being a largely closed market, dominated by ten water and sewerage companies. North American companies see the UK as a logical beachhead into Europe, according to O’Callaghan. He believes the key innovative water utilities are Thames Water, Severn Trent Water and United Utilities. Several overseas companies are already working with them.

For example, Vancouver-based Ostara Nutrient Recovery Technologies is working closely with Severn Trent Water and Thames Water, while the latter is working with US firm Global Water Resources and Israel-based TaKaDu in water management technology solutions. PWN Technologies, a division of Dutch water utility PWN, is piloting with South West Water a SIX/CeraMac technology, which uses ceramic membranes in the drinking water treatment process.

Global drivers

Regulation is a historical driver in the water technology market but in recent years several new drivers have emerged, O’Callaghan says. One of these is the desire to reuse water locally, in a city or a catchment area. This is driven by a goal of more self-reliance within communities in the face of climate change and the increased water scarcity it is expected to bring, in many regions of the world. Several UK water companies have recently mooted the idea of recycling treated wastewater for drinking – only public mindset may hinder its development.

Another driver is reducing the amount of water used, or removing it all together, from services that have traditionally required it, such as getting rid of waste or in cooling processes. O’Callaghan says there is an increasing focus on technologies such as vacuum sewers and using more non-potable water in order to meet this aim.

Long-term growth attracts big players

Many multinational companies, not traditionally associated with water, are now moving into the market. According to O’Callaghan, a positive medium to long-term outlook on the sector is responsible for this shift, with good prospects of long-term growth.

O’Callaghan sees two types of firms moving into the water sector: companies sitting on large cash reserves and taking a long-term strategic view; and those with core expertise in fields such as advanced material science, biotechnology or filtration – expertise that can competently be applied to the water market. Global giants such as BASF, Fuji, Outotec, Johnson Matthey, Bilfinger, Lockheed Martin and Mann+Hummel are mentioned by O’Callaghan as significant movers into the market.

He says that unlike the first wave of companies moving into the sector, such as GE and Siemens, the new entrants define their ‘right to play’ by focusing on their strengths and entering market areas where they fit.

All statistics in this article are provided by BlueTech Research