Smarter Water Biz to Swell to $16.3B by 2020: Report

water-drop-randysonofrobert-flickrMuch of what information technology can do for the power grid, it can also do for water management. With the smart grid buildout, wireless sensor networks, software, and computing will be used to let utilities track energy use and identify problems in the network in close to real-time, delivering a more efficient grid that’s better equipped to handle renewable resources. According to a new report out from Lux Research, better information about water usage could save utilities money, make water management more efficient and provide one of the simplest solutions to the problem of water scarcity, which scientists have warned will be heightened in coming years by climate change and other factors, such as population growth.

As a result, the tide of water infotech is rising fast, and just as the smart grid buildout could be one of the largest creators of wealth in the decade, there are billions to be made in smarter water systems. Lux finds the market for water IT is set to grow to a $16.3 billion in 2020, up from just $530 million today.

Water distribution often relies on sprawling, complex systems, and water managers today often work with spotty knowledge about what is happening in their systems on a real-time basis. Water information technologies in the five segments identified by Lux — water mapping, infrastructure, quality monitoring, smart meters and smart irrigation — could change that. Benefits would extend not only to utilities, but also to industries, consumers and governments in several ways, says Lux: minimizing unaccounted-for water, reducing consumption, limiting pollution and cutting energy use (water and energy use are closely linked, since it takes energy to treat and deliver water, and most of the time it takes water to create energy).

A number of startups are active in this market and have attracted venture capital investment. But they face high barriers to entry as a result of entrenched companies and utilities preferring to work with known players. The startups that succeed in this space, predicts Lux, will be those providing highly innovative solutions. The research firm notes TraceDetect, which offers a web-based display of real-time arsenic concentrations in drinking water, as an example.

For startups and larger firms alike, Lux sees “the real winners” being companies that provide tech that addresses several or all of the five market segments in an integrated way. The bulk of the profit, meanwhile, will go to systems integrators such as IBM (s IBM), which splashed into water management this year with a new sensor-based system that automatically collects important data (water quality, pump rates, water use at meters), analyzes the data and then packages it into easy-to-consume formats for water mangers to evaluate.

As Eliot Metzger, co-author of a report from the World Resources Institute on the relationship between water and energy use, told us earlier this year, water utilities (like electric utilities) typically plan about 5-10 years in advance, taking into account variables such as population growth, supply and demand — but it’s time to pick up the pace. “Climate change will affect those supplies,” Metzger said, “and I think a lot of the water utilities at least are going to be hit with some surprises.” Integrating water management and IT sooner, rather than later, could help lessen the challenge.

Photo courtesy of Flickr