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www.britishwater.co.uk
WHERE WE are GOING: THE GLOBAL WATER MARKET David Lloyd Owen, Envisager
2009 is already looking like the Curate’s egg of a year “good in parts”. The good news is that sterling’s subdued exchange rate makes this a good time for our exporters. The bad news is that with the British markets for water related goods and services in a subdued state and the effects of the credit crunch worldwide, we need every bit of help we can get. Still, the highly cyclical (and competitive) nature of doing business here means that many companies are at least used to adversity.
Looking at the dramatic slowdown in major projects since the second half of 2008, it is evident that the financing is becoming a crucial issue. The original idea behind the World Bank’s water and wastewater concession model was to mobilise international funds that in turn would get the new infrastructure developed. Now the difficulty of raising these funds is shifting the emphasis towards using municipal and government backed funds and implementing their use through PSP / PPP contracts. But funding flows are a universal concern and so new approaches are needed.
Recessions challenge orthodoxies. Out of the traumas of the 1990-93 slowdown, came the mass adoption of mobile telephony and in its turn, the Internet. Is it the turn for water and wastewater technologies? The need is immense: we face a crunch between what people are prepared to pay for their services and what they expect in terms of service delivery and that is before you start factoring in climate and demographic change.
It will be fascinating to see what emerges from the explosion of CleanTech venture capital funding over the past five years. For now, the venture capital sector has to concentrate on nursing its investments through the recession until markets and market confidence recover enough to regain their appetite for new technology. That is unlikely before 2010-11 and the
Photo: Envirogene
companies that do indeed survive will be well worth watching.
A lot of our more advanced technologies are maturing, moving from closely guarded corporate breakthroughs to commodity products. Membrane bioreactors were revolutionary in the 1990s and are now part of the engineer’s package. While there is little scope for making membranes perform better, much can be done in the way they are applied.
This looks set to result in two major developments. Firstly, as technologies mature the current market conditions will force companies to merge or go under (‘buy or die’) and secondly, the onus will be on technology developers to assemble various well tried and tested technologies in innovative ways for innovative applications in order to deliver real improvements in price and performance.
One great change has been in various companies sense of pragmatic awareness. At the early Pinsent Masons ‘Wet Events’
for early stage water companies seeking new funding, we were told that their kit would do the task faster, more accurately and with more panache. Over the last year, the companies are telling us they will do at least as well as the incumbents, but for less. Twenty years ago, the mindset looked towards what grand environmental ambitions might achieve. Today, the emphasis lies on addressing what needs to be done and making it economically worthwhile to do so.
Opportunities and growth in international markets will be far more country-specific for the next two years. The overall need (if not always desire) to invest in water and wastewater infrastructure is there, but financial issues take precedence. So Dubai’s ambitions are on hold for now but other countries such as Tunisia are continuing to develop new projects. In Europe, we are awaiting the first hard data on what the Water Framework Directive really will cost to achieve and when this can be realistically attained. While the original 2012-15 compliance dates look like an initial step, the
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