October 7, 2020


The Water Sector’s Resilience: Way Ahead of COVID

The water sector was working to meet the myriad of challenges associated with climate change, and then another challenge came along – a global pandemic. COVID-19, tagged 19 due its 2019 start, appears poised to affect many aspects of our lives well into 2021. Water suppliers, major water users and sewage treatment plants are innovating to keep workers safe, ensure the reliability of the water supply, and maintain operations to continue to produce to power, food products, and other goods and services.

 

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The water sector was working to meet the myriad of challenges associated with climate change, and then another challenge came along – a global pandemic. COVID-19, tagged 19 due its 2019 start, appears poised to affect many aspects of our lives well into 2021. Water suppliers, major water users and sewage treatment plants are innovating to keep workers safe, ensure the reliability of the water supply, and maintain operations to continue to produce to power, food products, and other goods and services.



The Water Resources Association of the Delaware River Basin (WRA) held a forum with two experts in water sector innovation – Kendra Morris, Director of Business Development at SUEZ North America, and Bill Malarkey, Managing Partner North America for Amane Advisors, to discuss the most urgent and important challenges facing the water sector, and explore which solutions are most transformative.



Water Sector 1


Utility workers can now manage infrastructure using remote tools such as acoustics to detect leaks, and robots to do the repair. Courtesy Suez North America



It Starts with Keeping People Safe



COVID-19 and the associated requirements for health and safety altered the workplace dramatically for utilities. For plant and field workers, working from home is generally not a possibility; operations must continue, with enhanced safety measures. Supply chain managers are working harder than ever to secure N95 masks and other personal protective equipment (PPE). Shifts have been reorganized to minimize contact among workers, creating smaller teams or pods. This reduces exposure to each individual, and minimizes disruption if someone tests positive. One case of coronavirus means quarantining the entire team. The status of coronavirus cases in a community is factored into work plans, because field workers do have interactions with the community during testing, construction, and other activities. Field work is delayed until virus counts in a community decline, when possible.



These changes require close coordination, and constant communication. The changing protocols stretch into workers’ personal lives; if people vacation in high risk states they must quarantine upon return.



Approximately half of the US workforce can work from home, according to Stanford economist Nicholas Bloom. For utilities, not as many workers can transition to remote work. SUEZ North America, which owns and operates 15 water and wastewater utilities, and manages 69 municipal and industrial water and wastewater systems, is a good example. “Thirty percent of our workforce went virtual in a week” said Kendra, “we were able to do that with a suite of tools already in place.”



The COVID Crisis, the Innovation Opportunity



Both Kendra and Bill emphasized the sense of urgency the water sector has to safely maintain operations, and how transformation due to COVID fits into a larger trend of digitization and enhanced efficiency.



“Business continuity during the pandemic is the most urgent need; to keep water flowing to hospitals and homes, as well as to industrial and commercial customers.” said Kendra. Simultaneously, “water providers must continue to strategically invest in systems, repairing and upgrading to ensure reliability, safety and affordability. Regular investment prevents large rate increases.”



"Digital transformation of water utilities was well underway. COVID just accelerated that."


– Kendra Morris, Director SUEZ North America



“The link between investment and affordability is a growing issue,” added Bill. “Rate increases are being resisted or delayed in some cases due to affordability concerns. Smart asset management is finding out where efficiencies are on the operating side. Every dollar you can save on the operating side translates to six or seven dollars that you can put into capex and keep it rate neutral.”



A range of technical innovations offers opportunities to decrease costs, and minimize worker exposure. Rapid assessment technology using acoustics, combined with trenchless pipe repair techniques, make repairs more cost effective and less disruptive. Kendra explained, “we are able to send robots and tools into pipes to fix leaks without tearing up roads.”



With operations and capital improvements, “digitization drives efficiency,” said Bill. Machine learning and Artificial Intelligence (AI) are increasingly being used to develop replacement and repair plans.



Kendra agreed, “digital transformation of water utilities was well underway. COVID just accelerated that.”



The American Water Resources Association predicted back in April that the financial impact of the COVID-19 crisis on drinking water and wastewater utilities would exceed $27 billion due to drops in customer payments, and associated cascading effects. The financial pressure on utilities goes beyond saving money, and the innovation is not just technical. “At Amane, said Bill, “we are working with several utilities who want to tap other sources of revenue beyond their core utility business. Rental fees on reservoirs, cell towers on water tanks, solar generation -- there are a lot of ways to generate other revenues that can mitigate the need for rate hikes.”



The water sector is seeing different types of consolidation: true ownership consolidation; utilities joining together into regional authorities; and virtual consolidation where a management team provides policy support, data analysis, and other resources and operators have local control. “Digitization makes this more feasible; we can do more remotely, share field resources, bundle procurement for chemicals and machinery. Ultimately, having 50 plus thousand water utilities is not financially viable,” said Bill.



Integrating Operational Efficiency While Maintaining Reliability



Identifying the right tools is just the first step in successful deployment. “Change management is key,” advised Kendra. “Make sure users know how to make the best use of the tools, and how to leverage the power of the data gathered. Analyze the data and make the data actionable.”



Kendra and Bill agreed that integrating innovative technology expands training requirements for workers. New skill sets are needed. Furthermore, the pivot to a more internet of things (IOT) approach changes the profile for new hires, while helping to address shortfalls in the workforce.



“Sometimes technology and efficiency are about cost cutting. Sometimes technology is making up for attrition in the workforce; utilities are being forced to digitize as workers retire. Technology can also enhance the ability to capture revenue, with better meter reading for example,” said Bill.



Bill focused on three main cost drivers: labor, power, and chemicals. “How can you tighten costs for each? Implementing energy efficiency measures is an excellent starting point.”



Ongoing reliability and resilience in the water industry, Kendra said, hinges on “being able to collect data on systems, and translate that data into something you can use to improve your system. We need to use technology in a whole new way.”



Quick Wins



Participants asked Kendra and Bill to recommend quick wins utilities can implement now given the current environment.



“We are working with utilities to accelerate technology programs,” said Bill. “One utility took every project in their technology pipeline slated for the next 18 months and implemented them all within six weeks.” With another utility all customer service workers had to go remote. “Within a week, they transitioned the entire workforce to home with extra focus and determination.”



Kendra recommended trenchless sewer repairs as “a quick win if you have the data.”



Water Sector 2


Courtesy Amane Advisors



Stormwater Strategies



Stormwater management offers utilities unique challenges and opportunities. Utilities must consider the entire watershed, well beyond the plants and pipes. The infrastructure can be grey (e.g. concrete) or green (e.g. rain gardens). Kendra said “solutions tend to be two-fold. First, data and analytics: mapping Geographical Information Systems (GIS) information; employing an array of sensors; and analyzing the data and making it actionable. Second, infrastructure improvements: fixing cracks in pipe, identifying blockages using acoustic technology to reduce overflows by keeping pipes clean, etc.”



South Bend Indiana partnered with the University of Notre Dame to solve the city’s sewer overflow problem. “They developed a sensor and real-time decision support system call Emnet that channels flows to other portions of the network when needed, avoiding huge capex costs,” said Bill. The system reduced South Bend’s overflow by 70 percent. “Green infrastructure doesn’t replace all grey infrastructure, but it can significantly reduce the capex you have to spend. Swales, channeling runoff, ponds, all these are useful tools.”



Prince Georges County, Maryland paired up with Corvias to create the Clean Water Partnership, a 30 year design build program funded by state loans and Clean Water Act compliance fees. Corvias is also working with the City of Chester, tapping more conventional funding like municipal financing and Pennvest loans. The big questions holding back public-private partnerships (P3s) for stormwater are 1) who pays, and 2) is it profitable. Sometimes, the main question is what is affordable.



“There are numerous municipalities with combined sewer overflows (CSOs) in NJ,” said Kendra. “They are developing long term control plans which can include green infrastructure. SUEZ runs the water and wastewater systems for the City of Bayonne, which is considering green infrastructure and weight the costs and benefits.”



“Philadelphia is one of the model cities in integrating green infrastructure to address to stormwater issues,” Bill emphasized.



“They had the stormwater fee,” added Kendra, “which helped.”



The DC Water and Sewer Authority, and its investors, Goldman Sachs and Calvert Foundation, were pioneers with their first ever Environmental Impact Bond. “DC was facing a massive grey infrastructure bill,” said Bill. “They went with a pilot program funded through green bonds paid back to investors based on performance metrics. Initial returns are excellent.” Where else can that model work?



“You need strong political leaders,” noted Kendra.



COVID, What Changes Will be Long Term?



“None of challenges from COVID are necessarily new, but the pandemic has put them into sharper focus. The need to go digital has been accelerated,” said Bill. This shift will be reflected in the type of people who get hired. “Advances in the sophistication of tools in the water industry change the skills workers need. There is greater demand for IT savvy workers, for technical and data analysis skills, field and plant workers included.”



"Advances in sophistication of tools in the water industry change the skills workers need. There is a greater demand for IT savvy workers, for technical and data analysis skills, field and plan workers included."


– Bill Malarkey, Managing Partner North America, Amane Advisors



Kendra emphasized the need for change management and technical skill sets to effectively deploy new tools, and train workers to use those tools. “Mapping with GIS, for example,” Kendra elaborated. “We are mapping everything. You can now point your phone at the fire hydrant, click the button, and the data location goes into the GIS database along with the infrastructure conditions the worker entered. When bringing in young workers, we have an opportunity to leverage their familiarity with digital technology.”



“This is a resilient industry. SUEZ did not lay anyone off during COVID. The stability of the work, combined with the younger generations’ sustainability, environmental protection, and circular economy values go hand in hand. The water sector will be more front and center as a career option,” Kendra summarized.



To meet infrastructure needs long term, we need “to take a more long term orientation,” noted Bill. “People in the utility sector already have this. I am referring to long term vision on a policy level, understanding that it takes money to create or refurbish infrastructure. It will cost money. It may be up to local and regional leaders to do this.”



Federal leadership can make a difference. COVID will drive continued federal stimulus. “We hope,” said Bill, “that the stimulus includes an infrastructure component, and specifically a water component. We welcome infrastructure stimulus with long term focus.”






About the Experts



Water Sector 3


Kendra Morris, Director of Business Development North America


Kendra Morris is Director of Business Development and is responsible for partnering with municipal leaders to bring sustainable and resilient water solutions to our communities. At SUEZ North America, she leads cross-functional teams to develop and execute commercial strategy for new contract operations.


Kendra's background is in infrastructure investment in environmental, social and transportation public private partnerships. She has a Bachelor of Arts in Economics and Political Science and a Master of City Planning both from the University of Pennsylvania.



Water Sector 4


Bill Malarkey, Managing Partner North America Region


Bill Malarkey is a managing partner with Amane Advisors, an international management consulting firm focused on the water sector. He is based in Philadelphia and advises clients in a variety of segments across the water sector.


Bill has over two decades of experience in international water and infrastructure markets, particularly in the areas of strategy development, mergers & acquisitions, public-private partnerships.


He has served as an Advisory Board Member for the Urban Water Council of the US Conference of Mayors and as Vice Chairman of the Water Institute of the National Council for Public-Private Partnerships. He earned his BS and JD degrees at Georgetown University, and holds an LL.M. degree from the University of Heidelberg in Germany.



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