ONE DAY FOR A DIGITAL WATER FUTURE - XPV Water …€¦ · ONE DAY FOR A DIGITAL WATER FUTURE A one-of-a-kind gathering of leaders from a diverse set of industries ... COVER PHOTO

ONE DAY FOR A DIGITAL WATER FUTUREA one-of-a-kind gathering of leaders from a diverse set of industries shaping the digital future of water

XPV WATER PARTNERS + WELLS FARGO • 2

CONTENTSBringing Digital Technologies To The Water Sector 3

Industry Background 4

Digital Water Leaders Roundtable 2016 5

Roundtable Recommendations 8

Follow-On Actions 9

Future Call-To-Action: One Day For A Digital Water Future 10

The One Night For One Drop Event 11

Notes From The Digital Water Leaders Roundtable Discussions 2016 12

COVER PHOTO CREDIT CHRISTINA RUSSO

PHOTO CREDIT JOHN ROHLING


BRINGING DIGITAL TECHNOLOGIES TO THE WATER SECTOR


The last seminal event in the sector was arguably in 1969,

when the heavily polluted Cuyahoga River caught on fire,

sparking the eventual passage of the Clean Water Act

in 1972. Billions of dollars of investment in cleaning up

US waterways followed, and water issues subsequently

faded from national attention.

Now, after a steep decline in public funding and decades

of relative obscurity in public policy circles, water has

recently gained national prominence once again. This

time, the seminal event has been the Flint, Michigan

water quality crisis, which has captured national

attention and crystallized concerns

about the risk of poorly managed water

infrastructure. Rising attention to water

is also flowing from overarching worries

about the impacts of climate change,

exemplified by deep drought in the west

and historic flooding in the south.

Solving these water infrastructure and scarcity challenges

is expected to cost many billions of dollars, by some

estimates as high as one trillion dollars, in the US alone.

However, unlike the response to the water crisis in the

1970s, the US federal government is not in a position to

provide a major contribution to funding these upgrades.

The traditional, costly approach to fixing infrastructure

has become increasingly unavailable at the state and

local level as well. As a result, utilities, cities, and federal

regulators are realizing that more creative, and more

cost-effective, technology and business-model solutions

will be needed.

While advancements in water treatment and

infrastructure repair technologies are important, we

believe that one of the most critical solutions for

today’s water challenges lies outside the water sector,

in the technology transformation that is rapidly taking

place across the globe.

Indeed, most sectors change from the outside in,

especially in today’s digitally driven world. The water

sector will be no exception to this rule. Today, we

live amid the most rapid technological change in the

history of mankind. The pervasiveness of the internet

and mobile technologies have already transformed how

we all work and play. As in other sectors, technological

developments such as cloud computing, big data, the

Internet of Things (IoT), smart sensors, and machine

learning will have a significant impact on how we

manage and use water. These advances also offer the

opportunity to meet the large capital needs in the sector

far more efficiently than is currently envisioned; as well

as changing how utilities, industrial users, farmers, and

consumers all think about water.

To get ahead of the curve and accelerate innovation in

the water sector, XPV Water Partners and Wells Fargo

Bank recently brought together a diverse set of leaders

from, from industry and government, to learn from

each other; and develop an agenda to help shape how

digital technologies and other outside influences will

profoundly change how we manage the world’s most

precious resource.

INDUSTRY BACKGROUND

UNTIL RECENTLY, WATER HAD NOT BEEN A LEADING NATIONAL ISSUE IN THE US FOR MORE THAN 40 YEARS.

after a steep decline in public funding and

decades of relative obscurity in public

policy circles, water has recently gained

national prominence once again.

AN XPV WATER PARTNERS AND WELLS FARGO WHITE PAPER MAY 2016

DIGITAL WATER LEADERS ROUNDTABLE 2016


Keynoting the discussion were Anthony Lacavera,

founder and chairman of Globalive Capital,

a technology accelerator for emerging tech firms,

and former chairman and CEO of Wind Mobile,

which he sold to Shaw Communications

for $1.6 billion in 2015 — and Minh

Le, Senior Advisor in the Obama White

House and former Director of the Solar

Technologies Office in the Department of

Energy.

Mr. Lacavera noted how the Internet

of Things has been made possible by

the logarithmic acceleration of mobile

network speed, with next generation 5G wireless

expected to be up to 100 times faster than the

current generation of 4G LTE, which is in turn 100

times faster than earlier 3G.

This transmission speed has in turn dramatically

increased the number of connected devices collecting and

communicating data, which now outnumber people. Mr.

Lacavera noted that most organizations

are only in the early stages of mining, storing,

and analyzing this massive amount of new data, and

ultimately using it to create decision-making applications

that will transform organizations.

Mr. Le provided an update on the White House Water

Technology Innovation Strategy released in December

2015, related to the administration’s climate change

initiatives. Key activities include better data coordination

around water use and availability, and increasing

water supplies and water efficiency through technology

innovation. He also asked the group for input to take

back for the subsequent White House Summit on Water

that was to be held later that month.

In March 2016, in conjunction with Cirque du Soleil’s “One Night for One Drop” annual fundraising event in Las Vegas, XPV and Wells Fargo convened for an inaugural Digital Water Leaders Roundtable with a select group of high-level executives from water technology, consulting and engineering, public and private sector water utilities, NGOs, and the financial markets.

This transmission speed has in

turn dramatically increased the

number of connected devices

collecting and communicating data, which now

outnumber people.

The Number Of Connected Devices Will Exceed

50 BILLION BY 2020


As in other tech sectors, acceleration of technology adoption will be driven by customer

demand. If end users experience the benefit of timely, relevant water usage alerts or

contamination notices, they will demand it as “the norm.”

The fragmentation in the water sector has resulted in lack of data aggregation and analysis,

relative to the energy, tech, or telecom sectors. Creating a vehicle for data aggregation

could provide a powerful impetus for change.

Real-time access to water quality data can change the balance of community power and

action. Educated consumers will demand change when water quality is substandard, and

water providers or users can more intelligently target their investment to areas where it will

be most effective.

Utilities, many of which are under severe cost pressure, can use data to drive both revenue

(such as developing more value-driven rate structures), and cost savings (such as building

shared-savings partnerships with technology companies that improve operating efficiencies).

These opportunities are low-hanging fruit in early stages of being realized across the sector.

Narrowly defined regulatory enforcement and reporting requirements have acted as a

barrier to new technology adoption. The water industry must work with state and federal

regulators to ensure that laws and regulations are compatible with changing technologies

and business models in the sector.

Keeping in mind the Flint crisis, which

remains at the forefront of water

policy discussions this year, several key

conclusions emerged from the Digital Water

Leaders Roundtable


ONE In response to the Flint crisis, the federal government should develop a

real-time water quality data initiative. This would entail: assessing current

data availability, determining what investment will be required to establish

and deploy a national data collection program, setting mandates for

data collection from key sources over a period of time, and supporting

development of public and private sector tools to analyze and communicate

data in the most effective manner.

TWO Development of “Sensor at the Tap” technology could be a powerful tool in

accomplishing these goals.

THREE More broadly, federal water investment programs should include support for

deployment of data collection and data analytics tools related to the use of

water itself, and of the water infrastructure that delivers the service.

FOUR The policy approach to “water technology” should be expanded beyond

the traditional focus on water treatment technologies to include: sensors,

smart meters, leak detection, decentralized solutions, asset management, and

related analytical and operating software tools. Innovations incorporating

high-speed, low-cost digital technologies may offer a more cost-effective

approach to solving water challenges versus providing funding for large-scale

traditional infrastructure projects.

ROUNDTABLE RECOMMENDATIONS Emerging from the Roundtable were the following key principles and recommendations related to the adoption of digital technologies


Also in March 2016, the Obama administration convened the first-ever White House Water

Summit. XPV Water Partners participated in the White House Summit, further articulating

the recommendations that emerged from the Digital Water Leaders Roundtable discussion.

At its Water Summit, the White House released a list of public and private sector

commitments for innovation, specifically including a section on “Enhancing

Data Collection, Access, and Usability.” In addition, the US Environmental

Protection Agency is now exploring how data-driven technologies can improve

public confidence, utility transparency, and water quality improvements as the

Agency struggles with finding more rapid solutions to the Flint crisis and to

broader national infrastructure investment challenges.

Many water sector commentators have noted that the old approaches to infrastructure

investment are no longer valid in an era of far more capital-constrained governments. Yet

alternative solutions for water resiliency have so far been slow to materialize.

We believe one answer lies in leveraging limited government funding more efficiently:

targeting projects that speed deployment of new technologies that can measure, communicate,

and manage key items such as watershed flows, utility performance, and end-user activities —

and all far more accurately, quickly and cheaply than is happening today.

FOLLOW-ON ACTIONS

the US Environmental Protection Agency is now

exploring how data-driven technologies can improve

public confidence, utility transparency, and water

quality improvements

The ongoing purpose of the Digital Water Leaders Roundtable is to “cross fertilize” industry and policy leaders across sectors, to foster more rapid learning and spur creative action to bring digital technologies to the water sector of the future.


FUTURE CALL TO ACTIONOne Day For A Digital Water FutureXPV Water Partners has committed to following up with industry leaders and policymakers in the coming year to

encourage exploration and adoption of the recommendations above. We are also asking leaders who participated

in the 2016 inaugural Digital Water Leaders Roundtable to support action on these principles throughout their

industry networks in the coming year.

Looking ahead to 2017, our vision is to further refine industry goals and concrete actions that a core leadership

group can take to promote digital technologies that will more rapidly advance solutions to water challenges.

In conjunction with the One Night for One Drop event, our goal is to further develop a unique, high-profile “One

Day for a Digital Water Future” event that will bring together each year the most powerful group of water sector,

technology sector, and national and local water policy leaders specifically focused on transforming the future of the

water sector through digital technologies.


THE ONE NIGHT FOR ONE DROP EVENTOne Drop Foundation is an international non-profit organization created by Cirque du Soleil founder, Guy Laliberté in 2007. At the core of their mission is water as a transformative force to improve living conditions, as well as giving communities the ability to care for themselves and their families.

One Drop has received international recognition from the United Nations (United Nations Award for

best sector practices), the International Water Association (award for innovation), the International Water

Resource Association (award for innovation), and has special consultative statue with the United Nations’

Economic and Social Council (ECOSOC).

One Night for One Drop is an annual charity event in which Cirque du Soleil cast and crew donate their

talent and time to create a unique and incredible show for one night only in support of the One Drop

Foundation. Guests are treated to an exclusive cocktail reception prior to the show, as well as an unforgettable

post-show experience.

Featured in USA Today “10 Best Annual Events in Las Vegas”, it is the only show where world-renowned

guests perform alongside Cirque du Soleil artists such as Leona Lewis, John Legend, Lindsey Stirling, The

Tenors and Jackie Evancho. Since 2013, the event has raised $17.6 M to support One Drop’s mission.

PHOTO CREDIT JOHN ROHLING

The ongoing purpose of the Digital Water Leaders Roundtable is to “cross fertilize” industry and policy leaders across sectors, to foster more rapid learning and spur creative action to bring digital technologies to the water sector of the future.


NOTES FROM THE DIGITAL WATER LEADERS ROUNDTABLE DISCUSSIONS 2016The executives at the inaugural digital water event participated in guided discussions regarding how the “Internet of Things”, and related digital technologies can provide value in the water sector. The group also debated a “moonshot for water” — a concept the White House has used to help center its thinking on various innovative technologies, recently including the water sector. The following are brief summary notes on the discussion, which formed the basis for the initial recommendations framed in this white paper.


ACCELERATION OF TECHNOLOGY ADOPTION WILL BE DRIVEN BY CONSUMER DEMANDDemand for real-time usage alerts and contamination notices: if a customer realizes this information is available and begins to receive it, they will come to expect and demand it.

As with electricity costs, rising water costs will change behavior and lead people to find efficiencies.

Education of the consumer about costs, quality, and risks is key to change. As is often noted, consumers simply expect high-quality water to always be available.

The industry needs to learn more about what consumers really want to know. What data do we need to collect?

Water quality — minerals, metals, pathogens?

What about notifications on leakage, pressure, temperature?

What if people really knew how much water they waste? What if they were able to compare consumption versus their neighbors, or learned about daily consumption patterns?

A NEXT-GENERATION “SENSOR AT THE TAP” COULD BE A KEY CONSUMER TOOL

Future technology need: real time, consumer-friendly water quality sensor – (sensor at home to view quality of water from our taps).

Red alert system — measures data and notifies customer and utility when it is unsafe.

System of the future envisions continuous monitoring at the point of delivery — quality, usage, and price — a proactive approach to customer communication.

The “Sensor at the Tap” concept raises questions about hardware and data ownership (utility or user?), and pricing (full cost or subsidized, particularly for vulnerable users?). Leadership in creating a workable business model could speed implementation.

Need to assess cost to put a sensor in every tap. How would cost savings or revenue enhancement offset cost of deployment?

More water data could also offer an opportunity to marry personal health technology, e.g. Fitbit type devices, with water quality technology. Not every consumer has the same health or water quality needs; some populations are more vulnerable.

Technology to detect biopathogens in real time could also enable more effective use of point-of-use treatment.


DATA AGGREGATION COULD PROVIDE POWERFUL IMPETUS FOR CHANGEWater quality and access to data around water quality will be a defining issue for the digital water future; creating a vehicle for data aggregation could be a powerful driver for change.

Value isn’t just in the collection of data, it must be aggregated, analyzed, and translated into effective tools to support both utility and consumer decision-making.

What are the best analytics and decision support tools available for doing this?

What still needs to be developed?

Effective data aggregation could enable increased decentralization of infrastructure, reducing capital replacement costs.

Effective water quality data aggregation could improve public health management, as health authorities could correlate it with patient population data to identify water-related illnesses.

UTILITIES ARE STARTING TO TAKE ON CHALLENGES OF DIGITAL TECHNOLOGY ADOPTION

Utilities and cities are starting to shift thinking toward benefits of data collection and analysis.

Leadership is key for this thinking to filter through organizations and be effectively implemented.

Utilities must have clear vision of customer service needs in order to prioritize what data to collect.

Majority of water utilities are public, and need incentives to adopt new technologies.

Smaller utilities face the greatest challenges in financing and implementing technology upgrades.

Industry needs to work to drive down the cost of deployment, e.g. partnering with technology and service companies.

Digital tech benefits to utilities.

Using real-time usage data to manage loads, e.g. reducing pumping pressure at night at times of lower demand, or shifting industrial users to off-peak usage.

Data can help drive additional revenue streams, e.g. “lost revenue” customer ID, improved rate structures, additional services.

Internet of Things can substantially improve operating efficiencies via automation.

Water policy remains highly fragmented and hard to manage at federal level, given many agencies involved.

The Clean Water Act and the Safe Water Act need to become more flexible to encourage technology adoption and offset fear of additional regulatory scrutiny.

Cybersecurity and regulatory compliance issues need to be addressed, but can be managed with utility and regulator education about data technologies.


CHAIN OF EVENTS

THAT DRIVES TECHNOLOGY

ADOPTION

Economies of scale achieved via

aggregation of response/data analytics.

More centralized or national data

management bodies can provide trend

analysis; benchmark communities.

Water supply incidents, water quality

incidents, utility conservation and

revenue challenges drive interest in

data technologies that offer solutions.

Data technologies introduced

to early adopter consumers

and utilities.


KEY AREAS OF DATA COLLECTION & ANALYTICS SHOULD INCLUDEWATER QUALITY

Next generation sensors at the tap and at the well-head to track water quality in real time.

WATER USAGE

Consumer and industrial/commercial usage data communicated

to drive customer education and behavioral change.

ASSET MANAGEMENT

Network sensors to improve leak detection, energy management, and stormwater overflows.

OPERATING & FINANCIAL MANAGEMENT

Integration of operating and reporting data to improve utility automation and financial management.

WATER SUPPLY & PRICING

Track supply-side knowledge on wholesale sources and prices of supply, to help drive trading and reuse markets.

NATIONAL DATA AGGREGATION

Develop consolidated national water database using real-time tools to aggregate and constantly update these

various analytics on water supply, quality, usage, and pricing, providing access for public and private use in

developing decision support tools.

“SMART WATER MOONSHOT”When asked the question “What digital technologies or national technology initiatives would make the greatest impact in achieving long-term water sustainability and security?” — roundtable attendees had a lively debate and a number of creative ideas, but the discussion overall centered on the following core theme:

We should leverage scarce federal and state government

funding dollars to build national sensor and data

reporting platforms to better inform infrastructure

investment decisions, rather than subsidizing replacement

of “old infrastructure” or relying on less informed local

water infrastructure decisions.


XPV Water Partners is comprised of

experienced water entrepreneurs, operators,

and investment professionals dedicated to

making a difference in water. XPV partners

with, invests in, and actively supports entrepreneurial companies so

they can grow and deliver value for all stakeholders. XPV manages over

$400 million in investment capital from some of the top institutional

investors in North America, Europe, the Middle East, and Asia. The

XPV family of portfolio companies is making a difference in water

both by driving more efficient management of the world’s most critical

resource and by creating significant shareholder value that can help

move the industry forward. www.xpvwaterpartners.com

Wells Fargo & Company (NYSE: WFC) is a

diversified, community-based financial services

company with $1.8 trillion in assets. Founded in

1852 and headquartered in San Francisco, Wells

Fargo provides banking, insurance, investments,

mortgage, and consumer and commercial finance through 8,800

locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile

banking; and has offices in 36 countries to support customers who

conduct business in the global economy. With approximately 269,000

team members, Wells Fargo serves one in three households in the United

States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2015

rankings of America’s largest corporations. Wells Fargo’s vision is to

satisfy our customers’ financial needs and help them succeed financially.

Wells Fargo perspectives are also available at Wells Fargo Blogs

blogs.wf.com and Wells Fargo Stories stories.wellsfargobank.com


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ONE DAY FOR A DIGITAL WATER FUTURE - XPV Water …€¦ · ONE DAY FOR A DIGITAL WATER FUTURE A one-of-a-kind gathering of leaders from a diverse set of industries ... COVER PHOTO