Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
PRESENTATION GREENFIELD + WATER = BLUEFIELD
WATERFINANCECONFERENCE:DENVER,COLORADO
PrivateFinancing:TheFutureofP3inWater
30-31August2016
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Focus of Presentation
• Defining Bluefield Research
• US Municipal Utility Landscape
• Key Market Drivers for Investment
• Evolving Private Water Landscape
2
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Bluefield Research Focus
Bluefield’s insight services and reports are positioned to validate companies’ assumptions, address critical questions, and strengthen strategic planning processes as global water markets evolve.
• Companies approaching water as a business are often challenged by a lack of high quality, reliable information.
• Bluefield bridges this gap with actionable, data-backed analysis supported by a transparent research methodology and ongoing access to our global water experts.
• Interactive relationship between client and research team to work through critical assumptions and changing market conditions.
News & Events
Business Strategies
Technology Assessment
Research & Analysis
3
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Bluefield supports a diverse group global companies positioned across the water value chain, validating the quality and breadth of our insights.
We Serve Companies Across the Water Industry
Global Reach
Technology / EquipmentProviders
Engineering ProcurementConstruction
Firms
Water & Wastewater
UtilitiesIndustrial
Companies Infrastructure
InvestorsIndependent
Water Providers
4
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Very Small
27,039Small, 13,249
Medium4,828
Large3,761
Very Large418
Number of Water Systems by Size
49,295 Water
Systems-
20 40 60 80
100 120 140 160
Popu
latio
n Se
rved
, Mill
ions
Water System Sizes by Population Served
>25>10 to <25<1 to <101
Number of Very Large Systems by State
U.S. Water Network
Highly fragmented by 49,295 municipal water systems, 45% of the population is serviced by the 418 utilities serving over 100,000.
Source: EPA, Bluefield Research
5
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Sizing the Market – Municipal Water & Wastewater Outlook
Surpassing half a trillion dollars by 2025, the U.S. municipal water utility sector represents the single largest opportunity for water technology, equipment, engineering, and construction providers.
Water48%
Wastewater44%
Stormwater8%
Forecasted CAPEX, 2016-2025
US$532 Billion
Pipes51%
Plants29%
Other12%
Pumps6%
SmartWater2%
Total CAPEX Spend by Segment, 2016-2025
West25%
Southeast18%Atlantic
18%
Southwest14%
Midwest12%
South9%
Central2%
North1%
New England
1%
Total CAPEX by Region, 2016-2025
US$532 Billion
US$532 Billion
Source: Bluefield Research
6
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Projected Population Growth Heightens Pressure in Key States
• Three states, California, Texas and Florida, are forecasted to increase by more than 37% on top current 63 million people.
• Scaling populations to drive new supply infrastructure spend–reuse, desalination, and water transfer– and need for innovation
• High water usage and growth rates signal opportunities for smart water and efficiency-driven investment.
Population growth anticipated to place additional pressure on utility infrastructure, demanding greenfield capacity additions to keep pace.
Source: EPA, USGS, U.S. Census Bureau, Bluefield Research
State Population Growth vs. Water Usage per Capita
Nevada
IdahoUtah
Hawaii
Wyoming
District of Columbia
ArizonaTexasNebraska
California
OregonLouisiana
WashingtonWest
Virginia
FloridaGeorgiaNorth
Dakota Connecticut
North Carolina
DelawareWisconsin
40
60
80
100
120
140
160
180
200
-30 20 70 120
Dom
estic
Wat
er U
se (g
allo
ns / d
ay
/ per
son)
Urban Population Growth Percent, 2010-2030
7
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Pipe Infrastructure Getting Older
• Approximately 50% of U.S. infrastructure evaluated as poor to beyond planned life.
• The EPA estimates that 4,000 to 5,000 miles of water mains are replaced annually, which is expected to peak around 2035 at 16,000 to 20,000 miles.
• The national average for water losses in major U.S. cities ranges between 10% and 15% annually and below cities like Detroit and Philadelphia's approximate 30% levels.
Aging water infrastructure in the Northeast and Midwest underpin the regions’ higher rehabilitation costs going forward.
Source: AWWA, EPA, Bluefield Research
0
10
20
30
40
50
60
1970 1980 1990 2000 2010 2020 2030 2040 2050
Aver
age
Age
of P
ipes
Average Age of Pipe Infrastructure by Decade
8
PRIVATE WATER INSIGHT SERVICE
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
Declining Federal Funds Give Way to Localities
0
20
40
60
80
100
120
140
US$
Billi
ons
Federal State and Local
• Public spending—spending by federal, state, and local governments—on water infrastructure totaled $108 billion in 2014.
• Over the last reported decade–2004-2014– public spending on water CAPEX totaled US$455 billion.
• Another US$761 billion was spent on O&M.
• The lion’s share of government spending, totaling 95%, is generated from state and local governments.
Public Spending for Water Utilities, Federal vs. State Funding, 1956-2014
Federal funding for water utilities peaked in 1976 at US$16.9 billion and has since fallen to US$4.3 billion in 2014, requiring states and localities to shoulder the burden of water infrastructure.
Source: Congressional Budget Office, Bluefield Research
9
PRIVATE WATER INSIGHT SERVICE
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
0
5
10
15
20
25
30
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
U.S.
Mun
icip
al B
ond
Mar
kets
, Tra
ding
Vol
ume,
US$
Bi
llion
Municipal Bond Market ActivitySteady headwinds for municipal bond markets pose long-term risks to utilities as infrastructure costs escalate.
Source: SIFMA, Bluefield Research
• Over the next decade, utilities will be forced, in many cases, to address their respective infrastructure gap, including US$176 billion of network upgrades.
• The combination of bond rate returns and rising CAPEX demands will increasingly squeeze municipalities to identify new, more innovative solutions
• Unforeseen water system volatility including supply disruptions (e.g. drought), infrastructure shortcomings (e.g. non-revenue water), are placing municipalities credit ratings at risk.
Municipal Bond Market Trends, 1996-2015
10
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Sea
ttle
San
Fra
ncis
coP
ortla
ndS
an D
iego
Los
Ang
eles
San
Jos
eO
akda
leO
akla
ndR
iver
side
Long
Bea
chFr
esno
Atla
nta
Law
renc
eville
Ral
eigh
Cha
rlotte
Jack
sonv
illeM
arie
ttaM
iam
iTa
mpa
Aus
tinH
oust
onP
hoen
ixD
alla
sFo
rt W
orth
San
Ant
onio
El P
aso
Den
ver
Alb
uque
rque
Las
Veg
asR
ichm
ond
Was
hing
ton
DC
Laur
elB
altim
ore
New
Yor
k C
ityP
hila
delp
hia
Fairf
axC
leve
land
Det
roit
Indi
anap
olis
Col
umbu
sC
hica
goM
ilwau
kee
Okl
ahom
aLo
uisv
illeM
emph
isH
onol
ulu
Bos
ton
Min
neap
olis
Om
aha
US$
per
m3
Wastewater Price Water Price
City Pricing Index for Water & Wastewater, 2016
Municipal water infrastructure, including services and equipment for outsourced O&M contracts is primarily financed locally through the rate base, and the revenues that underpin bond issuance.
West Southeast Southwest Atlantic Midwest South
Paci
ficN
ew E
ngla
ndN
orth
Cen
tral
Source: Utilities, Bluefield Research
Price of Water & Wastewater by Volume, 2016
11
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Municipality Perspective: Drivers for Private Participation in WaterIn a highly public-controlled sector, municipalities’ move to incorporate private participation is based on a calibrated approach considering a spectrum of solutions to address specific financial and operational challenges.
Key Drivers
Financial Restructuring/Distress
Expansion/upgrade
Asset Management
Municipalities under financial stress seek to tap the private sector to improve debt position
Mounting capital improvement obligations for EPA compliance of aging infrastructure
Communities seeking to improve service quality tap into professionalized, large scale IOUs
Public Utility O&MContracts
ManagementContracts Lease BOOT
DBFO Concession Privatization
Predominate model in US water market
Model for public/private collaboration
Increasingly viable option for municipalities
Source: Bluefield Research
12
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Private Players in the Water Value Chain
Wastewater Treatment
Privatization / Concession
PPP Concession
O&M Service Agreement
Sewage System
Core Water IOU Model
Water Value Chain Segment
Ongoing/Complementary business line
Evolving Model beyond O&M Agreements
Con
trac
ting
Mod
el
A well defined competitive landscape with a number of outsiders looking in for strategic opportunities.
DistributionWater Treatment
Water Production
IWP Model
Source: Bluefield Research
13
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Investor Owned Utility PresenceThe sum of IOU M&A activity in the past 3.5 years totals almost 313,000 customers driven by large scale deals in 2015 and early 2016.
Large Scale IOUs >50,000 Served
American Water Works Company
40%
SUEZ20%
Aqua America7%
California Water Service Group
5%
Liberty Utilities (Algonquin)
5%
American States Water Company
4%
Southwest Water Company
4%
San Jose Water Company
3%
Utilities, Inc3%
<2% Each-Artesian Resources-York Water Company-Global Water Resources-Great Oaks Water Company-Del Oro Water Company-Johnson Utilities-Middlesex Water-Connecticut Water Co.-Sn Gabriel water Co.-Epcor Utilities-Aquarion Water Company
Source: Bluefield Research
14
WaterFinanceConference:Denver,Colorado, 30-31August2016 ANALYST PRESENTATION
U.S. WATER INSIGHTS
Global companies across the value chain are developing strategies to capitalize on greenfield opportunities in water -- new build, new business models, and private investment. Bluefield Research supports a growing roster of companies across key technology segments and industry verticals addressing risks and opportunities in the new water landscape.
Companies are turning to Bluefield for in-depth, actionable intelligence into the water sector and the sector's impacts on key industries. The insights draw on primary research from the water, energy, power, mining, agriculture, financial sectors and their respective supply chains.
Bluefield works with key decision-makers at utilities, project development companies, independent water and power providers, EPC companies, technology suppliers, manufacturers, and investment firms, giving them tools to define and execute strategies.
WWW.BLUEFIELDRESEARCH.COM GREENFIELD + WATER = BLUEFIELD
Contact Bluefield Research
NORTH AMERICA192 South St // Suite 550Boston, MA 02111T +1 617 910 2540
EUROPECarrer de Sant Joan de la Salle 42Edifici Technova, 2.1208022 Barcelona, SpainT +34 93 681 4325