Water and Wastewater Infrastructure Concerns for Future Major Weather Events

Hurricane Sandy – Water and Wastewater Hurricane Sandy – Water and Wastewater Infrastructure ConcernsInfrastructure Concerns

How are municipal utilities addressing major wet weather events?How are municipal utilities addressing major wet weather events?

Eric Meliton, Industry AnalystEnergy & Environment

August 15, 2013

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Today’s Presenter

Eric Meliton – Industry Analyst, Energy & EnvironmentFrost & SullivanNorth America - Toronto

Place photo here

Shadow Background for

effect

Industry Expertise Experience in covering a broad range of sectors, leveraging long-standing working relationships with leading

industry participants’ CEO’s and senior executives in: - Environmental technologies- Industrial, residential, and commercial water & wastewater treatment technologies- Air pollution, soil remediation, and waste management solutions- Pharmaceutical quality assurance manufacturing and management practices

Career Highlights• Cited by leading publications like Wall Street Journal, Yahoo Finance, and Greener World Media• Keynote speaker at 2012 WWEMA 104th Annual Meeting to discuss Impact of Global Water Regulations• Former Analytical Chemist, Quality Assurance Specialist, and Narcotics Vault Supervisor• Attending WEFTEC 2013 (Chicago, IL) as a Supporting Publication Sponsor from October 5 to October 9

Education• BSc. in Chemistry & Environmental Science from the University of Western Ontario - London, ON, Canada• Level I English Writing Certificate from the University of Western Ontario - London, ON, Canada• Certificate in QA Manufacturing & Management from Sheridan ITAL - Brampton, ON, Canada

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Focus Points

• Market Overview• Introduction• Aftermath of Hurricane Sandy• Current Industry Challenges• Key Market Drivers & Restraints• Regulatory Trends• Industry & Technology Trends

• Conclusions & Recommendations

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Poll Question

What is the most effective way to address storm water management and wet weather events?

• Adequate storm surge protection for major urban centers

• Addressing combined sewer overflow and sanitary sewer overflow issues

• Increased state and federal funding for prevention

• Regulatory enforcement to evoke industry changes

• Continued investment into research and development of technologies

Market Overview

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Introduction

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Issue: According to the 2008 Clean Water Needs Survey (as part of the United States Environmental Protection Agency), there is an estimated $65 billion required to address CSO/SSO issues. Frost & Sullivan perspective: Short-term market potential is not as strong as the addressable market, however, long-term growth potential is.

Issue: According to the U.S. EPA, there are approximately 772 cities with 9348 Combined Sewer Overflow (CSO) outfalls. Additionally, this results in approximately 850 billion gallons of untreated wastewater.Frost & Sullivan perspective: Volume of untreated wastewater is a major concern, resulting in a large list of consent decree cities that are legally mandated to develop CSO solutions.

Issue: Ongoing media coverage of major wet weather events in North America (e.g. Hurricane Sandy) has made Sanitary Sewer Overflow (SSO) issues top of mind for municipal and state governments.Frost & Sullivan perspective: There are approximately 23,000 to 75,000 seasonal SSO events in the U.S., resulting in over 3 to 10 billion gallons of untreated wastewater. Outdated infrastructure to address these volumes in wet weather regions are a major concern.

Source: United States Environmental Protection Agency (U.S. EPA), Frost & Sullivan analysis.

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Affected U.S. CityNumber of combined sewer outfalls

Pittsburgh, PA 217

Chicago, IL 231

Kansas City, MO 218

Hamilton, OH 213

Wheeling, WV 137

Indianapolis, IN 131

Milwaukee, WI 120

Philadelphia, PA 118

Morris Forman, KY 115

Seattle, WA 113

Youngstown, OH 101

• Regional opportunity map of the number of combined sewer outfalls in the U.S. based on demographic analysis conducted by the U.S. EPA.

• Of the 772 affected cities, an approximate population of 40 million U.S. residents are impacted by CSO issues.

Introduction


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EPA Region

Number of Sanitary Sewer Systems

Population Served (Mn)

1 705 6.18

2 1,518 14.51

3 2,149 15.49

4 2,678 29.89

5 4,296 27.05

6 2,983 25.67

7 2,619 7.58

8 1,437 7.78

9 1,003 33.38

10 823 6.36

Total 20,211 173.89

• Regional opportunity map of the number of sanitary sewer systems in the U.S. based on U.S. EPA regional breakdowns.

• These sanitary sewer systems experience approximately 23,000-75,000 SSO’s annually.

Introduction


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Aftermath of Hurricane Sandy

• Responsible for 285 confirmed deaths in October 2012, deemed the 2nd costliest hurricane in U.S. history (over $70 billion in damages)

• Infrastructure devastation to nine U.S. states: New York, New Jersey, Washington D.C., Connecticut, Maryland, Pennsylvania, Virginia, Rhode Island, and Delaware

• According to Climate Central, an estimated 11 billion gallons of untreated sewage and wastewater flowed into existing waterways

• Outdated stormwater and combined sewer overflow infrastructure systems were overwhelmed by storm surges

• In May 2013, U.S. EPA announces planned infrastructure grant funding to states of New Jersey ($229 million) and New York ($340 million)

Source: United States Environmental Protection Agency (U.S. EPA), Climate Central, Frost & Sullivan analysis.

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Aftermath of Hurricane Sandy

• Approximately 93% of sewage overflows were experienced in New York and New Jersey, worse hit by the storm surges

• According to Climate Central, New Jersey regional EPA office estimates $1 billion to repair and recover damaged treatment infrastructure

• According to Climate Central, New York regional EPA office estimates $2 billion to repair and recover damaged treatment infrastructure

• Confirmed by various industry insights, a potential market of $4 billion in estimated retrofit and replacement costs are required to mitigate future CSO/SSO issues in New York and New Jersey alone

• On a national basis, U.S. EPA’s 2008 Clean Water Needs Survey (CWNS) projects approximately $64.98 billion to address similar issues

Source: United States Environmental Protection Agency (U.S. EPA), Climate Central, Frost & Sullivan analysis.

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North American CSO/SSO

Market

Lack of regulatory oversight

Lack of funding capabilitiesLong-term impact of

economic downturn

Slowness to retrofit/replace aging

infrastructure

High CAPEX requirements for new installations

Current Industry Challenges

Source: Frost & Sullivan analysis.

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Challenge Perspective

Lack of regulatory oversight

U.S. EPA have not heavily pursued regulatory oversight and enforcement requirements for CSO/SSO issues. Consent decrees, long-term master planning initiatives, and ongoing permit enforcements are major source of regulatory influence.

High CAPEX requirements for new installations

New build installations CSO/SSO issues are deemed costly investments with unproven long-term ROI potential. Difficult to finance funding requirements in current economic climate.

Lack of funding capabilitiesFederal and state budgetary allocations are not sufficient to address aging infrastructure projects. Many smaller municipalities continue to forego or delay projects due to lack of funding.

Long-term impact of economic downturn

Prior to economic downturn, investments into water infrastructure projects were not considered high-yield investments. Post economic downturn, view has worsened as many municipal water infrastructure projects have experienced difficulty in generating financing required.

Slowness to retrofit/replace aging infrastructure

Lack of enthusiasm to adopt to change amongst many municipalities that rely on outdated combined sewer and sanitary systems. Many end users view CSO/SSO related water infrastructure investments as a green investment initiative, which have been placed on hold due to financing issues.


Current Industry Challenges

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Key Market Drivers & Restraints

Drivers

Restraints

Drivers

Restraints

Regulatory permit requirements to address issues

Long-term planning to mitigate outdated

infrastructureAwareness of impact of major wet weather

events

High CAPEX and OPEX costs

Lack of stable funding initiatives

Limited enforcement of regulatory guidelines

Large number of outdated facilities

Limited incentives to utilize CSO/SSO

solutions


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Driver Perspective

Large number of outdated facilities

With over 772 U.S. cities affected and 9348 CSO outfalls and between 23,000-75,000 SSO seasonal events, these issues are not expected to be mitigated in the short-term.


National Pollutant Discharge Elimination System (NPDES) wastewater effluent discharge levels as part of the Clean Water Act (U.S. EPA). Identified cities with consent decree initiatives.

Awareness of impact of major wet weather events

Regional awareness of the economic impact and devastation of recent hurricanes in New York City and New Orleans and seasonal flooding in the U.S.

Long-term planning to mitigate outdated infrastructure

Cities with consent decree initiatives have identified long-term master plans to finance and implement various CSO/SSO installations.



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Restraint Perspective

High CAPEX and OPEX costsMany CSO/SSO solutions have high CAPEX and OPEX costs required to retrofit and replace outdated systems and buried infrastructure. This limits the long-term market opportunities for strictly large municipalities.


U.S. EPA has not properly enforced industry guidelines for CSO/SSO requirements. Each regulatory body expects municipal utilities to study/plan for long-term mitigation of the issues, but only effluent permitting is affected.

Lack of stable funding initiatives

Despite Clean Water State Revolving Funds allocations for municipal wastewater projects, utilities are positioned to generate funding for upwards of 80-90% of project installation and operational costs. Economic downturn has negatively impacted investments into this market segment.

Limited incentives to utilize CSO/SSO solutions

No distinct treatment solution preferred or selected by industry, allowing for diverse solutions to be utilized including the following: operations & maintenance practices, collection system controls, storage expansion, and low impact development initiatives.



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• National Pollutant Discharge Elimination System permit program (2004), requiring that facilities are responsible for permitted point source discharges. Permit holders are now responsible to treat point sources using accessible technology (2006).

• In 2005, the U.S. EPA began drafting a policy that required blending of treatment requirements for CSO/SSO in specified mixing zones that would require additional treatment before discharge. This included the requirement of an additional secondary biological treatment of rerouted wastewater.

• In March 2013, legal precedent was set by the State of Iowa who appealed the imposition of this draft policy, obtaining a court ruling that the U.S. EPA would not be permitted to require this additional treatment requirement, contrasting the existing NPDES permit rules.

Regulatory Trends


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• As aging infrastructure is retrofit or replaced, there will be a steady demand for complex CSO/SSO solutions for municipalities with long-term investment plans and consent decrees

• WEFTEC 2013 to hold inaugural Stormwater Congress to facilitate and identify leading industry innovations and solutions for CSO/SSO issues

• Continued data collection and analysis required to understand the areas of risk, long-term challenges, and revisions to regulations needed

• Ongoing development of mitigation plans to protect vulnerable wastewater treatment facilities and related infrastructure

• Limited funding through state and federal means, resulting in a continued reliance on inefficient municipal funding initiatives

Industry & Technology Trends

Source: United States Environmental Protection Agency (U.S. EPA), Climate Central, Water Environment Federation, Frost & Sullivan analysis.

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• Long-term assessment of innovative solutions related to operations & maintenance practices, collection system controls, storage expansion, and low impact development initiatives.

Industry & Technology Trends

CSO/SSO Processes Techniques and Applications

Operations & Maintenance Practices• Sewer testing and inspection techniques, sewer cleaning techniques, and pollution prevention, monitoring, reporting, and public notification.

Collection System Controls• Maximizing flow to treatment plants, monitoring and real-time control, inflow reduction. sewer separation, sewer rehabilitation, service lateral rehabilitation, and manhole rehabilitation.

Storage Facilities • In-line storage, off-line storage, and on-site storage.

Low-Impact Development Techniques • Porous pavement, green roofs, bioretention, and water conservation.

Treatment Technologies• Supplemental treatment, plant modifications, disinfection, vortex separators, and floatables control.

Source: United States Environmental Protection Agency (U.S. EPA) Report to Congress (2004), Frost & Sullivan analysis.

Conclusions & Recommendations

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• Engineering, Procurement, and Construction (EPC) firms are still the key stakeholders capable of addressing the market fragmentation of the municipal wastewater infrastructure industry

• Lack of stable funding sources combined with a poor economic climate (with limited potential ROI) for major projects will continue

• Diverse CSO/SSO solutions available to address long-term planning initiatives and consent decrees limits growth of specific solutions

• Ongoing end user awareness from Hurricane Sandy, Hurricane Katrina, and Hurricane Irene, have brought CSO/SSO issues to the forefront

• Funding gaps for wastewater infrastructure repairs and retrofit will widen

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• Development of effective master planning and consent decree milestones to ensure long-term implementation of CSO/SSO solutions

• Continued research and development into innovative treatment solutions and effective stormwater/wet weather event applications

• Ongoing assessment of national and regional permits and enforcement regulations positioned to evoke long-term industry changes

• Prioritized spending of federal/state funding for CSO/SSO issues to be addressed, especially in larger urban centers with major concerns

• Pursuit of platforms to discuss these issues with key technology solution providers and EPC firms capable to address specific issues

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For Additional Information

Liz ClarkAssociateCorporate Communications(210) [email protected]

Eric MelitonIndustry AnalystEnergy & Environment(416) [email protected]

Roberta GamblePartnerEnergy & Environment(650) [email protected]

Nils FrenkelSales DirectorEnergy & Environment(210) [email protected]