In December 2017, Ofwat published the final Price Review (PR19) methodology and water companies have been formulating their five-year plans to deliver what has been outlined in the next Asset Management Period (AMP).
Water leakage performance is a key area of improvement under the category of resilience. Leakage is the amount of treated, drinking water which escapes from pipes underground, costing water companies and their customers millions of pounds every year in wasted water treatment and repair costs.
There are 3.1 billion litres of water leaked every day in England and Wales. Ofwat has set a target of reducing leakage by 15% over the five-year AMP period in England and Wales by 2020 which means the water industry needs to reduce the volume leaked every day by approximately 470 million litres - the equivalent of 188 Olympic swimming pools of water being leaked every day.
Customers expect clean water to be available when a tap is turned on. Leakage is, therefore, a significant contributor to poor customer satisfaction and a negative perception of water companies.
As an industry, leakage volumes have gradually dropped from the early 2000s to 2010 and since then have plateaued a little with leakage targets over the last five-years being relatively static. Repairing leakage comes at a high cost – the work is difficult and complex, with ever-increasing amounts of telecommunications, gas and electricity supplies underground. This high operational cost does not incentivise water companies to over-deliver on regulatory targets.
The technology available to repair leaks has not advanced significantly: leak detection and repair methods used today are similar to those used for the last twenty years, one of the biggest changes being the use of acoustic detection methods to find leaks underground.
Ofwat wants to encourage and promote innovation in all aspects of the waste and water value chain. Our view is that there are a number of areas to explore, examples include:
- Advanced leakage analytics – there are hundreds of data points that water companies can mesh together to provide insight on leakage, often this data is disparate and not analysed holistically. Using data effectively to define leak types, trends, and forecast where leakage will occur will increase accuracy of leak detection. Leak detection technicians can also be given insight from data analysis, showing where the most likely locations for leakage within certain areas might be. If leakage analysis does happen today it is often as a one-off activity and the challenge is to turn this into regular, repeatable, enterprise wide analytics
- Machine learning – data science techniques such as machine learning can be used to improve leakage detection targeting decisions and determining what asset classes get the most leakage volume benefit. Using outcomes from completed network activities will enable better business decisions to be taken in the future
- Repair technologies - less invasive techniques (think key-hole surgery on pipes) enable shorter repair cycle times and ultimately less water leaked. They also mean repair technicians can get through more work each day.
A combination of the above methods will reduce leakage and will ultimately lead to improved customer satisfaction. The leakage targets set by Ofwat are certainly going to be difficult to achieve, and in our experience, innovation and challenging normal, historic operational methods are going to be the way to make the step-change in leakage performance.