While it may be the start of a new year, the economic landscape facing UK businesses in 2023 is far from the fresh start many would have hoped for. But despite the uncertain economic future, industry leaders must not lose sight of larger initiatives that would usually receive most of their attention.
This is especially the case for the utility industries, which – as the backbone of a prospering modern economy – cannot afford to lose momentum on key projects of national and global significance. At the outset of the year, it’s important to take time to highlight the priorities for the UK water industry deserving continued attention over the next 12 months.
Priority I – Wider deployment of smart meters
One of the key priorities for the UK water industry in the year ahead will be answering growing calls for accelerated deployment of always-on, connected water metering. This is particularly the case following the Chairman of the National Infrastructure Commission’s calls for the rollout of advanced metering infrastructure (AMI) within the water utility industry last summer.
Smart metering eliminates the need to share readings with suppliers manually. It provides continuous meter read data to suppliers and users alike. By providing far more accurate data and reducing the risk of inaccuracies, AMI allows people and businesses alike to track their water usage and identify opportunities to cut back on waste or create efficiencies.
Considering the potential of AMI, the drive towards nationwide uptake of smart water meters should certainly rank as a top priority for the sector. In May 2022, a report by Frontier Economics and Artesia revealed that advanced water metering infrastructure (AMI) could deliver up to £2.2bn net benefit across England and Wales.
Additionally, Ofwat research reveals that limited access to quality consumption data can significantly undermine customer experience. Unsurprisingly, customers value timely and accurate bills which help them to manage and reduce consumption. Access to good quality data is also a crucial driver of innovation in the sector, and supports strategic planning for the sector as a whole.
As such, operators in the water industry willing to prioritise and advocate for AMI deployment to meet this customer demand and support innovation have a lot to gain in 2023. Nevertheless, lack of funding will continue to present a significant challenge to delivering AMI in the year ahead.
While no doubt a priority for the water industry, there is a need for far greater government investment to ensure the burden of paying for AMI deployment does not unduly fall on any one stakeholder. As everyone has a lot to gain from AMI, all stakeholders in the water industry must prioritise greater cooperation and coordination to ensure smooth and speedy delivery in 2023.
Priority II – Driving the net-zero transition
Given the UK Government’s commitment to fully decarbonise the UK economy by 2050, an ongoing priority across all utility industries – electricity, gas, water and waste – in the year ahead will be the continued investment in decarbonising supply networks. In the UK, household water supply/use alone accounts for up to 6% of our annual GHG emissions. Revolutionising the UK water industry could eliminate 10 million tonnes of GHG emissions. But unlike other industries, the water market has the potential to dramatically cut emissions in its supply network quickly and at relatively low cost because many technological solutions already exist.
If water consumption and waste are reduced, less energy is used in its supply chain, and emissions are reduced. By deploying smart meters, leak detection sensors and increasing the use of renewable energy, the water industry could significantly improve water and energy efficiency and reduce emissions.
With accusations of ‘greenwashing’ already dominating the headlines in January, it’s important that businesses chose suppliers committed to becoming net zero by 2050 and that those in the utility industries continue to work towards our targets honestly and openly.
Priority III – Increasing engagement in the open water market
While concerns from business leaders over rapidly rising operating costs and a looming recession have sparked a lot of conversations around commercial utility costs, the focus typically falls on electricity and gas supply rather than the cost of commercial water supply. However, water’s status as the ‘overlooked’ utility, is a concerning trend in need of addressing in 2023 because, while water utility costs may make up a smaller proportion of running costs, there are significant savings to be made by businesses in their water bills.
The latest research from Ofwat suggests that just under half of businesses (48%) are aware that they are eligible to switch their water and wastewater retail supplier or re-negotiate a better deal with their existing supplier. This represents a drop from 58% in the 2019/20 data. As a result of this lack of awareness, only 10% of eligible business customers were deemed ‘active’ in the market between April 2021 and March 2022 – far below the activity rates seen in other utility markets.
Since the deregulation of the water industry in 2017 created the world’s largest competitive water and wastewater retail market, businesses have been empowered to switch providers and renegotiate their contracts via water utility brokers to inject much-needed competition among retailers.
However, the benefits of an open water market – including innovation, improvement to services and lower prices – require intense competition driven by customer engagement in the market. Without customers, the competitive incentive will quickly dry up – along with the desired benefits.
Raising awareness among business customers is crucial and this is where we expect to see water utility brokers play an ever-increasing role in 2023. Such brokers can provide UK businesses with the insights and advice needed to navigate the unchartered waters of this new marketplace.
On a personal note
This year, we’ll be continuing our drive forward to make all utilities simpler and sustainable. The recent launch of our waste service has supported this aim and it represented the first step in our ambition to pursue a multi-utility approach to the B2B market. We’re confident that offering services across multiple utilities will help SMEs to significantly cut down on their administrative demands while also securing cheaper bills.
Final thoughts
The rising costs of essential utilities last year have highlighted the need to identify all opportunities to cut business costs, improve efficiency and reduce costly waste. However, business focus on the cost-saving options around electricity and gas leaves many overlooking the chances to cut costs on their water utility bills.
By improving wider awareness of their consumption habits and by incentivising their engagement in the water market, industry leaders have an opportunity to help UK businesses to take vital steps forward toward saving money.
Along with supporting important technological advancements in the sector and delivering on the country’s net-zero commitments, helping businesses navigate the choppy economic water ahead should be a top priority for the UK water industry.
