The UK water industry is in the midst of one the greatest periods of transformation that it has ever witnessed. As the industry sets its sights on driving urgent improvements across clean, waste and environmental operation and increased accountability, water companies are also faced with having to expertly navigate an evolving regulatory landscape. To help them set their direction for the coming year, here are three predictions that I think we will see to come to bear in 2025.
Data and Performance as the Critical Success Metrics
Over the next twelve months, meter read performance will be critical for meeting the regulatory targets set by Ofwat, and in turn, justifying further investment. Companies that successfully hit the required number of reads per day will avoid financial penalties and be able to invest more of their revenue into driving down leakage and consumption.
To hit these targets, rollouts must be managed efficiently. Installing meters on a street-by-street basis should be the de facto method used by water companies. While it sounds basic, being able to tackle a whole street at once, rather than installing one meter and changing location, will ensure greater efficiencies.
As we look ahead to the next few years, performance will become an increasingly critical measurement of success. Previously, the industry lacked clarity around the definition of how frequently and reliably meters had to connect. Now that the regulator has set out clear guidance around the parameters of smart meters and subsequent targets, water providers will be looking to deploy meters and solutions that deliver reliable and complete data.
Changes to Incentives and Penalties, and Bring a Call for Mandated Metering
In 2025, the conversation around penalties and incentives will heat up. Currently, smart metering has been identified as a contributor to two Operational Delivery Incentives (ODIs), both Leakage and Per Capita Consumption (PCC). Yet, each major investment comes with a Price Control Deliverable (PCD) engineered to ensure that specific projects deliver to the required standards. Water companies and providers will continue to debate the challenges around having two sets of penalties and incentives for an activity designed to reduce leakage and PCC. The guidance around the current PCD could mean that failure to deploy a working smart meter, despite incurring all of the costs, can result in a water company being forced to return the same amount of money back to its customer as the penalty. As water providers look to meet new regulatory targets in 2025, the conversation around revisiting PCDs and ODIs will continue.
Given the focus on data and tangible outcomes, the next AMP8 period will no doubt continue to showcase the benefits of smart metering. We may well see increased calls for a mandated approach – one that is already more straightforward in water-stressed areas in the South and East.
At Arqiva, we recognize that it is infinitely more efficient to deploy smart meters en masse. When scaled up, installation teams can focus on a geographic area and install meters in every property. If the communications solution needs to be built, it can align its investment in the areas that will have the meters installed. If this is not possible, water providers will need to find a solution that covers all the large territories that water companies are accountable for, even if they are only able to deploy a small number of meters because the water companies are not in control of where the meters need to be installed. This inequity needs to be removed – only solved by a mandated rollout.
Proactive, Real-Time Data Analysis
Typically, water companies get just two reads per year from a water meter. The future will see meters providing up to 24 reads per day. This data will be invaluable for spotting real-time leaks and assessing water usage habits, but it will also require significant interpretation.
In 2025, there will be a focus on proactively interpreting data. The industry must shift from relying on leak alarms to leveraging continuous flow data for efficiency and water scarcity management. High-performance smart meters will provide real-time balance, reducing the need for complex calculations based on estimates.
Building customer engagement will be essential. Water companies must adapt their organizations to handle information efficiently, responsibly, and transparently. Successful companies will integrate data with their wider CTO and IT infrastructure to deliver tangible outcomes for customers and the environment.
The bar for success has been raised. Those that emerge as winners in the next regulatory phase will be those that focus on capturing complete and accurate data, leverage managed service providers to handle rollouts, and work to ensure that they are deriving valuable real-time insights from the influx of new data. Only then can we hope to drive tangible value for both customers and the environment.
