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Digital Water: how the integrated water system evolvesThe water sector can live a favourable moment for its development, as long as it’s able to catch the opportunities presented by the European fundings and digital technologies to deal with new regulations and the challenges of Water 4.0.
Main regulation challenges
In fact, the Italian water sector is affected by many issues:
- ageing infrastructures (22% of the network is more than 50 years old and 36% is more than 31 years old) [Cresme, “Rapporto Accadueo”, 2018.];
- 42% of leakage, in comparison with Germany 8% and France 20%;
- Financial and organizational inefficiency, with more than 2.500 companies, 83% of which are directly managed by local authorities, resulting in a contraction of investment capacity [CDP, “Brief – Servizio Idrico Integrato: il moment giusto per gli investimenti”, 2022.] [An average of 7 euro per person in 2019, against an average of 49 euro by national companies and the European average of 90 euro – Utilitatis, “Blue Book”, 2022].
Most of these issues has been addressed by the Regulatory Authority of Energy, Networks and Environment (ARERA) for some years, through different measures.
In 2017 ARERA issued the RQTI [then reviewed in 2021 with 609/2021/R/idr and 639/2021/R/idr deliberations. ], regulating the technical quality of water services by establishing some core indices through which evaluate each company and creating an incentives-and-penalties system aimed at encouraging focused actions and investments by the companies, similar to what already established regarding the contractual quality with the RQSII in 2015. RQTI comprehends:
- 6 core indices, like leakage, linear and percentage (M1); service suspension, in hours (M2); quality of distributed water (M3); suitability of drainage system (M4); sludge disposal (M5) and quality of purified water (M6);
- 203 water companies, serving 84% of Italian population, who took part in the evaluation system regarding 2018-2019 [14 water companies didn’t meet the preconditions required by ARERA for M1 index; 3 didn’t met the preconditions for M3; 14 for M4; 13 for M5 and 13 for M6, showing a high level of criticality in the section considered].
- 135,36 million euro allocated between 2018 and 2019 for incentives [Data from ARERA].
In October 2021, ARERA introduced the strategic directions for 2022-2025, built upon some core goals: shaping aware end-users; promoting better quality and efficiency of water infrastructures, innovation and Digital Transformation. Resolution 609/2021/R/idr, which updated the regulation of water measurement (TIMSII), was then based on these principles and stressed the importance of smart metering technologies, aware consumption of water and actions against leaks.
Change enablers: European funding
In order to address these issues and be compliant with the updating regulations, water companies can now rely on new European funding opportunities, such as:
- PNRR’s Mission 2, “Green revolution and ecological transition”, which includes investments in the water sector, such as € 900m aimed at creating “at least 25.000 km of new networks for the distribution of potable water and reduce water losses, especially in Southern Italy, introducing advanced and digitised control systems that allow for an optimal management of resources, reducing waste and limiting inefficiencies” [https://italiadomani.gov.it/];
- REACT-EU, which allocated € 482m, usable until end 2023, for reduction of leakages in water distribution networks through the digitalisation, tracking and districtualization of networks and the adoption of smart technologies.
In fact, most of the goals of the European programmes correspond with the issues addressed by the Authority, such as water leakages management and diffusion of smart technologies, representing a great opportunity for water companies to fund initiatives to improve their performance regarding technical and contractual quality, as established by ARERA. Programmes like the ones mentioned above can therefore enable companies with less investment capacity, like the smaller ones or those managed by local authorities, to deal with the regulation, access the incentives-and-penalties system established by the Authority and, best case scenario, gain monetary incentives thanks to their investments.
In order to allocate funds efficiently, companies need to clearly define desired areas of improvement and expected goals, as well as estimate economically the investment needed. It is important, indeed, to track the indexes evaluated by the Authority and monitor major criticalities regarding areas of intervention chosen, so as to better define actions that need to be taken: companies must be able to analyse thoroughly their needs and the feasibility of their project, and scout for partners, if necessary. Furthermore, when managing public funds, especially related to complex projects that require several areas of expertise such as digitalisation projects, management activities like monitoring and recurring reporting, both financial and technical, must also be carried out, to smoothly follow project’s programme in terms of time, cost and assure its good completion.
Many are the challenges water companies need to deal with to renew themselves and become “digital utilities”, where being digital is not and end in itself, but rather an effective means of achieving an end: provide outstanding service to users within the available resources [Howells, McFie, Yates, Budimir, Gasson, “Accelerating the digital water utility. A Global Water Intelligence and Global Water Leaders Group white paper published in partnership with Grundfos”, 2019].
Technology trends for water industry: from feedback to feedforward approach
Control over the whole network is a key element when dealing with improving services’ quality and assuring reliability of physical water infrastructures. The use of IoT devices and sensors enables an efficient and accurate collection of data, and continuous monitoring through the whole integrated water cycle, thus allowing a better infrastructure management. Furthermore, the use of analytics systems to elaborate data collected by IoT devices lays down the foundation for remote asset control and management, changing the way water companies operate and make decisions.
Water Management Systems (WMS) are integrated systems which comprehend in a single platform several solutions, like GIS, Enterprise Resource Planning (ERP), WorkForce Management (WFM), Business Intelligence (BI), and KPIs. These systems, can also acquire data from other sources such as SCADA and Head End Systems (HES), allowing data aggregation, correlation and elaboration, in order to generate better Water Balance statements and execute predictive maintenance activities.
In particular, WMS enables:
- Data analytics using georeferenced historical infrastructure data;
- Asset predictive maintenance, using hydraulic modeling and field data;
- Real time issue alerting, based on field data;
- Water Balance statement data and quality indicator plotting;
- Investment strategies support.
All these are key resources to develop a predictive model of analysis, able to enhance a feedforward approach, required to plan mid-long term investments, providing at the same time an immediate solution to actual problems.
Besides, implementation of these technologies automates processes, improving productivity and quality of operations. The goal is to optimize the whole water process chain, from data collection to analytics in a single plaform, maximizing efficiency and bringing significant economic and environmental benefits by reducing costs and energy consumption.
Smart Water Metering
In smart end-to-end water networks, smart metering (Smart Water Metering SWM) is an important source of data for management functions (e.g: billing). Since market is constantly evolving, there isn’t yet a technological standard for SWM. In fact, manufacturers offer solutions with different communication technologies and application protocols, thus complicating operations for water companies and increasing lock-in effect risk on existing technologies and protocols. Furthermore, in contrast with what was done for other utilities, Regulatory Authority has not issued clear guidelines on SWM yet, not defining communication technology nor application protocols. This approach requires to design systems, like the WMS, as open as possible and capable of communicating with any device on field.
Therefore, it is important for water companies to use a correct approach to evaluate economic impact as well as technical and functional needs, regarding communication technologies, for instance, main options available comprehend:
- wM-Bus;
- NB-IoT;
- LoRaWAN;
- Sigfox.
Each technology has its own characteristics that need to be carefully evaluated when building the end to end communication and data management infrastructure, taking into account normative and locations specificities. In fact, SWM initiatives by national water companies have involved different communication technologies, as well as different kind of devices (integrated or semi-integrated). But, despite the launch of several digital transformation projects, the digitalisation of IUWM is still at an early stage. In fact, in 2019, in Italy just 3.5% of meters are smart [ARERA DCO 405/2021/R/IDR. ARERA recently defined metering devices read from proximity (drive by/walk by mode) as semi-smart, and devices remotely read as smart (609/2021/R/IDR)] , and more in general only 1,4% of 2015-2017 investments by water companies was allocated for digital initiatives [Utilitatis, Orange book, 2018.]. However, digital investments planned for 2020-2023 amount to 4,8% of total [ REF Ricerche, “Water 4.0: la rivoluzione digitale nel servizio idrico integrato”, Acqua 173, 2021], showing a growing interest in digital transformation.
Although this kind of initiatives are an important step towards Industry 4.0, digital transformation is not just a matter of choosing the right technology. In fact, technological and cultural paradigms changes come with a set of new challenges.
Digital Utility: new challenges
The introduction of disruptive digital transformation sets new challenges that need to be addressed to get the most out the transformation itself, such as:
- Company culture and technological integration;
- New processes and organization design;
- Effective procurement strategies.
According to a survey conducted by Global Water Intelligence (GWI), «staff resistance was the second most commonly experienced challenge utilities experienced when implementing digital solutions» [Howells, McFie, Yates, Budimir, Gasson, “Accelerating the digital water utility. A Global Water Intelligence and Global Water Leaders Group white paper published in partnership with Grundfos”, 2019.], while organisational culture, history, and a lack of digital familiarity within the workforce are cited as its primary causes, whose effects need to be mitigated in order to be able to reach a successful cultural transformation. These can be addressed by taking a more human-centred design approach, so as to help workforce to better understand the opportunities of digital development and facilitate knowledge transfer. In this sense, continuous training and communication strategies are important tools to get an effective change management, ensuring understanding and awareness of change, as well as dissemination of information and methodologies, and, therefore, helping more mature staff develop new digital skills.
Adoption of digital solutions involves a paradigm shift regarding the frequency and quality of information received, posing the need of process re-engineering and design of new ones. In this sense, it’s also important to analyse the regulatory and technological context, using also market benchmarks so as to take advantage of their systems and processes configuration. The organizational design phase is paramount when adopting new technologies and to monitor and exercise new implemented processes. Assessing the current situation, identifying roles and skills required through the definition of skill maps of current workforce and, consequently, the identification of main gaps with respect to the new reference skill framework, make possible to launch improvement initiatives and reduce worthless activities.
Furthermore, selection and adoption of complex digital solutions requires strong market and technology awareness and a deep knowledge of company’s specific needs, so as to carry out an effective procurement. In fact, procurement itself can become tricky for companies unable to clearly define their needs and their expectations, with the risk of losing the chance of carrying out a proper and complete digital transformation. An effective procurement strategy should not only be congruent with new digital architecture, but also be able to take advantage of the best-in-class technologies.
BIP Role
To make the most of the opportunities presented for their development and address the future challenges water companies should rely on a partner able to assure:
- Subject Matter Experts know-how for better investment and technology supply decisions, given the currently complex and constantly evolving scenario;
- Project Management related to complex initiatives of digital infrastructure evolution;
- Processes re-engineering activities, to maximize opportunities generated by the newly introduced technologies;
- Organizational sizing and re-design, to integrate new processes, skills and technologies requirements;
- Re-skilling and up-skilling planning, to optimally reallocate resources and increase the added-value generation;
- Strategic planning support, selecting investments able to assure normative compliance and value generation;
- End-to-end financed projects selection management, and reporting activities support.
BIP has successfully developed and applied all the skills necessary to accompany its customers toward the IUWM technological transition and digital transformation.
Furthermore, our multidisciplinary approach and extensive experience in the field, assure a solid knowledge baseline, able to minimize project effort and maximize results.