The Case for Resourcefulness
More than a century after the first public power station was built, the invention of the light bulb and the widespread move to indoor plumbing, utilities have become inextricably linked with the prosperity of nations, serving as an engine of commerce and enabling significant quality of life improvements.
Now more than ever, utilities ? along with consumers, governments and other institutions ? are being called upon to find ways to ensure that water and energy resources are used more effectively and efficiently. In some instances, this is viewed as a burden, or even as a drain on economic vitality. But, a growing body of evidence suggests that countries and utilities actually benefit economically from making the investments needed to achieve a higher level of resourcefulness.
This report from Itron aims to add to that body of evidence by shedding light on how utilities can help contribute to national resourcefulness and economic growth. We start with a simple premise ? that by more effectively managing the delivery and use of gas, water and electricity, utilities can play a central role in meeting rising energy and water demands and promoting economic stability.
This study marks the first step in exploring the ties between resourcefulness and economic growth. By combining survey results with economic data, this report provides a new view of the utility industry?s role in national competitiveness, while at the same time capturing the consumer perspective on the state of the utility industry.?These insights help drive a new dialog about the roles utilities, consumers and governments play in managing and conserving energy and water and how that will lead to greater social and economic opportunities that will shape the future of resourcefulness.
Key Insights
This study measures the opinions of global gas, water and electric utility executives, along with consumers, to gauge how resourceful they think the industry is today to identify perceived barriers to progress and help envision solutions for a more resourceful future. Key perception study insights include: Modernizing infrastructure; educating the public; and developing a future-proof business model.
The Industry Must Continue to Modernize
The survey found that regardless of where leadership responsibility falls, utility executives and consumers agree there is a need for transformation and infrastructure investment. This need for transformation remains widely recognized. A total of 83 percent of utility executives feel transformation is needed, while 55 percent believe the industry is not running efficiently and 21 percent believe the state of the infrastructure will be worse in five years. Among water utility executives, only 40 percent believe that the industry is running efficiently.
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Of note, utility executives? confidence in the industry?s outlook has improved slightly from last year. Specifically, 11 percent fewer reported a need for transformation and 26 percent fewer reported infrastructure will be worse in five years. Utility executives are also more confident about the industry outlook than consumers.
Consumers? current concerns include lack of educational programs, personal information security and distribution leaks. For example, 54 percent of those surveyed agreed that education about consumption and conservation is low or lacking. Compared with last year?s results, this year there is a trend that both utility executives and consumers agree that modernization and access to information are necessary for continued reliable service at a time when resources are strained in some parts of the world and demand is on the rise.
Technology & Software Are Key to Transformation
Investments in business intelligence/analytics are a major focus. This year, the survey specifically asked utility executives what technology investments they would prioritize. Nearly one-third (29 percent) reported that business intelligence/analytics would be at the top of their investment wish list. Analytics deliver value by turning data into information utilities can use to improve smart grid and smart water distribution operations.
For example, in the United States, there are currently about 150 million electricity meters, of which more than 40 percent are smart meters with more advanced functionalities that generate large amounts of data. For many utilities, fully analyzing the data to extract more value is a top priority.
Networks and IoT are driving investments in big data tools. As utility systems become networked and interconnected, the management of big data is increasingly becoming more important. The vast majority of utility executives, 81 percent, will adopt big data processes. This is especially true for water executives, with 85 percent of respondents saying they need big data tools. Investing in tools to manage big data is crucial for modernizing infrastructure, according to 80 percent of all utility executives. In fact, 80 percent say ?without big data, you can?t have smart cities.?
Educate the Public
Study results show there is a growing disconnect between utilities and consumers regarding consumer education. Among consumers, 54 percent believe there is a lack of information about consumption and conservation. However, utility executives ranked consumer/educational programs as the first to go if they had to reduce their budgets by 10 percent.
There is a disconnect in the dialog between utilities and consumers. This year, 66 percent of utility executives believe they have been successful in consumer engagement, an increase from 55 percent last year, yet consumers feel less informed about the utility industry and are less satisfied with the information they are receiving. Only 14 percent of consumers are satisfied with the communication from their water providers. Consumer education is vital to spreading efficiency and conservation practices to end-users in order to achieve greater resourcefulness.
Consumers want more ?news you can use? from their utilities. Nearly half of consumers continue to believe utilities should focus on educating consumers about consumption and conservation; however, utility executives surveyed put consumer education and conservation programs at the bottom of their investment wish list.
Government, utilities and consumers need to work collaboratively to boost resourcefulness. Both consumers and utility executives agree that national policy and regulation are large factors influencing resourcefulness. This creates a challenge as utilities make the case to invest in tools that empower consumers.
Water Resourcefulness Index
This year, to reflect a broader assessment of the relationship between resourcefulness, and social and economic health and competitiveness, the study compiled macroeconomic data from third-party sources, including the World Bank, World Economic Forum, Global Water Intelligence and others. Research data was combined with survey findings to create a national resourcefulness ranking for the countries surveyed, resulting in two new indices: the Energy Resourcefulness Index and the Water Resourcefulness Index.
Regarding water, results from the research reveal that the top five countries in water resourcefulness tend to have high levels of water meter penetration and low levels of non-revenue water. Interestingly, while the top two countries, Australia and Canada, are comparable in population and landmass, they provide a stark contrast in water abundance ? Australia is dominated by an arid interior, while Canada has one-fifth of the world?s fresh water supply and almost 10 percent of its surface covered in water.
Australia performed strongly across all three pillars and was ranked the strongest in efficiency as a result of having the largest meter market per capita and low proportion of non-revenue water. It also ranked highest in innovation, given the high level of government investment in environmental R&D.
Canada also performed well in all three pillars, with the strongest fundamentals and the second strongest efficiency. Canada maximizes its ample water resources by harnessing hydropower to generate approximately 60 percent of its electricity. Japan, the U.K. and Germany also ranked in the top five most water-resourceful countries. Japan excelled in efficiency, while the U.K. performed strongly in the fundamental and efficiency pillars, driven by waste and wastewater coverage rates.?
The Path Forward
Energy and water consumption have increased over the past 30 years ? and will continue to do so. As such, resourcefulness will be one of the defining trends of this century. The insights from this report can help all stakeholders prioritize the need for investment in technology, infrastructure and education.
The opportunities and consequences of inaction are too great to ignore. To put this enormous potential waiting to be harnessed into perspective, consider the cost of current waste in the United States: $13.1 billion in water, $25 billion in electricity transmission and distribution and $2 billion in unaccounted for natural gas. In total, almost $40 billion is lost through wasted resources every year. That is no small sum considering in 2008 alone, state and local governments in the U.S. estimated their total expenditures at $93 billion annually for wastewater and drinking water infrastructure. Worldwide, utility infrastructure spending is expected to total more than $9 trillion by 2025, up from $4 trillion in 2012.
As an industry, we?re taking strides toward becoming more resourceful with the energy and water resources we have by applying technology and empowering?consumers to manage energy and water use. But there is still more work to be done.
This study indicates that to address the top concerns identified in this report, utilities need to take a leading role in a new era of resourcefulness. They can become the voice behind the need for transformation to address the following key themes:
- Modernizing infrastructure;
- Educating the public; and
- Developing a future-proof business model.
Utilities should to continue to invest in methods and technologies that enable the effective and efficient use of our resources. To do so, partnership will be key.
This article is an excerpt of the 2015 edition of Itron?s Resourcefulness Index, which offers a unique perspective on the state of the utility industry and global resourcefulness. The report examines both executive and consumer attitudes within the utility industry, surveying more than 900 informed consumers and 900 utility executives in 16 countries. To view the full version of the index and survey results, visit www.itron.com/index.
