The Energy Briefing team recently sat down with Waterscan Commercial Services Manager Nathan Morgan to find out more about his company, industry challenges and market opportunities…
Tell us about your company, products and services
Waterscan is an independent consultancy wholly focused on helping clients push the boundaries of sustainable water management. We provide practical and technical support from creating full water strategies to helping them make better water purchasing decisions in a recently deregulated marketplace.
What have been the biggest challenges the water sector has faced over the past 12 months?
It has been nearly three years since the non-residential water market across England and Wales became a competitive marketplace. This ‘open market’ introduced customer choice for the first time and it’s been good to see change happening and innovation occurring.
However, I think all involved parties would like it to happen faster. The development of the market is being impeded by poor data quality, anti-competitive behaviour and inconsistency across the marketplace. This is because we currently have dispersed systems, divergent processes and some market codes that are open to interpretation. This situation enables wholesalers to implement different solutions. This gives rise to a non-standard customer experience which is still driven by geographical location rather than the high quality, standardised single market experience that we’re striving for.
And what have been the biggest opportunities?
Self-supply, without a doubt. Customers that are choosing to self-supply their water are the highest performing trading party in the open water market, according to official Ofwat data. There are nine active self-suppliers to date across a wide variety of industrial sectors including, for example, Whitbread, Coca Cola European Partners, Kellogg’s, John Lewis and BT. This self-supply community is outpacing the rest because it is customer-led. These businesses have ownership of their own market performance and are motivated to deliver the best outcome that they can for themselves.
What is the biggest priority for the water industry in 2020?
Tacking long-unread meters (those that have not been read for 12 months or more). These are a huge issue across the water marketplace because, without accurate consumption readings, there can’t be accurate customer billing.
The self-supply community is driving change and signalling to other trading parties just what can be done on this. Our work with BT is a great example. BT has reduced its long-unread meters by 88% in less than a year and, with more than 5,000 supply points, this demonstrates what is achievable across a sizeable estate.
What are the main trends you are expecting to see in the market in 2020?
I expect to see water’s leading ladies – Rachel Fletcher and Sarah McMath, the Chief Executives of Ofwat and MOSL respectively – getting strict with any parties that are impeding progress towards an efficient open market. They’ve already been sending strong signals that they will no longer accept poor performance and reluctant relationship building – from any market participant.
What technology is going to have the biggest impact on the market this year?
Fast-tracking the planned industry bilateral hub will solve many of the issues around data, efficiency and the customer experience, leading to a more effective market.
In 2025 we’ll all be talking about…?
I would like to see the introduction of further competition when it comes to the supply of water and wastewater services; for example, in meter operations and in waste collection and treatment facilities. A centralised, digital marketplace to allow third parties to introduce new products and services to companies operating in the market would also fuel further innovation.
What’s the most surprising thing you’ve learnt about the water sector?
From my experience of attending the Self-Supply Users Forums, it’s interesting that control has proved to be a more important driver for customers over price. Through initiatives like the Self-Supply Users Forum, self-suppliers have gained a strong and clear understanding of the market which enables them to make decisions and take positive actions that support their operational and sustainability goals. This level of control has proved to be an incredibly important factor.
What’s the most exciting thing about your job?
Realising the benefits of innovating. Seeing customers who have chosen to take the leap into unchartered waters and self-supply achieve great things. They have transparent data on which to make effective business decisions. Many are achieving consumption savings that go beyond initial expectations. For those organisations with a complex property portfolio, there are tangible administrative efficiencies too.
And what’s the most challenging?
A key challenge is that there’s a general apathy around the open water market. Unlike when the gas and electricity markets opened, awareness of the opportunity to renegotiate and switch water suppliers – currently around 50% of eligible businesses – is not high enough and few feel the need to act.
Part of the reason for this is that water is rarely part of the conversation when it comes to sustainability. We talk a great deal about the impact of carbon, plastics and the food chain but not about the impact of water inefficiency and that’s a real problem. The Environment Agency predicts that water demand (which is going up due to population growth and business development) will exceed water availability (which is going down due to climate change and aging infrastructure) in the UK within twenty years. At this tipping point, when water starts to become a scarce commodity, businesses will start to prioritise water. My challenge is to get them thinking about water long before this.