NIC0028

Written evidence submitted by Arqiva

 

Arqiva is a communications, infrastructure and media services company that is the only large-scale provider of smart water metering infrastructure in the UK. We work with some of the UK’s largest water companies, including Anglian Water, Thames Water, Northumbrian Water and Yorkshire Water, to support the digital transformation of their businesses. Through the provision of our ‘Advanced Metering Infrastructure’ (AMI) smart water meters, companies gain insight into the amount of water going into properties within the network on an hourly basis.

Arqiva welcomes this opportunity to respond to the Committee’s call for evidence concerning ‘Critical National Infrastructure and Climate Adaptation’. Looking ahead, society, industry and the UK at large are confronted by a range of challenges, created by the escalating impacts of climate change and the anticipated future fluctuations in water demand and supply. The actions taken over the next decade by the water sector will be critical in protecting our natural environment and ensuring the continual delivery of plentiful and secure water supplies for years to come.

Through this response, Arqiva wishes to highlight that:

The effects of climate change are making rainfall less reliable which, together with an increasing population and unresolved leakages in both water and wastewater services, is placing ever-increasing pressure on water resources. Findings from the Climate Change Committee (CCC) have already argued that actions taken to help bolster the nation’s resilience and adaptation to the effects of climate change have “failed to keep pace” with growing climate related risks.[4] However, the CCC emphasises that “further reductions in water use by households would make them less vulnerable to water shortages” in the future.[5] Following the passage of the Environment Act 2021 and standing at the helm of the water sector, the regulator Ofwat and the Government will both play critical, guiding roles.

It is incumbent on Ofwat, the Government and the private sector to work together to ensure the resilience of our water resources and support the public in making environmentally conscious decisions. This is an area where the water sector has already shown strong leadership. However, a long-term approach that is pro-smart metering, through the PR24 process, is now needed. This approach should recognise the benefits of creating a truly digitised water infrastructure network and provide the incentives and support required to accelerate the delivery of this network through a rollout of smart water meters. 

The Government’s regulatory approach also needs to place a greater emphasis on AMI smart meters as the most effective means of enhancing the sector’s resilience and maximising benefits to customers. The near real-time data provided by these smart water meters gives water companies a much more accurate and up-to-date measurement of water usage across the distribution chain than conventional ‘dumb’ Automatic Meter Reading (AMR) meters. These benefits have been proved at significant scale with nearly 1 million meters providing hourly reads across our customers.

Arqiva would welcome the opportunity to meet with the Committee to discuss our points regarding the direct benefits of smart metering.

 

Laurie Patten

Director of Strategy and Regulation

 

 

Written evidence submitted by Arqiva

Arqiva welcomes the opportunity to respond to this call for evidence on the resilience of the UK’s critical national infrastructure (CNI) to climate change. Noting the Committee’s interest in ‘opportunities presented by technological solutions (such as AI and digital twins) for anticipating and managing the implications of climate change for CNI’, Arqiva wishes to highlight the important role of Advanced Metering Infrastructure (AMI) smart water meter technology in enhancing the resilience of the UK’s water sector to climate change.

The UK’s water sector is increasingly vulnerable to the effects of climate change, particularly through the “increase in extreme water events such as… droughts”[6], as this call for evidence highlights. In March 2019, Sir James Bevan, Chief Executive of the Environment Agency, suggested climate change poses the biggest operating risk to the UK’s water resilience, with increasing shortages due to hotter and drier summers[7]. The effects of climate change are making rainfall less reliable which, together with an increasing population and unresolved leakages in both water and wastewater services, is placing ever-increasing pressure on water resources. Without urgent action to address the sustainability of our water supply, the UK faces severe water shortages in the coming decades and parts of the UK will run out of water in the next 20 years.

This pressure point is becoming increasingly urgent. Recent findings from the Climate Change Committee (CCC) have argued that actions taken to help bolster the nation’s resilience and adaptation to the effects of climate change have “failed to keep pace” with growing climate related risks.[8] However, the CCC emphasises that “further reductions in water use by households would make them less vulnerable to water shortages” in future. [9]

To successfully mitigate and adapt to the effects of climate change, it is incumbent on the Government, the regulators and the private sector to work together to ensure the resilience of our natural resources and support the public in making environmentally conscious decisions. This is an area where the water sector has already shown strong leadership, however a holistic government-led approach is now needed that utilises the strengths of every aspect of the water industry and encourages a partnership approach.

Smart metering is a long-term investment enabling the data insights businesses need to plan effectively. AMI has an economic life of approximately 15 years and enables water companies to be truly flexible and adapt to water usage. By contrast, short-sighted investments will cost water companies, consumers and society in the longer-term. In comparison with AMI, Automatic Meter Reading (AMR) meters provide less clarity over water usage and leakage and do not provide the detailed data that can support the sector in planning for the future.

Arqiva considers that Government and regulators have a vitally important role to play in delivering a holistic policy and regulatory framework that drives and supports resilience of the water sector to climate change over the long-term; from the management of wastewater and sewage, to incentivising and supporting the water companies to support their customers actively manage their water usage.

Benefit 1: The role of smart water metering in delivering a resilient water sector

As mentioned, Arqiva believes that smart water meters can play a critical role in enhancing the resilience of the UK’s water supply. The connectivity that smart water infrastructure provides enables water companies to actively manage their network and take action to reduce leakage and implement technological solutions that support environmentally conscious decision-making. However, the implementation of these networks is not uniform across the UK or between nations.

To achieve the water industry’s resilience objectives at the fastest possible pace, there needs to be a meaningful acceleration in the nationwide rollout of smart water networks and metering. The hourly data provided by AMI smart water meters (in contrast to AMR meters which deliver data much more infrequently), provides a much more accurate and up-to-date measurement of water usage across the distribution chain. This allows the industry to identify leaks more quickly and with greater efficiency, reducing water consumption, waste and overall costs, and increasing the sector’s resilience to future demand fluctuations. Furthermore, data on household usage allows consumers to become engaged themselves in saving water, helping to drive down per capita consumption. 

For example, in April 2021, Thames Water celebrated the installation of half a million smart meters in its region. The company claimed that as of that date, smart meters had helped to detect over 28,000 leaks on customers’ private supply pipes, saving up to 43 million litres of water per day. At the time, Thames Water said that “customer side leaks account for around a quarter of Thames Water’s total leakage and the meter data was cited as playing a large part in the company meeting its leakage reduction target in 2019/20.”[10] This example alone presents a significant indicator of the positive impact the technology could have if there was encouragement for it to become more widely deployed.

 

Benefit 2: The role of smart water metering in countering climate change and protecting the environment

Arqiva believes that the most profound and urgent risk facing the water sector, and society at large, is the climate emergency. The water sector’s ability to reduce its strain on the UK’s natural resources will have a fundamental impact upon the country’s efforts to prevent the deterioration of the environment. Indeed, evidence shows that smart water metering technology, if deployed at scale, can make significant contributions towards the UK’s trajectory to net zero emissions. 

The water sector has already shown strong leadership in the fight against climate change, committing to a target of net zero by 2030 for its operational emissions. However, given that approximately 6% of the UK’s total greenhouse gas emissions each year (circa 27 MtCO2e[11]) comes from activities relating to the production and use of water, it is clear that further measures to reduce the amount of water we consume as a society, and protect existing water supplies, are urgently required.

Arqiva’s analysis shows that smart water metering can directly contribute to the UK’s ambitions to meet net zero economy-wide by 2050. Based on evidence compiled in conjunction with Waterwise on the impact of smart meters that have already been fitted, we estimate that if just one million smart water meters are fitted in the UK each year for the next 15 years, then by the mid-2030s, savings of at least one billion litres of water a day (1,000 Mld) could be made and the UK’s current total annual greenhouse gas emissions could be reduced by up to 0.5% (2.1 MtCO2e).[12]

The Government and Ofwat have a vitally important role to play in delivering a holistic policy and regulatory framework that drives and supports change over the long-term and within every aspect of the sector; from the management of wastewater and sewage, to incentivising the water companies to support their customers to actively manage their water usage.

As such, Arqiva recommends that the Government and Ofwat devise regulatory frameworks to encourage and support greater investment in, and uptake by customers of, AMI smart meters, especially in high water stress areas.

 

Benefit 3: The economic case for smart water metering and its benefits to the consumer

As mentioned, Arqiva believes smart water meters can support greater resilience for the UK’s water supply, but this technology can also provide additional benefits to consumers by enabling them to track and reduce their consumption. Changing consumer behaviour in the short term will be vital for ensuring the resilience of the UK’s water sector into the medium and long term.

Important new research has suggested that a coordinated and accelerated roll out of smart water metering across England and Wales would deliver huge benefits for households, the environment, and the water industry. Independent research[13] commissioned by Arqiva and carried out by Frontier Economics and Artesia shows that a coordinated rollout of smart water metering across England and Wales would deliver £4.4bn in benefits to society against costs of £2.5bn; a net benefit of £1.9bn. The new analysis points to a clear environmental and social benefit from the implementation of smart metering with £1.73 saved for every £1 of cost incurred. Savings would come from improved leakage control and network management, and by avoiding the need for other water resources. Smart metering reduces the amount of water which must be extracted and processed, resulting in lower costs for water companies, in addition to the resilience and environmental benefits we describe in this response. The study highlighted a positive benefit-to-costs ratio in all areas of England and Wales with the highest ratio in the South-East and East of England, reflecting higher existing meter penetration and greater water scarcity in those areas.

In fact, just focusing on the costs incurred by the water companies, our research shows that there is a positive investment case for smart water metering. The expenditure on smart water metering is more than offset by cost savings on leakage control, network management and avoided costs of other water resources. The study from Frontier and Arqiva concluded that overall, across England and Wales, a Smart Water Metering programme “will cost £2,537 million (NPV over 30 years) but will result in offsetting cost savings for water companies of £3,263 million.”[14]

Further, research from Waterwise[15] has found encouraging signs that the public is receptive to the technology. Nine in ten already have smart technology in their home and 87% would consider getting a smart water meter if it would lead to a reduction in bills and was fitted for free. Crucially, this research highlighted that smart metered customers are more likely to be aware of the water scarcity challenges we face in the UK, are more likely to be aware of their own water use, and are much more likely to act to try to save water[16].

Customers can also benefit through reduced household bills. Recently, Thames Water highlighted the additional benefit to customer bills that can result from improved water efficiency measures supported by smart meters. In their December 2021 report on ‘Smarter ways out of water poverty,’ Thames examined the data from their ‘Smarter Homes Visits’/smart meter network and water efficiency audits. They found that customers consuming more than 500 litres per day can benefit from a bill reduction of between 8-17%, equivalent to a saving of between £40 and £166 per year[17]. The benefits, therefore, of investing in smart metering should be encouraged with a long-term view of meeting objectives for sustainable water resources, whilst delivering positive outcomes for consumers.

 

Conclusion

Arqiva welcomes the Committee’s call for evidence as an opportunity to set out the clear benefits that smart water metering could deliver for the UK’s future water resilience, in addition to the water sector, the environment, the economy, and customers’ bills. The rollout of smart meters needs to be a focus for policy makers and regulators and incorporated into the wider approach taken to address the challenges of climate change. In addition, it is important that the water sector adopts sophisticated AMI smart meters which capture far more data and enable greater responsiveness, as opposed to standard AMR or “dumb”, meters, which do not offer the same long-term scope to support actions that help combat climate change and ensure a greater resilience of the UK’s water supply.

 

Laurie Patten, Director of Strategy and Regulation

 

24 February 2022

 

 


[1] Arqiva and Waterwise, Smart water metering and the climate emergency, April 2021

[2] Frontier Economics, Artesia, Arqiva, Cost benefit analysis of water smart metering, November 2021

[3] Waterwise, Arqiva, Exploring public attitudes towards smart water metering, November 2021

[4] Climate Change Committee, Independent Assessment of UK Climate Risk, June 2021

[5] UK Climate Risk, Water Briefing – Findings from the third UK Climate Change Risk Assessment (CCRA3) Evidence Report 2021, June 2021

[6] National Security Strategy (Joint Committee), ‘Call for Evidence Critical National Infrastructure and Climate Adaptation’, February 2022

[7] Sir James Bevan, ‘Escaping the jaws of death: ensuring enough water in 2050’, March 2019

[8] Climate Change Committee, Independent Assessment of UK Climate Risk, June 2021

[9] UK Climate Risk, Water Briefing – Findings from the third UK Climate Change Risk Assessment (CCRA3) Evidence Report 2021, June 2021

[10] Thames Water, Thames Water hits half a million smart meter milestone, April 2021

[11] Arqiva and Waterwise, Smart water metering and the climate emergency, April 2021

[12] Arqiva and Waterwise, Smart water metering and the climate emergency, April 2021

[13] Frontier Economics, Artesia, Arqiva, Cost benefit analysis, assessing the social and environmental case for a smart water meter rollout, November 2021

[14] Frontier Economics, Artesia, Arqiva, Cost benefit analysis, assessing the social and environmental case for a smart water meter rollout, November 2021

[15] Waterwise, Arqiva, Exploring public attitudes towards smart water metering, November 2021

[16] Waterwise, Arqiva, Exploring public attitudes towards smart water metering, November 2021

[17] Thames Water, Smarter ways out of water poverty, December 2021