H2.O – Pushing Past the Clichés Towards the Future of Water Innovation
On September 10-11, Cleantech Group hosted its second annual Water Innovation Summit in Berkeley, California. Representatives from VC firms, corporates, startups, municipalities, and more gathered to debate issues ranging from repair drones in water pipes to financing infrastructure in emerging markets. Our strategy for the Summit was simple: define top challenges throughout the ‘water cycle’ and uncover opportunities to accelerate innovation at each step. However, what quickly became evident, as with many water-related conversations, is that the challenges are complex and solutions are interconnected.
In fact, in summarizing the Summit, Peter Gleick from the Pacific Institute, referred to a few ‘water clichés’ that seem to emerge from any discussion of water challenges and solutions:
- Water is more than technology; we must consider cultural and political challenges. The confluence of all three—technology, culture, and politics—is the key to making water work. This was particularly noted by leaders from the World Bank and WaterHealth as critical to solving challenges in developing countries. New technologies and business models must be accompanied by an authentic understanding of personal, cultural aspects of water in addition to local regulations. Some innovators in the room provided insight on how to leverage these competing factors—for example, WaterSmart takes advantage of culture and behavior to incentivize consumers to use less water.
- We don’t have the money or the financing model is wrong. We were often reminded during the event that taking on water challenges will require trillions of dollars in investment. In particular, as explained by experts from American Water and East Bay Municipal Utility District, municipalities will need significantly more money to install smart meters and fix aging pipes. And while over a billion dollars of venture money has been put into the sector since 2011, the sector has not provided very many venture returns, nor a large number of successful exits which was identified as a major barrier for VC and corporate investors alike.
- We need more data. The cliché is that we need more, but the reality is that we need to improve the quality and use of data. In other words, as described by a leader from IBM’s Venture Capital Group, there is a critical need to unlock the value of data. Data needs to be standardized and interpretable for all parties. A pointed example was noted in one session: data collected from ETWater’s irrigation system needs to be able to talk to data collected from Sensus’ advanced metering software—otherwise its value is lost in its overabundance.
- Water is hard. The event never failed to remind us of the cliché that water is both hard and simple. We have the technology (but still need more), we have lots of money (but still not enough) and we have plenty of smart, passionate people in this space (but there is room to do more together).
- Let’s talk more than once a year. It is a rare sight to see leading VCs such as XPV Capital, Cleantech 100 innovators like Ostara, Fortune 100 corporates such as Dow Chemical and Chevron, and federal regulators from the EPA all sitting in the same room to discuss water innovation. We might even venture to say that the last time a meeting this prominent took place was a year ago—at our last Water Innovation Summit! While great for sparking dialogue, if these forums are not followed up with meaningful, frequent collaboration, the key players likely return to autonomous approaches to solving core challenges. However, accelerating change will require a better understanding of the varying needs of each stakeholder—the hurdles faced by the venture capitalist interested in investing in water innovation and the municipal utility operator working on operational excellence are dramatically different. And, as we observed over the two days, these core players are too infrequently communicating with each other. This sector may have all that is needed in the way of data, financing opportunities, and technology as a starting point—what it now needs is a willingness to act and collaborate.
- Let’s integrate our challenges and solve them together. The individual sessions of the Summit focused on each phase of the ‘water cycle’ such as supply/distribution, demand/use, and reuse/recovery. However, the reality is that each portion of the ‘cycle’ relies on the next and disaggregating the issues will only compound the problems. It’s time to start solving challenges as integrated inputs. For example, when thinking about a ‘smarter’ water infrastructure, we must consider the fragmented wastewater infrastructure as a critical piece—this was noted as a particular challenge by municipal operators working on integrating recycled water into current systems. In addition, when incentivizing reduced water demand, we must determine how we do the same for energy—a challenge acknowledged by energy-consumptive corporates who cannot to afford to view these issues in isolation, such as Google. Innovators solving for integrated challenges such as Energy Recovery and Grundfos, who both shared of their approaches to water- and energy-efficient technologies, will have the most success.
- Let’s diversify our approaches and share our results. With representative from varying geographies present, we learned that the regulatory and technological challenges are not the same in Massachusetts, Ontario, or Haiti. Infrastructure, pricing, and quality challenges vary; we should therefore not be afraid to try a variety of solutions. The innovative financing model brokered by United Water, the City of Bayonne, and KKR may not be the silver bullet for all municipalities. The forward-thinking conservation approaches that were shared as examples by leaders from East Bay and Southern Nevada utilities may not work for all either. However, as success stories of new business models, financing mechanisms, and technologies, they provide impactful illustrations of how each stakeholder might tackle local innovation challenges. Continuing to look for the silver bullet will be time wasted but piloting, collaborating, and sharing successes could be the way forward for this global yet local issue.
Stay tuned—there’s more to come: Be sure to stay tuned for the release of Cleantech Group’s white paper and quarterly webinar, both in October, summarizing other insights from the 2013 Water Innovation summit. Also, for more information and data on the Water & Wastewater sector, check out the i3 platform.