Sources: Bluefield Research LLC, Boston; CP staff
Municipal water & wastewater utilities’ budgeting suggests pipe, treatment plant and pump expenditures will exceed $532 billion between 2016–2025, representing a 28 percent increase against comparable investment over the 2006–2015 window. The projected 10-year total is split by water treatment, supply and delivery, 48 percent; wastewater treatment and conveyance, 44 percent; and, storm water management, 8 percent.
“Our research indicates that the water utility sector has finally emerged from the economic downturn, which undercut public spending in water infrastructure by almost 15 percent from 2009 to 2014,” says Bluefield Research President Reese Tisdale. “We anticipate a surge of network upgrades to address aging infrastructure, scaling populations, and tightening environmental regulations nationwide that will usher in new infrastructure technology and financing solutions.”
While capital expenditure levels are forecast to rebound, the firm’s new report, “U.S. Municipal Water Infrastructure: CAPEX Forecasts and Utility Strategies, 2016-2025,” finds a) a significant decrease in federal funding for water utilities—$4.3 billion in 2014 versus $16 billion in 1976—has shifted investment burden onto states, municipalities, and ultimately ratepayers; and, b) residential water and sewer bills have increased annually 5 percent and 20 percent, respectively, since 2000, but total collections are expected to continue falling short of infrastructure needs.
“Unfortunately, all of this spend[ing] is not expected to cover the full cost to catch up to an aging system, particularly if the federal government is not going to step in,” Tisdale observes. “For this reason, public-private partnerships will begin to take on greater significance. They enable deployment of more advanced solutions in an industry that does not lack technology options, but rather capital.”
The enormity of the municipal sector’s capital requirements is compelling utility decision makers to adopt new, more advanced and cost effective approaches to infrastructure management and build-out, notes “CAPEX Forecasts and Utility Strategies.” Going forward, markets for trenchless technologies, real-time data & analytics, or smart water, and advanced treatment solutions are expected to show significant growth. Opportunities for private capital in the municipal water sector are also expected to proliferate.
Staying ahead of 1.6 million miles of rapidly aging underground water and wastewater pipe networks poses the single largest financial challenge facing the nation’s municipal water utilities. Bluefield has forecasted an almost doubling of capital expenditures on pipe networks from the previous decade, reaching almost $300 billion over the 10-year period. While construction companies and traditional pipe suppliers will maintain a stronghold on the investment pool, Bluefield staff cite the likelihood of greater adoption of cured-in-place pipe rehabilitation and pipe bursting replacement as utilities seek to extend installed networks’ service life with limited system disruption. — www.bluefieldresearch.com