Water Innovation

2015

All Party Parliamentary

Water Group

The views expressed in this publication are solely those of the authors and do not reflect the views of the All Party Parliamentary Water Group or any of its individual members and supporters.

Reception sponsored by

Foreword by the APPWG Co-Chairs

We are delighted to welcome you to this year’s Water Innovation Reception, our ninth annual reception organised and hosted by the All-Party Parliamentary Water Group. Over the last nine years our Innovation Reception has showcased the work of some of the most innovative organisations in the UK, displaying everything from technology to transform how water companies tackle leaks, to companies leading the way in reducing their water usage, delivering both economic and environmental benefits.

This year’s reception is the biggest yet and we are delighted to welcome such a wide range of organisations to Parliament to share their expertise, their ideas, and their enthusiasm for ensuring the UK remains a world leader in developing innovative solutions to a wide range of water-related problems.

We are particularly pleased that this year’s event sees the launch of the Geovation Water Challenge. Since 2009, Geovation has run challenges aimed at finding innovative ways of using open data to encourage everything from healthier lifestyles, to greener businesses and more sustainable transport infrastructure. It is fantastic that they are now turning their attention to water, and how geographic information and open data can help find answers to the question of how we more sustainably manage water use in the UK.

We hope that you find this year’s reception an informative and exciting showcase of some of the innovative work going on in the UK to improve how we use and manage water. This pamphlet sets out in more detail the work being done by this year’s exhibitors and we hope it will be a useful resource in presenting the potential for the UK to continue to be a world leader in this area.

Baroness McIntosh of Pickering

Angela Smith MP

Water challenge from Geovation

Since everything happens somewhere - Geography underpins all we do in life. Geographic information links people, places, processes (natural and man-made) and planet. In creating Geovation our aim was to generate meaningful social, economic and environmental value using collaboration, open innovation and open data. Our methodology is: ‘Innovation = problem x solution x execution’. This means we are looking for a business or venture using a well scoped and sustainable solution and business model that is well grounded in a problem worth solving, such as the issues we currently face, at both the global and local scale, with water. What we are also interested in is how these ideas and ventures can also be scalable to offer solutions UK wide or even globally, using the power of geographic information at their core.

Since 2009 Geovation has been responsible for providing almost £750,000 in development funding, creating 31 new ventures. The whole process is a test of resilience and humanity’s ability to tackle real issues head on and collaboratively.

Through running the Geovation Challenges, OS has entered into communications with different groups and bodies it would previously have been excluded from. By being included in these conversations our organisational view of the horizon has been greatly improved, and the challenges have also enabled us to gain valuable insights and feedback about our open data, and the other products and services we offer.

It’s a huge compliment to us that organisations in other countries and at home, such as Sir Tim Berners-Lee and Sir Nigel Shadbolt’s Open Data Institute (ODI), have found inspiration in the Geovation methodology and the work of a small but dedicated Geovation team. We look forward to growing engagement from commercial entities and government bodies in identifying and launching future challenges where geography, design thinking and technology can play a key role in solving recognised problems.

Dr Chris Parker

Geovation Challenge Manager Ordnance Survey

Funding innovation that improves our relationship with water

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““Past Geovation Challenges have encouraged healthier lifestyles, greener businesses and improved tourist experiences, neighbourhoods, transport infrastructure and the way Britain feeds itself.

Now we turn to our relationship with water, as organisations and individuals, and how geography and data can be used positively to address issues associated with: too little water, too much of it, poor water quality, an ageing infrastructure and the ways we use and consume water in our homes and workplaces, as part of the overall management of the water cycle.We are delighted therefore to be collaborating with Environment Agency, DEFRA (whose release of thousands of open data sets coincides with the Geovation Challenge), Southern Water, and United Utilities on OS’s ninth Geovation Challenge, in offering development funding and places on its Geovation programme for ideas in response to the Challenge question: “How can we better manage water use in Britain, sustainably?”

Individuals, start-ups and existing businesses and organisations are invited to submit their innovative ideas on how to improve the way we use and manage water between now and 27 January 2016. Ideas identified for their potential impact will be invited to a Geovation Weekend Camp from 4-6 March 2016, where the innovators will be asked to work on transforming their idea into a prototype venture. Those selected to receive a funded place on the Geovation Programme will be announced at the end of this camp.

Geovation Challenges are a special experience. We have the opportunity to work with incredible people who have real passion to improve the world. It’s contagious!

Ordnance Survey is also joined by Springwise in supporting the Challenge. Geovation.uk/challenge

The work of the Geovation team has not only injected a notable amount of energy and cash into the open data community, it has also provided inspiration for the Open Data Challenge Series run in partnership by the Open Data Institute and Nesta. As we actively support their current Housing Challenge, which complements our own, we look forward to the future and to many more challenges to come.

Briony Phillips, Programme Manager of the Open Data Challenge Series, Open Data Institute

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Water – a new direction

In 1989 water was among the most controversial of privatisations. Since then, private finance and independently regulated price limits have improved the environment, customer service and the reliability and quality of essential services - contributing significantly to economic growth, at almost nil cost to the taxpayer. On occasions the legitimacy of this model has been challenged. Bills have increased faster than inflation (allowing companies to invest more than £120bn to improve services); failures such as leaks and hosepipe bans tested customer patience; and investors benefited from efficiency savings and low interest rates. However, both regulated and regulators have adapted and responded to retain public trust. While challenges remain, including rising population, climate change, increased customer expectations and tighter environmental standards, the sector’s success presents opportunities for those grappling with today’s key policy issues: public expenditure, economic growth, resilience of services, competitiveness and the environment experienced by future generations.

Growth through infrastructure investmentThe water sector facilitates and generates economic growth. Infrastructure investment creates jobs and helps the communities we serve, and better river and bathing water quality have boosted leisure and tourism. Increasing resilience (such as our new water supply grid) also facilitates economic activity, enabling everyone to continue functioning in the face of droughts or floods. Reducing public expenditure Despite a constrained public purse, the UK urgently needs investment in flood defences. Water systems are complex, interconnected and don’t recognise barriers between public and private. As we already drain surface water from premises (and successfully absorbed the transfer of privately owned sewers), regulation should enable us to deliver integrated catchment infrastructure, combining flood defence and drainage. This will mean better outcomes, lower public expenditure and low financing costs due to water companies’ financing model.

David Elliott

Director of Strategy and New MarketsWessex Water

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Improving competitiveness We need new ways to deliver improvements at least cost and greater use of markets could deliver better outcomes for investors and customers and promote wider collaboration as well as competition. We have been at the forefront, separating the majority of our sludge and retail services over the past decade. A step-by-step approach to extended use of markets, following Professor Cave’s model of “test and evaluate”, should ensure that reforms benefit customers. Meanwhile, investor confidence remains crucial - there should be clarity on opportunities for rewards alongside increased risks, and care taken to ensure the value of the RAB in attracting low cost finance to the sector is not diminished. Sludge – harnessing innovation Creating GENeco helped us identify and exploit the intrinsic value of sewage sludge to the energy and farming sectors. GENeco treats and recycles food and liquid waste and difficult-to-treat biodegradable material, creating renewable energy and attractive alternatives to conventional fertilisers. Looking beyond cost efficiency and compliance, Ofwat could encourage better use of available resources, regulating sludge in a separate price control and mandating some separation between sludge and the remainder of the wholesale business. A direct say for customers Customers’ voices are increasingly central, with unprecedented engagement prior to the 2014 price review, but they could have more influence on the final outcome. We favour an approach that allows Ofwat to step back from defining specific outcomes to be delivered, to better fulfil its primary duty to protect consumers; also we promote multi-agency, community negotiation rather than traditional customer engagement.

The water environmentOur medium-term vision is for a multi-purpose, catchment-based approach with the Environment Agency acting as an independent system operator, commissioning solutions for natural capital, supply, demand and land drainage. Water companies could bid alongside farmers, insurance companies and local authorities to provide solutions and operate new assets. In the short term, our catchment panel already mimics the role of a system operator, bringing stakeholders together to promote solutions to common objectives. In summary, there are real opportunities to build on the water industry’s success, to contribute further to wider societal objectives: • Defra should review charging guidance and rules for

new development to ensure these are transparent and promote housing growth.

• Public expenditure can be reduced by extending the use of the RAB model, in particular for flood defence, with water companies and others bidding into a reformed EA acting as a catchment system operator.

• Market approaches should be developed step-by-step to maintain customer and investor confidence in the sector while improving competitiveness.

• Ofwat should amend sludge treatment and recycling regulation, to promote a more commercial approach that extracts most value from available resources.

• Ofwat should allow more direct agreement of service outcomes between customers, communities and companies, promoting greater trust and confidence in the sector.

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Level playing field in the English water market

Open Water’s market architecture plan advised water companies preparing for retail competition to focus their efforts on ensuring they met level playing field requirements. That means doing their bit to ensure all retailers in the market have equality of opportunity to compete for customers, irrespective of their size, history or relationship to the wholesaler.

As 2017 nears, exactly how companies should go about this is still far from clear. The Water Act does not prescribe legal separation and other competitive markets sport a variety of different models and degrees of wholesale/retail division.

Ofwat’s arrangements for PR14 – four discrete price controls for each water company business area (water wholesale, wastewater wholesale, household retail and non-household retail) – put the foundations in place for organisational separation.

As a market design and governance specialist Gemserv has written a paper which provides direction on what

specific actions water companies could take to ensure they are compliant in time for market testing in October 2016.

It cautions: “It is clear that ultimately the buck will stop with the companies and a proactive stance towards these issues is advisable.”

Whilst it will be for each company to decide its own precise course of action, our experience in other markets informs a recommendation that clear, organisational separation is advisable as it:

• helps water companies align their operations with the new market, which is structured on the basis of retail and wholesale activities;

• protects against potential legal action/non-compliance fines;

• protects against reputational damage in the event that legal or regulatory enforcement action is taken;

• helps water companies demonstrate to new entrants they take their obligations seriously;

Paul Witton-Dauris

Business Development Manager (Water)Gemserv

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• assists in briefing staff on their responsibilities; • helps in communicating with customers about who

does what in the new market; • gives focus to those parts of the business and

can lead to better outcomes for both the retail and wholesale activities; and

• allows wholesale activities to be further developed in readiness for changes proposed for 2019 and beyond without unduly impacting on the retail part of the business.

The internal business areas likely to require intervention to achieve organisational separation are identified as organisational structure; processes; data ownership and access; IT; finance (including financial and management accounting); people; communications towards customers; and office space requirements.

Companies will have to make a call in regard to each item as to where to strike the balance between ensuring compliance and footing the bill for implementing change. However, the paper suggests two sensible “early actions” companies should consider: separating their activities supporting non-household customers into an organisational unit and location; and putting up ‘Chinese wall’ information barriers to prevent information exchanges that may breach commercial confidentiality.

More broadly, we are encouraging any company not already underway with level playing field preparations to implement an organisational structure consistent with the likely demands of the competitive market and to ready their compliance arrangements.

Finally, each company should be designing and implementing its market readiness programme, so it is able to engage with all stakeholders in the market in a timely fashion.

Drawing on extensive work in other markets, we have aimed to identify some potential pitfalls firms should bear in mind in making their level playing field preparations.

Lessons from the electricity market suggest new entrants will closely scrutinise incumbents’ wholesale/retail cost allocations, and will question areas such as compliance with regulatory guidance, whether incumbent retailers bear an appropriate proportion of costs and any cross subsidies in place that would benefit incumbent retail businesses.

Secondly, plenty of other markets have thrown up doubts over information access and commercial confidentiality where wholesalers and incumbent retailers share integrated IT systems. Incumbents need to carefully consider whether to stomach the up-front cost of developing new separated systems for peace of mind, or to re-engineer existing systems and hope new entrants are satisfied with the controls put in place.

Finally, staff will need to be briefed clearly on any new role they take on in light of competition, and be trained on how to operate in the new market. This could be a real challenge for employees used to monopoly markets. There is as much danger from staff “sleep-walking into non-compliance” as from explicit attempts to discriminate.

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Britvic and water innovation

Britvic is one of Europe’s leading soft drinks companies, with operations in Great Britain, Ireland, France and Brazil. From juice drinks to colas, we produce some of the UK’s most iconic soft drinks brands, including Robinsons, Fruit Shoot and J2O as well as Pepsi, 7Up and SoBe, which we bottle under license from PepsiCo in the GB and Ireland. Producing so many of the country’s favourite drinks naturally means that water consumption is at the very core of our business; not only do we use water to make up our drinks, but it’s widely used across the entire manufacturing process. Given water is a vital resource, not just for us but for our communities worldwide, we are committed to minimising our consumption and protecting the environment.

By 2020, across all of our operations, we are aiming to improve our water intensity ratio to 1.4litres/litre produced, and we are well on our way. In fact, since 2013, our GB business has reduced its absolute water use at manufacturing sites by 26% and its water intensity ratio by 22%.

In order to make these reductions, we have had to change the way we operate and identify innovative ways of preserving the water we use. For example, at our factory in Leeds, we have begun to capture the water we use for our rinsing process, and now use it to cool our pasteurising equipment. Additionally, at our Norwich site, we re-worked our bottling lines to automate our cleaning processes and run times in order to reduce the water we used. This alone helped us save 8.8million litres of water, more than the amount it would take to fill three Olympic size swimming pools.

Our work on water stewardship to date has centred on building our knowledge and capabilities as well as engaging with the NGO community, both as an individual company and as part of the wider British Soft Drinks Association (BSDA). With the help of the WWF and their Water Risk Filter software, we have established the water related risks within our direct supply chain. We are now investigating how to address the identified high risk areas with new innovative projects.

Alison Rothnie

Senior Sustainability ManagerBritvic plc

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Embrace the future

Change is the key word for the water industry as the sector enters the sixth investment period AMP6. For the water companies the focus is on customers and their needs. Alongside comes the introduction of TOTEX (Total Expenditure) bringing life cycle assessment back into the thinking and from 2017 the opening of the retail and wholesale markets in England and Wales.

It is safe to say that the water landscape is undergoing a fundamental change. Add into the mix changing demographics, rapid development of technology, rapid increase in data transfer and an ever changing climate; the water sector will evolve dramatically over the next 10 years.

Innovation is at the heart of that evolution, why, because innovation is about ‘introducing something new’; new ideas, new products, new solutions, new ways of working. The water sector must constantly challenge itself, constantly look to the future and not be afraid to embrace change.

During 2015 the former Society of British Water &

Wastewater Industries (SBWWi) rebranded as the Future Water Association an organisation determined to shape the future of water through collaboration, innovation, education and by inspiring the supply chain to think creatively. This vision is underpinned by a modern, dynamic entity that: • has expanded Water Dragons (Dragons Den for

Water) to include schools;• is delivering the ‘Innovating for the Future’ Roadmap

through a series of sector initiatives;• supports and promotes excellence; • is in discussion with Government and regulators

about ‘future regulation’.

Looking forward ten years the sector needs to be fully integrated across research, academia, industry, utilities and Government and there must be a focus on strengths of the water industry. Future Water Association is an active member of the UK Water Partnership launched in 2015, which aims to coordinate and facilitate, innovation and business across the UK water sector and support growth across key international markets.

The sector needs new blood, new skills and an adaptable workforce and Future Water Association is in discussion with the Engineering Council and Solutions for the Planet about schools initiatives linked to Science, Technology, Engineering and Mathematics (STEM) Partnerships are being developed with professional bodies across the sector such as Institute of Water and CIWEM, alongside Institution of Mechanical Engineers and Institution of Civil Engineers, to foster greater thinking, collaboration and innovation across the sector.

The changing sector needs a new approach and organisations that have a clear vison of the future.

Paul Horton

Chief Executive OfficerFuture Water Association

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Water challenges and opportunities

The UK Water Partnership was launched in February 2015. Chair Richard Benyon MP says: “There is no more valuable resource resource for our economy and for our society than water. It grows our food, drives our industry and protects our country’s outstanding natural beauty. As a former water minister I have first-hand experience of dealing with some of the great challenges and opportunities faced by our water sector. It is my clear view that we have an opportunity to make much more of the wealth of expertise and ingenuity we have in water.”

The public-private Partnership has two primary goals:• To improve understanding, cooperation and

coordination across the diverse water community, allowing the UK to respond more effectively to the challenges of global water security and the need for resilience in a changing environment

• To more effectively deliver and implement research outputs and innovation, so that the UK wins a greater share of the global water market.

The Partnership has three distinct but inter-linked delivery groups: Research and Innovation; Development and Implementation, and Commercialisation and

Economic Growth. These are overseen by a Leadership Council which acts as an advocate for the sector, as well as providing critical challenge in key areas.

Achievements from the first nine months of the Partnership include:• A published strategic vision • A thoughtpiece for the Foresight Future of Cities

project • An RCUK showcase on Water in Future Cities,

attended by around 200 people from across academia, business, third sector and government.

• Published reports on water and agriculture • A report on a more holistic approach to Droughts

and Floods

Future deliverables include:• Hosting an Indian delegation on water governance

in spring 2016• A research, innovation and testing facilities register• A strategy for growing the UK’s testing and

demonstration facilities• An international UK hosted water event in 2017/18• A floods prevention project as an international offer

The Natural Environment Research Council (NERC) leads for the research councils in supporting the UK Water Partnership. One of NERC’s research programmes, in collaboration with the Met Office and other partners, is the Storm Risk Mitigation Programme. This has contributed to better understanding of the processes and modelling of North Atlantic storm development and their tracks and impacts on catchments and coasts.

For information on membership of the UK Water Partnership see theukwaterpartnership.org/about-us/our-supporters/

Richard Benyon MP

ChairThe UK Water Partnership

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About the APPWG

Following the 2015 General Election, the All-Party Parliamentary Water Group has reformed and is looking forward to a busy schedule of meetings over the course of this Parliament. Over the coming months the Group will be holding meetings on a wide variety of topics ranging from affordability, to resilience, the introduction of retail competition in the water sector, the role of water supply in public health, and many more.

The All-Party Parliamentary Water Group brings together parliamentarians and stakeholders from a range of sectors with an interest in water issues. It provides a forum for discussion and debate on a wide range of policy areas and issues relating to water.

The Group is led by our team of Parliamentary officers:

Co-Chairs: Angela Smith MP and Baroness McIntosh of PickeringVice Chair: Neil Parish MPTreasurer: Earl Selborne

If you are interested in supporting the Group or would like further information about our activates and future meetings, please contact the APPWG secretariat:

James Moseley 020 7592 9592appwg@connectpa.co.uk @appgwater

All Party Parliamentary

Water Group

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APPWG in pictures

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Reception sponsored by

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