The UK's share of the global water technology market could be worth £8.8bn by 2030, providing 71,000 jobs and involving around 960 small and medium enterprises (SMEs), suggests a new report published by the UK Water Research & Innovation Partnership (UKWRIP).

The first comprehensive attempt to analyse the UK's current and future performance in the global water technology market, HTech0: Tapping the Potential: A Fresh Vision for UK Water Technology highlights global opportunities worth over $50bn in the next six years alone.

However, the report is warning that competitors are forging ahead and if the UK fails to catch up within three years, they will be so far ahead that the UK will miss the boat.

Despite successful water privatisation, world class consultants and a reputation for fair dealing, the analysis says the UK has just 3% share of the global water technology market and lags way behind pioneering countries such as France, the US, Japan and Germany.

Report lead Mark Lane, chair of British Water and UKWRIP business & economy action group leader, is calling for urgent action to address the issue:

"The economic and environmental case for raising the UK's global game on water technology innovation is compelling. But we must act fast. If we don't make significant changes within the next three years, our competitors will have pulled too far ahead to catch up with."

The report highlights the “fractured and disparate nature” of the UK’s water technology sector and the significant market potential available worldwide if this fractured approach could be eliminated.

Areas of opportunity where the UK could expand its global market share in water technology innovation include wastewater reclamation, smart water, flood security and remote-sensing monitoring systems.

Key challenges include addressing the lack of alignment between research and commercial opportunity, as well as the gap between basic knowledge generation and subsequent commercialisation into marketable products. This will involve providing access to independent national testing, validation and demonstration facilities, complemented by a more co-ordinated and focused international marketing strategy, with a more compelling national branding of UK water capability. This will be important as a catalyst to accessing new market opportunities.

Global water market could be worth $8.6 trillion by 2050

The report says that required expenditure globally on water and sewerage to 2050 amounts to $8.6 trillion at a conservative estimate and identifies opportunities which amount to over $50 billion in the six-year period to 2020.

However, the UK’s share of the global market in water technology is just 3% (£1.5 billion), involving around 15,000 jobs in 400 small and medium-sized enterprises (SMEs).

The report says that the UK could realistically increase its global market share in water technology innovation to at least 10% (£8.8 billion) by 2030, providing 71,000 jobs and involving around 960 SMEs.

Ten key areas alone worth $200 billion-plus in next six years

The report says “huge commercial opportunities will be ripe for exploitation” even within the next six years, quantifying ten examples of major market opportunities.These include:

• $23 billion – the projected size of the wastewater reclamation market by 2017, as wastewater is transformed from budget-sapping burden to water, energy and nutrient-rich resource
• $16-23 billion – the projected size of the smart water market by 2020 as demand grows for real-time data that aids active water management
• $4 billion – the forecast size of the market for monitoring and remote sensing (eg via satellite) by 2020. Such technology can help to anticipate sewer flooding and other incidents, and provide real-time data on water resources and their usage
• $3.4 billion – the market for advanced irrigation anticipated by 2016
• $2.3 billion – the market for smart soil-monitoring systems anticipated by 2020.
• $82 billion – the municipal and industrial market for water engineering and chemical products, growing at 8% per year
• $20-35 billion – the potential market for smart flood protection combined with sustainable urban drainage systems (SUDS) for road and surface drainage
• $19-26 billion – the projected size of the market for the treatment of ballast water from shipping
• $4-6 billion – the market in developed economies for water-efficiency solutions (eg waterless urinals, minimal-water washing machines)
• $3-5 billion – the size of the leakage minimisation and pipeline rehabilitation market.

UK is “undeniably a minor international player”

The report says there are at least six recognised water innovation hubs worldwide but the UK is not among them. Overall, the UK is undeniably a ‘bit player’ in the worldwide water technology sector. In 2013, global water and wastewater technology capital spending totalled an estimated £51.2 billion, reinforcing just how modest the performance of ‘UK plc’ currently is.

According to Tony Conway, Executive Director – Strategic Programmes, United Utilities:

“Despite successes and a long tradition of innovation in water handling and management, the UK sector punches well below its potential weight in global terms.”

UK significantly underperforms in many areas

According to the analysis, the UK currently significantly underperforms in many areas. In rainwater harvesting and greywater recycling, for example, the UK lags well behind its international competitors. To date, there have also been limited opportunities for UK firms to develop activities in SUDS. Even in the sphere of smart water – one of the most dynamic in the whole market – there is no coherent framework that encourages UK utilities to innovate. In addition, major global markets such as desalination and irrigation are notable for the limited presence of UK firms.

Negative perceptions are deeply rooted and UK seen as a niche player

The report says the UK’s innovative capabilities are often overlooked or underestimated, especially within the UK itself, citing concern about the UK utilities’ market dominance and a regulatory climate that inhibits innovation as a key reason. Such perceptions have a tangible impact, inhibiting funding and deterring investment at every stage of the innovation cycle.

Globally, the UK is seen as a niche player – companies have not secured a dominant position in any traditional water or wastewater market. The report suggests that currently UK companies have no coherent platform for making their collective presence felt worldwide.  A lack of integration at government, regulatory, company and utility level also means there is no single point of contact for firms keen to develop a presence at home or abroad.

Unlike its key competitors, the UK sector has no unified platform enabling it to project a coherent image to potential customers worldwide.

Lack of incentives at regulatory level

The report also flags up the UK’s regulatory framework as a key contributory factor in the country’s limited profile in the global marketplace.  Separate economic, water quality, environmental and flood regulators have created a fragmented framework that limits capacity to compete overseas. In particular, lack of regulatory incentives for innovation combines with utilities’ inherent conservatism to inhibit utility investment and product development.

UK has a disappointing track record

According to the analysis, overall, the UK has a disappointing track record in transforming water-focused research into real-world products and services. The report attributes this to a of number of factors, including:

Low R & D spend - Each year, water utilities in England and Wales invest an estimated £18 million in R&D. At around 0.18% of revenues, this compares unfavourably with the average figure of 0.4% for French companies - Veolia Environnement and Suez Environnement, for example. The report says R&D expenditure is in fact falling (eg from £28 million in 2002/03 to £23 million in 2007/08).

Lack of a central innovation hub - Innovation activities need to be co-ordinated and disseminated. Absence of a hub also slows down the trialling and demonstration of innovative products – testing with several utilities is currently necessary because each has different standards.

Water has not been an explicit Technology Strategy Board priority - In 2011, the Technology Strategy Board decided against establishing an innovation platform in water because it felt that the UK water utilities were insufficiently supportive of investment in innovation, although water is treated as a cross-strategy theme.

Lack of capability within the utilities - Academics working in the sphere of water innovation report that water companies have neither the staff nor resources to innovate or develop new technologies systematically.

Lack of a UK test bed for water technologies – seen as a key factor preventing the development of a genuine national UK water technology cluster.

Innovation clusters are key factor for success

The report suggests that innovation clusters drawing together private and public sector expertise can provide fertile ground for growth - international examples cited include Canada, Germany, Israel, the Netherlands, Singapore and the US. However, current UK innovation clusters are limited in scope and challenges exist around: central co-ordination; a shared sense of focus to join the dots between researchers, entrepreneurs, investors, companies and large infrastructure projects; and clear branding to secure inward investment and global outreach.

The report says a partnership approach – currently absent in the UK – has acted as an engine of growth, providing a robust basis for the development of competitive, innovative companies capable of impressive export performance, commenting:

“Innovation clusters and a partnership approach involving government, industry and academia have helped competitors to build a big lead over the UK.”

Four key steps needed for UK to take 10% share of global market by 2030

To meet the report's 2030 vision of a 10% UK share of the global market, the report is calling for four essential steps:

• a strengthened public-private UK Water Research & Innovation Partnership to provide leadership;
• a sharper focus on commercial opportunities and customer needs;
• independent national testing, validation and demonstration facilities;
• and a co-ordinated international marketing strategy.

UKWRIP is now developing a costed business plan to deliver its four essential steps – the Partnership says it will welcome offers of support moving forward.

The scale of the challenge is undoubtedly formidable – whether the UK can now move swiftly enough to overcome a currently fragmented industry, the lack of co-ordinated and compelling national branding of UK water capability for international markets and  no- overarching research or industrial strategy for water remains to be seen.

Click here to download HTech0: Tapping the Potential: A Fresh Vision for UK Water Technology