By Nicole Tuggle
IMS Research – now part of IHS, Inc. – has been covering the global water meter market for well over a decade, producing annual market research on every aspect of the industry. In the past year or two the majority of industry attention and press has been geared towards the growth of smart two-way water metering and also the growing use of static measurement technologies in residential applications.
Lost in these narratives is the growth in market revenues occurring globally, primarily in developing economies, where governments are increasing the availability of piped potable water and increasing metering initiatives on existing water connections. These developments offer significant revenue opportunity to suppliers, one that almost matches the forecast cumulative five-year market volume of the more often covered smart water meter segment.
Currently only half of the estimated 2 billion households and buildings worldwide have water meters installed. For comparison purposes, over 75% of global households and buildings are connected to an electricity meter and almost 100% of buildings with a gas line are metered. Globally water service varies rather dramatically, and amongst the three main centrally supplied utility types it is the least often metered. Water is unique in that there is a widespread belief that water is a basic need that everyone has a right to consume. Therefore, the charge for water service can tend to not equal the actual cost of providing water. In developed and developing regions alike, bills are estimated for households without a meter connection based on a flat rate pricing structure.
Many sub-regions and countries in the developing regions of Asia and Latin America struggle with accessibility to potable water. Countries with growing economies, most notably China and Brazil, are making a concerted effort to improve water availability and modernize related infrastructure to improve public infrastructure and health and promote economic development. A significant increase in the water meter connection rate is forecast in the coming years, as governments improve public services, water scarcity in certain areas of the world promotes conservation initiatives, and more accurate billing is needed.
Future investment in water metering infrastructure combined with low labour costs found in Latin America and Asia, limits the opportunity for communicating water meters and therefore high volumes of low cost basic water meters are shipped to these regions. With a combined $1.4 billion in water meter market revenue in 2012 to these two regions, less than 5% of this revenue was for communicating water meters. In unit shipment terms, communicating water meters accounted for only 1% of combined shipments to these regions in 2012 and while strong growth for communicating technology is predicted, in 2016 communicating water meters will still account for less than 2% of Latin America’s and Asia’s total water meter shipments. From a global perspective, only an estimated 8% of water meter shipments are anticipated to be communicating water meters in 2013.
The potential increase of metering connections presents a significant opportunity for water meter suppliers. For example, if 100% of global piped water connections were metered this would add roughly 2 billion new water meter endpoints from 2012 to 2016. This is roughly 40 times larger than the projected amount of total global communicating water meter shipments over the same time period. While a 100% water meter connection rate is a little far-fetched, at least for the foreseeable future, then let’s consider current projections for piped water and related infrastructure expansion. IHS predicts that the developing regions of Latin America and Asia will invest over $3.5 billion in basic water meters in regards to increasing water availability and modernization efforts from 2012 to 2016, compared to $5.8 billion in communicating water meter revenue globally anticipated over the same time period1.
1 “Latin America and Asia developing infrastructure” is defined as a new meter connection point as a result of new construction or increasing the meter connection rate to existing buildings that were not previously metered.
The World Market for Water Meters – 2013 Edition updates the global water meter market covering basic water meters, communicating water meters and communication modules.