Improving water efficiency was one of the desired outcomes that Ofwat had on its list of success factors for the opening of the retail water market and this is arguably more necessary now than ever before given the recent weather conditions. Whilst everyone has a role to play in reducing water use; it will take a strong commitment from those in the industry to help ensure this objective is achieved.
Ofwat’s review of the first year of the retail water market estimated that business customers who had switched or renegotiated a better deal with their current supplier, will have reduced their water consumption by between 270 and 540 megalitres (MI) – the equivalent of between 100 and 200 Olympic-sized swimming pools, and that those same customers will go on to save between 380 and 740 MI annually. This is a great start but we can – and should – be striving to achieve so much more.
Although water efficiency is often touted as one of the benefits that the retail water market will deliver, it will take more than the creation of an open market to realise its full potential. A key contributing factor will be raising awareness to ensure customers truly understand the benefits of water efficiency and how using less water often has a positive impact on energy efficiency too. Take up of services designed to help customers reduce their water use has been low to date; Ofwat reported that whilst interest in water efficiency is high, only 0.2 per cent of those who switched or renegotiated in the first year of the market referenced water efficiency and leak reduction services as a benefit of switching. And yet, the case for reducing water use has never been more compelling.
Customers can achieve significant cost savings by reducing the amount of water they use; that has to be a key selling point in a new market where there is switching inertia amongst SME and mid-market customers in particular. The low margins limit the level of discounts available and therefore reducing water usage becomes a key way in which customers can deliver sustainable reductions in their water costs.
In addition to the cost savings, a focus on water efficiency will also help to generate greater environmental efficiencies – either to contribute towards customers’ own sustainability targets or those set by government. We only need to look at the extreme weather conditions experienced this year to understand the very real need to address this issue. Problems such as water shortages during periods of drought are likely to continue to recur, but by working together we can help reduce the demand for water by encouraging customers to use water wisely.
Whilst it will take a commitment from everyone – retailers, wholesalers, customers, regulators and Government – to deliver tangible improvements in water efficiency, I do believe that we in the industry can play a key role in promoting its importance. This is something the Waterwise Retailers Leadership Group has been set up to encourage. The Group provides an opportunity for retailers to work together to share ideas and best practice, as well as promote more ambitious water saving targets for customers. The first meeting took place at the end of June and plans are now underway to establish a work programme and priorities for the year ahead.
As well as a collective approach, there are lots we can do individually as retailers and indeed wholesalers, to help customers reduce their water use – because aside from the customer benefits, it’s quite simply the right thing to do. At Business Stream we recently launched a pledge to help our customers reduce their water usage by 20 per cent. To deliver on this pledge we will be working with our customers, in particular those who haven’t adopted water efficiency measures to date, to identify and deliver water efficiency solutions that suit their needs. We have also launched a campaign to help raise awareness of the importance of water efficiency and to promote the steps – big and small – that customers can take to make a real difference to the amount they use.
We all have a role to play to ensure we only use the amount of water that we need. Regardless of a customer’s main incentive, be it to cut costs, to generate efficiencies, or to help tackle current or future environmental challenges – a greater focus on water efficiency will have a significant impact. It really is that simple.
Jo Dow will be speaking at Utility Week Congress, held on 9 and 10 October in Birmingham