Private companies are positioned to bridge an investment gap of more than $500 billion for drinking water and wastewater treatment in the US over the next 20 years, according to a report from Bluefield Research.
The report, US Private Water Market: Opportunities & Strategies, 2014, says a revised regulatory landscape is shaping new opportunities for private players looking to invest strategically in US water.
A major step forward for the market came on June 10 when President Obama signed the Water Resources Reform and Development Act (WRRDA) into federal law. WRRDA aims to alleviate investment gridlock, which has plagued US water infrastructure over the past 25 years.
A series of private water-friendly proposals accompanies WRRDA, including the creation of a federal water authority, removal of caps on private water bonds, and guidelines for public-private partnership (PPP) legislation to support municipalities’ financing upgrades and optimizing water management.
Currently, private water suppliers operate in a hyper-fragmented US market that contains more than 100,000 systems. Privately owned water supply networks serve 15 percent of the US population. This market structure has challenged companies to realize economies of scale and capture synergies across asset portfolios.
However, Bluefield analyzes how a diverse set of strategies — ranging from greenfield development by independent water suppliers to pursuing the investor-owned utility (IOU) model through acquisitions — is helping companies enter and grow in the US.