Stage set for proliferation of private finance in US utilities
Capital expenditure by US water and wastewater utilities is expected to top $532 billion between 2016 and 2025, but the upturn is unlikely to be funded by federal budgets.
Instead, state and municipality budgets, ratepayers, and private financiers, are in the frame to provide the capital required to address aging infrastructure, growing demand, and stronger environmental regulations.
"We anticipate that upgrades will usher in new infrastructure technology and financing solutions. Opportunities for private capital are expected to proliferate," said Reese Tisdale, president of Bluefield Research, which analysed planned spending by utilities to produce the capex forecast.
Federal funding for water utilities has dropped by 73 per cent percent over 38 years, to $4.3 billion in 2014, down from $16 billion in 1976. Meanwhile, residential water bills have climbed by 5 per cent every year during the past 15 years, and sewerage bills rose by 20 per cent annually over the same period.
The squeeze on budgets means that water companies will look to innovations including real-time data and analytics, smart water tech, and trenchless technologies, to help make their money go further. Of the $532 billion, pipes are expected to consume the lion's share, at 51 per cent ($271 billion), water plants will use 29 per cent ($154 billion), pumps 6 per cent ($32 billion), smart water tech 2 per cent ($11 billion), and 12 per cent ($64 billion), will go on other aspects of water.
The spending outlook is set out by Bluefield Research in its latest report, US Municipal Water Infrastructure: Utility Strategies and Capex Forecasts, 2016-2025.