Blockchain’s potential to disrupt water supply remains divisive
Blockchain has the potential to help secure water transactions in the future but at the moment it’s largely over-hyped, according to utility expert Rebekah Eggers from IBM.
The industry leader for energy, environment & utilities said that blockchain has more near-term potential in water billing, distributed permitting and supply management.
However, she added that currently many cases “are theoretical because there is no regulatory construct that supports blockchain at the moment”.
“If you think about trading water credits and the ability to have rights to water - if you’re able to ultimately track that with a digital twin then you can understand where there is a need for water and where there is an abundance,” she said. “Water could then be transferred and tracked in that fashion.”
The blockchain ledger
Despite fluctuations in cryptocurrencies such as bitcoin, the potential for blockchain to disrupt several industries has been well publicised, from banking, to energy, healthcare and many others.
By 2020, 77 percent of companies surveyed are expected to adopt blockchain as part of an in-production system or process, according to PWC’s 2017 FinTech report.
The technology is, in its basic form, a digital record distributed across the internet and allows two users to conduct a transaction without the need for a third party or central company, such as a bank or PayPal.
One of the main selling points to date on blockchain is that it can provide a 100 percent secured, verifiable and traceable database, or a ‘ledger’ of transactions.
IBM claims to have over 400 “blockchain client engagements” with one water project in Africa set for a “blockchain upgrade”.
In Kenya, IBM Research has been developing a Water Management as a Service Platform (WMaaSP) as a unified platform for surface and groundwater data collection, system servicing, billing, data collection and action.
The platform links satellite reporting from borehole and flowmeter sensors with GIS water resource mapping to a dashboard and action platform. Data collected shows the runtime of each groundwater extraction pump, with sensors reporting daily regardless of the pump runtime.
IBM said this allows “an identification of a failed sensor differently from a non-operational pump”.
According to Eggers, blockchain technology will soon be integrated with the Kenya project to enable transparent, traceable and distributed borehole permitting, water billing, financing.
“There is room for growth in how we address challenges,” she said. “The water sector is so incredibly fragmented. All of the organisations that are part of it are doing the best they can to solve and optimise the problem at hand. However, they are not looking across the board. The greatest opportunities are when we break down those silos.”
Other industry experts believe blockchain has the potential to bring utilities together.
Professor Dragan Savic, CEO of the KWR Watercycle Research Institute agreed that there is “a lot of hype about blockchain and few other topics about the potential for ‘digital water’” but that as a wider topic, it has the potential to take water utilities into the 21st century “where everything can be measured”.
He said: “As for blockchain, one example that I feel strongly about the potential of the technology, is with sharing of data among utilities. They are reluctant to contribute data to joint databases, often citing confidentiality and commercial sensitivity as the key reason.
“However, data mining, analytics and AI outcomes depend crucially on the quality and quantity of data. Imagine, what would happen if a number of (or why not all?) water utilities pooled their pipe failure data for the analysts to develop asset deterioration models.”
The CEO believes that if data was pooled and involved all 10 big water companies in the UK, or the same in the Netherlands, it would enable “better models to predict deterioration of assets and provide better planning of investment”.
KWR recently analysed pipe break data across Japan, the Netherlands and Sweden and compared data registration, failure rates and models. Such an analysis on a larger scale could have an impact on asset management and planning, he said.
Savic added: “The bottom line is that the blockchain technology could alleviate the fear from the utility about the security and confidentiality of data and provide analysts with better datasets to use in their analyses.”
Peer to peer trading
Other industry experts believe for the wider sector there is the potential to see water trading at a peer to peer level.
One example is Civic Ledger that has used blockchain to improve water trading in Western Australia, allowing smaller irrigators to enter the market by reducing intermediaries. This company has also been investigating how a blockchain micro trading platform could open up rain water trading with residents near Melbourne.
“This application opens up a whole host of potential solutions to incentivise domestic customers to consider how they might play a part in conserving water,” said Dr Benjamin Tam, managing director, UK, at Isle Utilities.
A final example is the potential use of blockchain technology to finance water treatment by embedding smart contracts and a cryptocurrency for payments. This idea has been developed by water treatment technology company Origin Clear using a system called ‘Waterchain’.
“This is probably the boldest idea out there and not straight forward but could be a hugely innovative way to accelerate the adoption of new technologies that lack access to capital, especially in emerging markets,” commented Tam.
He added: “As with most technology development, anticipation often causes a spike in interest and the hype peaks before implementation and proof of benefit. I have no doubt that over time we will see blockchain integrated into many aspects of the water sector.”
Overcoming key barriers
Keith Hays, VP and managing director of Bluefield Research, believes one potential for blockchain is the real time clearing of transactions for decentralized water purification.
Bluefield anticipates three key barriers that need to be addressed to unlock the potential of blockchain:
- First, improving measurement of water volumes on networks must be tightened up before it can be tracked/transactionalized like bitcoin.
- Second, environmental agencies' regulations require greater teeth to ensure effluent standards, in addition to tighter monitoring.
- Thirdly, the IT integration tasks implied with wholescale deployment of blockchain are significant - although not insurmountable. Operationalizing data and other network information, whether over an external blockchain token platform or an internal event management system, suggests seamless sharing of data between multiple platforms (SCADAs, operations management, customer billing) that is not yet a reality at most utilities.
Hays added: “It is an exciting prospect for blockchain to sidestep the water industry's legacy issues and leapfrog slower-moving state water utilities.”