European Utilities Investing $526 Billion in Municipal Water over Next Decade

BARCELONA, Spain (Sept. 22, 2016)—European utilities are planning to invest more than $526 billion in water and wastewater infrastructure between 2016 and 2025, according to a new forecast from Bluefield Research. A combination of drivers including utility market restructuring, water and wastewater directives, and improved efficiency have encouraged cities and public water utilities to resume the most aggressive investment programs Europe has seen since 2007. Bluefield anticipates annual water infrastructure investment to increase 23 percent, from $46 billion in 2015 to $57 billion in 2025.

“Water infrastructure needs steadily increased during Europe’s fragile economic growth. Now the region is poised for a renewed push in CAPEX growth,” Bluefield Research Vice President Keith Hays said. “After years of delayed projects due to macroeconomic instability, Europe’s water utilities acknowledge investments must be made to secure networks for the future.” Europe will focus its CAPEX investment in two key areas: wastewater and pipes. An estimated 61 percent of spending will be allocated to improve wastewater infrastructure and the remaining 39 percent will be for water infrastructure. As much as $256 billion will be dedicated to maintaining and expanding Europe’s 6.7 million kilometers of aging and leaking pipe networks. Europe’s highly fragmented municipal water market, with more than 61,000 water and wastewater systems serving in excess of 509 million people, has begun consolidating. Led by France, Italy and the U.K., the number of water and wastewater service providers dropped by 16 percent between 2008 and 2014. Bluefield expects this consolidation trend to continue, bringing much needed economies of scale and more efficiencies, while unlocking new funding for network improvements. While Europe, as a whole, is investing in infrastructure, market conditions vary across the region. Southern Europe faces water stress from higher consumption levels and lower resources. Eastern Europe is focusing on wastewater while addressing cost-recovery. With more severe rainfall events expected, Northern Europe leads investment for flood resilience of treatment facilities and improved stormwater management. “Grappling with stagnating population growth and decreasing household water consumption, European utilities are becoming smarter and more resilient,” Hays said. "To get the most out of new technologies and deliver on performance targets, service providers must also commit to major CAPEX investments for underlying infrastructure.” These findings are found in Bluefield’s new report: Europe Municipal Water Infrastructure: Utility Strategies and CAPEX Forecasts, 2016-2025. Bluefield Research provides data, analysis and insights on global water markets.