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🗣️ "The 3 Painful Challenges the US Water Sector Desperately Needs to Overcome"

(don't) Waste Water!

Photo by Luke Michael / Unsplash

Table of Contents

Host: Antoine Walter
Guest: Alexander Loucopoulos | Partner | Sciens Water
Category: 🗣️ Opinion

Podcast’s Essential Bites:

[7:30] “Sciens is a global institutional asset management company. We've invested in many different types of asset classes, including private equity, venture capital growth equity. For the last about 15 years, we started focusing on real assets, which is taking […] sort of a hard asset, which […] could be real estate, could be a physical infrastructure, things of that nature, and deploying capital to it. So we did that successfully in multiple asset classes. But when we were looking to focus on just one asset class, we wanted to find something that was a very big growth market, where we could find ourselves really driving away. And water, […] there hasn't been a lot of interest from the finance field into water, because it happens to be so confusing, and difficult to understand that not a lot of people have spent the years I think you need to really understand and and appreciate the complexities and see through that to be able to put together the puzzle.”

[9:30] “I like to say [water] is literally everywhere, but nowhere. Because it is so confusing. […] It's part of industry, it's part of health. It's part of everything, so the main problem was we wanted to just begin and try to solve one of the main big problems. Because I think that's one of the main issues with water is that because it is so complicated, it kind of gets lost out there in terms of people trying to make sense of it. So I think the key is focus. And that took us a long time to even begin to understand that. And then we said, okay, let's just start with […] a couple of the main problems of water. […] So we said, let's just focus on the US. And let's focus on what we see as some of the main problems, and then work our way down in terms of actually trying to solve that. Because otherwise, literally, your head will go spinning around and around thinking of all the problems with water, because, frankly, I don't know, any problem that doesn't involve water.”

[10:51] “The first issue we found was there just way too many systems of water and wastewater utilities in the United States. Every time I say the fact that there's 60-70,000 systems in the US, people even in the industry, don't believe me. Because […] in France with there's a couple of dozen. So in the US, I think that's problem number one that we set out to solve.”

[11:12] “Problem number two is recycle, reuse. Again, I think people also don't realize in the US because it is such a big market that we recycle and reuse such a small percentage of our water yet every headline every three days in August and September, and October is of the lack of water on the West coast of the United States.”

[11:37] “Problem number three [is] just a deep infrastructure problem. The fact that the infrastructure in the US is really old. Europe's is even older, but has tackled it in a very more different way, because they've had to face the same issues the United States face, you know, earlier. But people I think, oftentimes headline that number and see the pipes breaking, and then they forget about it. […] It's the real infrastructure, which is the part that you can't see that […] is largely related to the underground systems and the water systems.”

[13:36] “In the US, the statistics [say that we] have about 50,000, water utilities, and then about 20,000+ wastewater utilities. […] And what makes the US so unique, is the way that the infrastructure grew, you know, 60-70 years ago. It's a vast land, it's very much not as centralized as Europe, didn't develop in a centralized, smaller geographical footprint area, with a much more pro private sector growth. […] So the byproduct of that 60-70 years later, is that you have big metro areas, but then you have suburbs or areas that have kind of grown in all these decentralized private wastewater and water systems. […] And the reality is that many of those systems are in the middle part of the United States, which doesn't get the amount of airtime and the amount of recognition that somebody does from New York from San Francisco. And it also doesn't have the capital or the political, federal capital, which is where a lot of that comes from in the United States to be able to fix those systems.”

[14:58] “The second problem is that a lot of these systems [are] actually completely private. There's thousands of these smaller systems that are actually completely private, which is, I think, very different from the rest of the world. […] In Europe, there may be a lot of systems, but I don't think they're private. In the US, […] 85% of the population is serviced by municipally run systems. But on the flip side, it's not 85% of the 70,000 systems are not public. It's actually the inverse. Most of the systems are actually small and private, which leads to even more confusion, even more issues, and an area that we identified that needs to consolidate.”

[21:18] “[There] is a mismatch between supply demand, or put it simply, the need for the US to recycle more water. […] That means treating it better, because as we've seen, in other parts of the world, you can reuse so much more of the water than in the US. […] We decided to […] focus on the more decentralized part of the market, which is less than 250,000 gallons a day.”

[28:09] “I do think hyper growth is possible. […] So hyper growth is 20-50% growth. I think, oftentimes, people think hyper growth is an Uber, a Twitter, a Facebook and just massive unicorns. That's not gonna happen in water. Water is such a local market, but to have growth that is well above market 20 or 50%, absolutely, if you find the right sector. […] There isn't going to be one technology that is going to be used across the board in every water utility in the United States that it's going to cause multi billion dollar water technologies. That's not, in my view, going to happen. But if you start putting the right pieces together, you can see pockets of water that are exhibiting that, that strong growth rate. And I'm hopeful that you'll begin to see those case studies in the next few years. And those case studies will fuel more business cases to keep at it.”

Rating: 💧💧💧

🎙️ Full Episode: Apple | Spotify
🕰️ 57 min | 🗓️ 09/08/2021
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