Smart water management system
Smart water management system
Business Model Description
Smart water management system aim to improve water management efficiency in an all-around way with the help of IoT technology.Traditional end-user equipment will be upgrade to terminals that could produce massive amounts of data which will be used to inform water management decisions.
Expected Impact
Smart water projects can improve the quality and efficiency of water supply through rational utilization of water resources.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Hainan
- China: Gansu
- China: Hunan
- China: Yunnan
- China: Sichuan
Sector Classification
Infrastructure
Development need
Significant differences in terms of quality of the infrastructure exist between urban and rural areas in china. In rural areas, power grids are costly yet of poor quality, and water quality needs to be further improved. (1) China’s circular economy development faces great challenges including lack of standardization, difficulties in recycling low-value material etc. (2)
Policy priority
The 14th 5-Year Plan highlighted the importance of building a modern network of infrastructure that is smart, eco-friendly, safe, and reliable. (3)The State Council issued Action Plan for Cabon Peaking, in which promoting circular economy was listed among the ten major actions. (4)The "No. 1 Central Document"" for 2021 also highlighted the need to imporve rural infrastructure. (5)
Gender inequalities and marginalization issues
Significant differences in the quality of infrastructure between urban and rural areas in China exist. Rural residents struggle to get access to quality and green infrastructure.
Investment opportunities introduction
The IOAs in the infrastructure sector center around low-carbon waste treatment, as well as building safer and smarter supply systems of water and electricity.
Key bottlenecks introduction
Infrastructure construction requires large amounts of investment, most of which is government-led or requires subsidies. In some fields, such as waste management, policies and regulations are to be improved; in the field of water and energy consumption, pricing mechanism is also in need of improvement.
Utilities
Development need
Affected by cliamte change, major rivers in eastern China have witnessed decrease in the runoff volume since the mid-20th century. Frequent cliamte-related disasters also reduce the availability of water resources, contributing to water shortage in China. Along with accerlerated global warming, China will face more water resource risks in the future. (6)
Policy priority
The ""14th Five Year Plan for Building a Water-saving Society"" stated that China plans to build a water-saving society. Measures must be taken to establish a comprehensive water pricing mechanism reflecting water scarcity and supply costs. Explore to establish an integrated water management mechanism and encourage the engagement of third-party enterprises in water supply. (7)
Gender inequalities and marginalization issues
There is still a huge gap between rural and urban areas in terms of the water quality and wastewater treatment capacity.
Investment opportunities introduction
The IOAs in this sector center around water supply and treatment, and smart water management system.
Key bottlenecks introduction
The water industry is still facing challenges such as single business model, strong geographical restrictions, and insufficient scale.
Water Utilities and Services
Pipeline Opportunity
Smart water management system
Smart water management system aim to improve water management efficiency in an all-around way with the help of IoT technology.Traditional end-user equipment will be upgrade to terminals that could produce massive amounts of data which will be used to inform water management decisions.
Business Case
Market Size and Environment
> USD 1 billion
20% - 25%
In 2020, the market size of China's smart water industry was about 12.48 billion yuan. It is expected that to reach 37 billion yuan by 2026, with a CAGR of about 20%. (9)
Indicative Return
> 25%
In 2020, the gross margin of intelligent water business is about 35.9%, including He Da Technology 50.08%, Hanwei Technology 33.49%, Shenzhou Taiyue 60.11%, Creative Information 20.92%, Feilixin 19.9%, Donghua Software 28.59%, Sai for intelligent 32.03%, Goldwind Technology 22.68%.(10)
Investment Timeframe
Short Term (0–5 years)
Take Suntront Technology Co., Ltd.’s smart water cloud server as an example, the project payback period is 3.92 years (before tax). (11)
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Data
Impact Case
Sustainable Development Need
China’s water stress is on the rise due to the increasing demand from industrialisation and urbanization. The combination of inefficient water management and widespread water pollution has worsened the problem.
Gender & Marginalisation
Urban areas are outperforming rural areas in terms of smart water projects, which indicates a prominent regional imbalance.
Expected Development Outcome
The smart water management system will improve the intelligence level of urban water supply and sewage treatment systems, enhancing water use efficiency.
Gender & Marginalisation
Expansion in the layout of smart water projects in rural areas helps mitigate regional imbalance issues.
Primary SDGs addressed
6.4.1 Change in water-use efficiency over time
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Outcome Risks
The industrial control network that urban water services rely on is directly connected to management networks and the Internet, which exposes it to certain safety risks.
Impact Risks
More investment is needed to tackle the compatibility and problem-solving gaps between the smart water system and the actual application.
Impact Classification
What
The outcome is very likely to be positive, long-term and large-scale, because investment can advance the development of water supply.
Who
Residents in rural areas and towns/counties, where water supply systems are backward and incomplete, and those living in water-scarce regions can enjoy significantly improved access to water.
Risk
There are safety and compatibility risks associated with smart water systems.
Impact Thesis
Smart water projects can improve the quality and efficiency of water supply through rational utilization of water resources.
Enabling Environment
Policy Environment
(Policy document): The 14th 5-year plan stated that new smart cities should be built based on their gradings and classifications. Smart water services will be further developed with the development of smart water systems and be involved in the smart city system. (18)
(Policy document): In July 2020, the General Office of NDRC proposed new directions for urbanization, including the digital transformation of public infrastructures in counties and towns and in municipal administration areas including water management. (19)
(Policy document): In 2019, the Ministry of Water Resources proposed that an internet safety protection system specialized for water conservancy at the provincial level, water information network and anwater monitoring and sensing network should be developed. (20)
Financial Environment
Financial incentives: In 2018. the Ministry of Water Resources stated that we should deepen the reform of water resources investment and financing mechanism, boost investment in water resources, improve related policies, and actively direct and regulate the participation of social capital. (23)
In 2021, the Ministry of Water Resources pointed out that to facilitate smart water conservancy construction, all units should actively attract investment, expand capital sources, coordinate capital channels for major water conservancy project management. (24)
Regulatory Environment
In 2017, the ""Cybersecurity Law of China"" came into force stated that special protection should be provided for critical information infrastructures such as urban water-affairs public services. Cybersecurity ensures the healthy and long-term development of smart water services. (21)
In 2017, the Ministry of Water Resources issued the ""Measures for the Administration and Construction of Water Resource Informatization"", which specified the requirements for all parts of the water resource informatization projects. (22)
Marketplace Participants
Private Sector
Beijing Philisense Technology Co., Ltd., Integrated Electronic Systems Lab Co., Ltd., Suntront Technology Co., Ltd.
Government
Beijing, Fujian, and Chongqing provinces have all announced that investments would be made to vigorously develop smart water platforms. In addition, Hainan will spend 28 billion yuan on building an island-based green and smart water network during the 14th five-year period. (24)
Target Locations
China: Hainan
China: Gansu
China: Hunan
China: Yunnan
China: Sichuan
References
- (1) National Development and Reform Commission, Ministry of Finance, Ministry of Housing and Urban-Rural Development, State Administration for Market Regulation, and National Energy Administration, 2020, Opinions on the High-Quality Development of Urban Water, Electricity, Gas and Heating Industry By Reviewing and Standardizing Charges, http://www.gov.cn/zhengce/content/2021-01/06/content_5577440.htm
- (2) National Development and Reform Commission, 2021, "Fourteenth Five-Year Plan for the Development of Circular Economy", http://www.gov.cn/zhengce/zhengceku/2021-07/07/5623077/files/34f0a690e98643119774252f4f671720.pdf
- (3) Xinhua News Agency, The Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
- (4) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030, http://www.gov.cn/zhengce/content/2021-10/26/content_5644984.htm
- (5) https://www.gov.cn,2019, Rural Infrastructure Construction Upgrading is in Urgent Need, http://www.gov.cn/zhengce/2019-10/14/content_5439186.htm
- (6) China Meteorological Administration, 2020, Climate Change and Water Security, http://www.cma.gov.cn/2011xzt/2020zt/20200323/2020032307/202003/t20200318_549083.html
- (7) State Council, 2021, 14th Five Year Plan for the Construction of a Water-saving Society, http://www.gov.cn/zhengce/zhengceku/2021-11/09/5649875/files/146d1a6fcb7c42f3a4aad9dca6104719.pdf
- (8) h2o-china.com, Explanation of 20 Smart Water Cases, http://wx.h2o-china.com/column/1275.html
- (9) Forward Intelligence, 2022, 2021 Market Size and Development Prospects Analysis of Smart Water Affairs Industry in China, https://bg.qianzhan.com/trends/detail/506/220113-3c324805.html （10） Southmoney，2022，List of Top 10 Smart Water Enterprises，http://www.southmoney.com/gupiao/sjjh/202211/33086182.html
- (11) National Business Daily, 2015, Suntront Technology Co., Ltd. proposed to raise 780 million through private placement for smart cloud service platform development, http://finance.ce.cn/rolling/201512/08/t20151208_7374247.shtml
- (12) Forward Intelligence, 2021, In-depth Report on China's Smart Water Affairs Industry, https://bg.qianzhan.com/trends/detail/506/211223-f3e43c30.html
- (13) Management Professional Group, 2021, Future Development Trend of Smart Water Services and Reflections, https://baijiahao.baidu.com/s?id=1696374297395173536&wfr=spider&for=pc
- (14) Xinjiang Goldwind Science and Technology Co., Ltd., 2021, Review on 2020 Annual Report: Gross margin improved for wind turbine business with abundant orders on hand, https://data.eastmoney.com/report/zw_stock.jshtml?encodeUrl=5LXpPgHQwHEl8vhC1XdCk1Ahqw83CBvjoAYj/LXWDpk=
- (15) Focused Photonics (Hangzhou), Inc., 2021, Hawkeye Alert: Interest return/cash and cash equivalents is less than 1.5%, http://finance.sina.com.cn/stock/yyyj/2021-04-29/doc-ikmxzfmk9754177.shtml
- (16) Dayu Water-saving Group Co., Ltd., 2021, Dayu Water Conservation: Net profit attributable to the equity in 2020 fell 23.7%, and the decline rate was higher that of the revenue, https://stock.eastmoney.com/a2/202104201890852266.html
- (17) Forward Intelligence, 2021, Market Overview of China's Smart Water Industry in 2021, https://www.qianzhan.com/analyst/detail/220/210723-37cff076.html
- (18) State Council, 2021, Outline for the 14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through the Year 2035, http://www.gov.cn/xinwen/2021-03/14/content_5592884.htm
- (19) National Development and Reform Commission, 2020, Notice on Accelerating the Progress in Shoring Up Weaknesses in New Urbanization Development and Orderly Intelligent Transformation of Counties and Towns, http://www.gov.cn/zhengce/zhengceku/2020-07/29/content_5530869.htm
- (20) Ministry of Water Resources, 2019, Three-year Action Plan of Improving Water Conservancy and Internet Information (2019-2021), http://cn.chinagate.cn/news/2019-06/19/content_74899910.htm
- (21) Standing Committee of the National People's Congress, 2016, Cybersecurity Law of the People's Republic of China, https://www-pkulaw-com-s.qh.yitlink.com:8444/chl/4dce14765f4265f1bdfb.html?keyword=%E4%B8%AD%E5%8D%8E%E4%BA%BA%E6%B0%91%E5%85%B1%E5%92%8C%E5%9B%BD%E7%BD%91%E7%BB%9C%E5%AE%89%E5%85%A8%E6%B3%95&way=listView
- (22) Ministry of Water Resources, 2017, Measures for the Administration and Construction of Water Resource Informatization, http://xxzx.mwr.gov.cn/xxgk/zcfg/201711/t20171122_1014578.html
- (23) Ministry of Water Resources, 2018, Guiding Opinions on Accelerating the Modernization of Water Resources in the New Era, http://www.gov.cn/xinwen/2018-02/19/content_5267619.htm
- (24) Ministry of Water Resources, 2021, Guidelines on Vigorously Promoting the Smart Water Conservancy Construction, http://xxzx.mwr.gov.cn/xxgk/tzgg/202112/t20211227_1556995.html
- (25) Forward Intelligence, https://www.qianzhan.com/analyst/detail/220/210707-5ed6c3cf.html