Spain: Need for wastewater treatment and more energy efficient distribution
What are the challenges and opportunities for Danish companies in the Spanish water sector? We have asked AVK and ASEAS, the Spanish Association of Water Supply and Sanitation, how they see the current situation in Spain.
AVK: Dry country means continuous investments
José Miguel Aranguren, Sales Manager, AVK Spain gives you the AVK perspective on the Spanish water sector:
The Spanish market is interesting because the country is dry. Therefore, the market will always be investing in new water infrastructure to develop the quantity and quality of water.
The past few years, the market focus has been on desalination, irrigation and waste plants. In the future, we believe that the sector will focus on technologies that allow remote control and energy efficiency. There are, however, no special trends at the moment. Due to special political conditions, investments are on standby and we do not know what the priorities of the new government will be.
Spain is a gateway to new markets
At AVK, we see Spain as a gateway to markets in Latin America and the Mediterranean area, because demands are similar. We cover Portugal and Latin America from Spain. Furthermore, the main Spanish water utilities and engineering & construction companies are developing large projects all over the world.
Approaching the Spanish market has demanded large efforts. AVK started working on the market in 1993 and due to the quality of our products, we focus on the water companies trying to build trust through good products and services. We still work by these ideas and that has made us one of the main valve suppliers in the sector. The past few years, we have acquired several local manufacturers in Spain and increased our activities in Latin America to make Spain one of the corner stones in AVK’s global strategy.
Add technical value to products
The Spanish market is complex. The solution needed depends on expectations and the specific situation. The main challenge for us has been convincing Spanish engineers that our product is the best option due to the durability and functionality. To overcome this challenge, we add technical value to all processes from design of our RDi department to supply of the products to our customers.
Entering Spain requires patience and effort. Spain is a large country and we recommend starting with small companies and from there build the business step by step. Study the market and map out the best focus for your company. If you do this study properly, you are likely to be successful. I would also recommend looking at Spain holistically and include the possible outreach to other similar markets.
AEAS: The urban water sector in Spain has several challenges
Gari Villa-Landa Sokolova, Head of International Affairs, AEAS reflect on key factors, the challenges and opportunities in the Spanish water sector:
The Spanish water sector explained
There are 3 key factors of the urban water sector in Spain.
- First of all, water is of public ownership, as stated in article 1 of the Spanish Water Law.
- Secondly, urban water supply is the highest priority among other uses, as established in our Water Law.
- Thirdly, and this is a really important factor, local governments are responsible for providing urban water services and establishing the management model for these services. It is important to highlight that Spain is formed by more than 8.000 municipalities. 84 percent of these have less than 5.000 inhabitants. There are more than 2.000 urban water systems (municipalities themselves plus groups of municipalities), which means that a great number of municipality-based regulators are involved.
AEAS, the Spanish Association of Water Supply and Sanitation, is a professional association more than 40 years old. We have around 260 members, representing different professional stakeholders of the whole urban water cycle in Spain. Providing water supply and sanitation services to 80 percent of the Spanish population, AEAS stands up for the wholesome equilibrium between public and private management, where public companies try to be more innovative and efficient and private companies, more social and customer service oriented.
In Spain, regarding water supply, 34 percent of the population is served by public companies, 10 percent by local entities, 34 percent by private companies and 22 percent by public-private companies.
The volume of water abstracted is nearly 4.800 hm3 and the source of raw water is mainly superficial (with a 67 percent) followed by groundwater (30 percent) and desalinated (3 percent). The water supplied per person rises up to 248 litres per day with a domestic consumption of 139 litres per person per day.
Talking about wastewater treatment, there is a coverage of around 85 percent of the population. The municipalities with less than 2.000 inhabitants are the ones that are having problems with wastewater treatment. Apart from this, there are some specific zones that are having difficulties in eliminating nutrients in wastewater. The treated wastewater rises up to 4.000 hm3 per year, and the use of reclaimed water is approximately 350 hm3 per year.
The economic state of the Spanish water sector
In Spain, the urban water sector is financed by the 3T model. This means Taxes, imposed by the local, regional and national authorities; Transfers, mainly, allocated by the European Union and Tariffs, determined by the municipalities.
The sector has a turnover of 6.479 M€ (3.854 for water supply and 2.324 for sanitation) and an invoiced volume of 3.360 hm3 per year.
The average urban water price for domestic use in Spain is of 1,78 €/m3 (1,03 €/m3for water supply and 0,75 €/m3 for sanitation). The price of urban water is highly heterogeneous among regional areas. In fact, Spain has the most variable price in Europe, with differences of up to 500 percent between municipalities. Each municipality or urban water system (consortium of municipalities) has a specific cost recovery distribution and therefore, a different finance distribution model, in which the water tariff does not cover the same costs. We need to bear this in mind when comparing the price of water in Spain.
In general, water tariffs comprise 2 parts (a fixed one and a variable one, which depends on consumption) and are progressive, following a block system of consumption with increasing prices.
The most common forms of tariff approval are joint action by municipalities and Price Commissions. Both are dependent of the respective regions, and where the first ones approve tariffs and the second ones authorize price revisions, or through regional public bodies or regional governments.
Challenges in the urban Spanish water sector
Although Spain has very satisfactory urban water services currently, they are facing the following challenges that should be addressed to ensure their sustainability. The aim is to improve efficiency and universality of water services, ensuring the human right to water and meeting social demands of citizens.
1. Renewal of infrastructures and equipment in Spain
After many years without an adequate investment in budgets, water infrastructure is aging, with the risk of losing the current quality levels of water supply and sanitation services. It is also necessary to invest in new construction as a result of the obligation to provide the necessary wastewater treatment facilities to protect and improve the environmental conditions of our public hydraulic domain. Given the conditions of control and limitation of public debt and the current economic and financial situation, it will be necessary to progress in the mechanisms of public-private collaboration to meet these objectives.
2. Advance in the ‘cost recovery’ in urban water services
According to the provisions of the Water Framework Directive and to cooperate in implementing the abovementioned objective, it is necessary that significant progress is made in the ‘recovery of costs’. Following the models of the countries of northern Europe, it is more effective and socially fair that this is done relying on the pricing mechanisms, where progressive prices regarding the consumption ensure a better distribution of economic efforts of citizens as well as a responsible consumption of water.
3. Establishment of a ‘Regulator’
To be met, the abovementioned requirements would need a regulator to endorse the required regulatory framework, whose goal should be to harmonize the levels of service delivery and tariff structures, as well as enhancing transparency and citizens’ involvement and participation.
In addition, the regulator should always seek efficiency in the performance of these public services and its orientation, strategy and actions will respond to the objectives, criteria and social sensitivities. The regulator would contribute to legal certainty of the stakeholders involved and ensure the continuity of the advantages of the current balance of powers, but also introduce elements of optimizing the efficiency and effectiveness, sustainability and social sensitivity.
Regarding facilities, new waste water treatment plants will be needed for those municipalities who currently do not have them, as well as some new facilities for tertiary treatment. Besides, renovation of actives will be needed, especially regarding sewerage network.
Utilities need actives which may allow a better decision making (utilities, devices, equipment, technologies…) in order to improve the efficiency of water services, prioritizing investments.
Given the expertise, know-how and experience of Danish companies, who have developed leading edge technologies for water sector, using and sharing their products and experience, would be a way of encouraging new technologies and RDI, both needed tools to achieve the goas and challenges of the urban water sector