Delivering Drinking Water in a New Way

Through an innovative shared-service business model, Aquify leverages Exelon’s experience and expertise in power and gas distribution for the infrastructure that delivers drinking water.

The Challenge the challenge

As one of the world's largest energy providers, Exelon has long recognized its responsibility to help serve communities to solve their sustainability challenges. To Exelon, a sustainable community must recognize that economic, environmental, and social issues are interdependent and integrated. Bionic partnered with Exelon to identify the spaces in which Exelon could have a direct impact on sustainability, resulting in a diverse range of areas that ran the gamut from renewable energy generation to building efficiency, from air quality to water and waste management, and from transportation to land use.

We helped Exelon map its proprietary gifts, namely the unique expertise in utility operation and a reputation as best-in-class utility, and more specifically its expertise in predictive asset maintenance, as well as mapping and inventorying. Several years into Bionic's partnership with Exelon, both companies still had no shortage of ideas around how Exelon could leverage its proprietary gifts to impact sustainability in our communities. The biggest challenge, in fact, was narrowing it down.

The Experiment the experiment

Staring down a rather robust list of potential Opportunity Areas and Exelon’s leverageable gifts, the team decided to start with “water,” that is, investor-owned utilities and municipal-owned utilities. Following a two-day Bionic-led Generate session, the team soon realized that the opportunity was much larger than it had initially scoped.

To start, there are an eye-watering 55,000 water utilities in the United States, with over 85% of them municipally owned (MOUs). While investor-owned water utilities (IOUs) are generally well-resourced and have tightly-run operations, MOUs as a whole are in various stages of disrepair. With this knowledge, we had identified our beachhead customers—United States MOUs—and we were ready to explore their problems.

experiment

MOUs have four main problems. The first is their aging and inefficient infrastructure. The Army Corps of Engineers gives the drinking water infrastructure across the nation an average D rating. This crumbling infrastructure leads to water loss through the distribution systems and behind the meters, which results in lost revenue. Inefficient assets require oversized pumping and treatment processes, which yields higher energy costs and capital expenditure. Gray infrastructure inhibits compliance with the Clean Water Act, which leads to compliance fees.

Next, there’s the issue of shrinking funding sources. Rate-setting is a political process that controls how much a utility is allowed to charge its customers. As population bases change, rate bases often diminish, rendering it harder for an MOU to get the funds necessary to improve or even maintain its infrastructure.

aquify-experiment

MOUs have four main problems. The first is their aging and inefficient infrastructure. The Army Corps of Engineers gives the drinking water infrastructure across the nation an average D rating. This crumbling infrastructure leads to water loss through the distribution systems and behind the meters, which results in lost revenue. Inefficient assets require oversized pumping and treatment processes, which yields higher energy costs and capital expenditure. Gray infrastructure inhibits compliance with the Clean Water Act, which leads to compliance fees.

Next, there’s the issue of shrinking funding sources. Rate-setting is a political process that controls how much a utility is allowed to charge its customers. As population bases change, rate bases often diminish, rendering it harder for an MOU to get the funds necessary to improve or even maintain its infrastructure.

The Solution the solution

All of this background investigation led to an in-market test called Aquify. The team identified and reached out to prospective customers for further investigation into pain points and potential interest in our range of solutions. We found that they cared most about intelligent solutions focused on monitoring, tracking, and managing their infrastructure in order to identify problems before they arise.

The team attended several trade shows with the initial goal of understanding the problem more deeply. We spoke with potential customers, participated in panels and workshops, and refined the solutions accordingly. When we went to the next round of trade shows with a minimal booth and basic product brochures, we got a swell of interest from MOU officials who dropped by our booth and signed up to learn more about two of our products. So, we doubled down on those.

The team focused on a few municipalities in the greater Chicago area that showed interest in entering a paid pilot with Aquify. This was no coincidence as this was the service area of ComEd, one of Exelon’s utilities. With a proposed business model and go-to-market strategy in place, we were well into Seed III.

In July of 2019, 18 months after the initial launch of the opportunity area, Aquify was ready to pitch Exelon’s Growth Board. With defined strategic, financial, and hiring plans, a pipeline of prospective customers, and a signed paid pilot generating $250,000 in initial revenue over a 5-year contract, the presentation was a success: Exelon’s Growth Board offered the team $4.3 million in funding for an 18-month runway, sending the Aquify team to execute on their plan.

The Insight the insight

Municipality-owned utilities in the United States have a long way to go before they overcome their many challenges. There is a lot of data to collect, pipes to replace, and infrastructure to monitor, maintain, and upgrade. But with a go-fast, gritty team in place and the full weight of Exelon behind it, Aquify is poised to wash away the biggest problems in our water systems.

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