The smart water management market - Italy

1.1 Introduction

The smart water management market encompasses the set of technological solutions aimed at improving the efficiency, sustainability, and security of water supply through the use of advanced tools such as theInternet of Things (IoT), artificial intelligence (AI), and big data analytics. The main goal of these technologies is to optimize water resource consumption, reduce losses in distribution networks, and improve water quality through constant and predictive monitoring. The field includes several components, including leak detection sensors, smart water meters, digital water management platforms, and advanced wastewater treatment and recycling systems.

The supply of smart water management solutions is based on a growing demand for innovation in the water sector, driven by the need to respond to global challenges such as water scarcity and aging infrastructure. Companies in the sector are developing and implementing digital water management platforms, predictive software for network maintenance, and devices for consumption measurement and optimization. Technology providers and water utility operators are collaborating to modernize distribution systems, also supported by government initiatives and public investment. In addition, the growing focus onenergy efficiency and reducing Non-Revenue Water (NRW) is accelerating the adoption of smart meters and Advanced Metering Infrastructure (AMI) systems.

Globally, the smart water management market is going through a significant growth phase. It was valued at $19.12 billion in 2024 and is expected to reach $66.65 billion by 2034, with a compound annual growth rate(CAGR) of 13.3 percent over the period 2025-2034. This development is driven by structural factors, such as population growth, increasing urbanization, and the need for more resilient and sustainable water infrastructure. In Europe, the sector benefits from strong regulatory support, with stringent regulations such as EU Directive 2006/32/EC and GDPR Regulation 2016/679 incentivizing the adoption of smart technologies for water monitoring and metering. The European smart water meter market, for example, has been valued at $1.3 billion in 2023 and will grow at a CAGR of 27.7 percent through 2032, driven by the need to modernize urban water infrastructure and improve operational efficiency.

In Italy, the smart water management market is still at an early stage of development but has ample opportunities for growth. Currently, out of 21 million installed water meters, only 17 percent (about 3.5 million) are smart, highlighting a significant potential for digitization of water networks. In the next few years, about 13.5 million traditional meters are expected to be replaced, although there is no regulatory requirement for this transition. The NRP has allocated 900 million euros to reduce water losses, an investment that could accelerate the adoption of advanced solutions. In addition, the growing interest in infrastructure modernization is evidenced by the 29 tenders launched in 2023 in the water metering market, with a total value of 250 million euros. However, the fragmentation of the sector and the need for more effective coordination between public and private entities are still challenges to be overcome for large-scale digitization.

Analyst's view
The smart water management market is characterized by robust growth and high potential for expansion, driven by structural factors such as increasing scarcity of water resources,accelerated urbanization, and the need for more efficient infrastructure. The CAGR of 13.3 percent through 2034 highlights a booming sector, with significant investment by governments and companies to implement IoT, artificial intelligence and big data-based solutions. However, the market faces some critical issues, including the absence of mandatory regulations in many countries to replace traditional meters with smart meters, which could slow the penetration of smart technologies. In addition, in regions such as Italy, despite a large margin for growth with only 17 percent of meters digitized, the transition to a more efficient management system could take longer due to bureaucratic and financial constraints. A key strength is the large public investments, such as the €900 million NRP to reduce water losses, and the €250 million tenders in 2023 alone, which demonstrate strong industry interest. Globally, the water crisis and predictions of 1.8 billion people in absolute scarcity by 2025 make the adoption of advanced technologies increasingly urgent. However, the market is influenced by geopolitical dynamics and volatile commodity prices, with the impact of the Russian-Ukrainian conflict highlighting the need for more resilient water systems. In conclusion, despite the challenges, the sector offers significant opportunities for growth, with a positive trend supported bytechnological innovation and increasing regulatory and environmental pressure.