Water as a Service: Transforming Industrial Water Management Through Innovative Service Models in Indonesia

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Executive Summary

Indonesia's industrial sector faces mounting pressure to optimize water resource management while addressing critical infrastructure challenges and regulatory compliance requirements. Water as a Service (WaaS) emerges as an innovative solution model where businesses outsource their water management to specialized service providers, shifting from traditional asset ownership to service-based operational frameworks.^[5] According to Asian Development Bank assessments, deep groundwater resources in Indonesia are being exploited at unsustainable rates, particularly in urban areas by industrial and services sectors, contributing to significant land subsidence and aquifer depletion.^[1]

The WaaS model addresses these challenges by providing industries with reliable, efficient, and sustainable water solutions without capital expenditure requirements, while specialized service providers assume responsibility for system design, installation, operation, maintenance, and regulatory compliance throughout contract duration.^[3] Service providers eliminate upfront capital investment requirements while guaranteeing delivery of specified water quality and quantity at agreed prices, fundamentally altering the economics of industrial water management.

This comprehensive analysis examines the WaaS model architecture, explores its application across Indonesian industrial sectors, reviews the regulatory framework supporting innovative water management approaches, and evaluates implementation considerations for organizations seeking sustainable water solutions. The transition from capital-intensive infrastructure ownership to service-based models represents a fundamental shift in how industries approach water resource management, offering significant potential for addressing Indonesia's water challenges while supporting industrial growth and sustainability objectives.

Understanding Indonesia's Industrial Water Challenges

Indonesia's water resource challenges reflect complex interactions between rapid industrialization, population growth, and environmental constraints. Groundwater potential is very limited nationally, yet much of the eastern islands depend on groundwater due to surface water scarcity. Groundwater overexploitation occurs in heavily populated coastal areas of Java, including Jakarta and Semarang, where industrial and services sectors extract deep groundwater at unsustainable rates.^[1]

Research documents that groundwater resources are being exploited particularly in urban areas at rates that contribute to significant subsidence. In Jakarta specifically, research indicates the megapolitan with approximately 11 million population relies heavily on groundwater, with most residents using it without treatment for daily needs except drinking water.^[2] Industrial areas face additional challenges from water quality degradation due to industrial effluents, agricultural runoff, and mismanaged solid waste polluting both surface and groundwater sources.

Global research emphasizes that groundwater wells face increasing risk of running dry, requiring comprehensive risk evaluation and sustainability planning.^[6] Groundwater resource management requires integration of science, technology, and governance to ensure sustainable utilization.^[8] These challenges create urgent need for innovative water management approaches that can balance industrial requirements with environmental sustainability imperatives.

Regulatory Framework Supporting Industrial Water Management

Indonesia has established comprehensive regulatory frameworks governing industrial water management that create structured approaches to sustainable resource utilization. Water Resources Law No. 17/2019 establishes the national water resource management framework with comprehensive industrial compliance requirements.^[11] This legislation provides streamlined permitting processes for qualified service providers while maintaining environmental protection standards and sustainable utilization principles.

Government Regulation No. 22/2021 defines environmental compliance standards for industrial water systems, establishing clear monitoring and reporting requirements.^[12] This regulation provides regulatory certainty for water service providers regarding operational standards, discharge limitations, and environmental performance expectations. The framework mandates industrial water users obtain groundwater extraction permits, environmental compliance certificates, and submit regular monitoring reports while establishing clear standards for sustainable resource utilization.

Ministry of Public Works regulations address groundwater extraction permitting procedures with facilitated processing mechanisms. These administrative frameworks enable efficient permit acquisition for water service operations while maintaining oversight of sustainable groundwater utilization. The regulatory environment, while maintaining strict environmental and operational standards, increasingly recognizes the value of specialized service providers in achieving water security objectives through innovative delivery models.

Water as a Service Model Architecture and Framework

Water as a Service represents a fundamental shift from capital-intensive asset ownership to service-based operational expenditure models, analogous to Software-as-a-Service business frameworks. WaaS is a model where businesses outsource their water management to specialized service providers, paying subscription or performance-based fees to access water services including treatment, recycling, monitoring, and maintenance rather than owning and operating water treatment infrastructure.^[5]

Leading international WaaS providers describe their model as eliminating upfront capital investment requirements while guaranteeing delivery of specified water quality and quantity at agreed prices.^[3] The service provider assumes responsibility for design, build, operate, update, and maintain infrastructure throughout contract duration, typically structured as Build-Own-Operate (BOO) or Build-Own-Operate-Transfer (BOOT) arrangements with performance-based service level agreements.

Integrated WaaS approaches encompass financing, installation, operation, and maintenance of water purification systems on behalf of clients, guaranteeing sustainable and affordable clean water without upfront capital investments.^[4] The model enables industries to implement advanced water treatment solutions while transferring system performance responsibility, capital expenditure requirements, and regulatory compliance obligations to specialized service providers with proven technical expertise.

Value Proposition and Strategic Benefits

The Water as a Service model delivers multiple strategic benefits addressing critical challenges faced by industrial water users. Primary value propositions include elimination of capital investment barriers, as WaaS providers finance, design, and install water treatment systems without requiring upfront capital expenditure from clients. Customers pay only for delivered water at guaranteed quality and price, eliminating capital barriers while streamlining infrastructure delivery. This enables industries to implement advanced water treatment technologies without diverting capital from core business operations.

Operational risk transfer represents another significant advantage, as service providers assume full responsibility for system performance, regulatory compliance, maintenance, and operations. WaaS shifts responsibility from reactive water management to proactive sustainability without infrastructure ownership burdens, allowing internal teams to focus on core operational priorities rather than water management complexity. This risk transfer proves particularly valuable for organizations lacking in-house water management expertise or resources for maintaining specialized treatment systems.

Flexible pricing structures offer various mechanisms including monthly subscriptions, usage-based billing, and performance-based contracts, providing better budgeting certainty and financial planning flexibility without concerns about unexpected system failures or repair costs. As businesses grow and water requirements change, WaaS solutions can be easily scaled or modified without infrastructure redesign requirements. Service providers continuously update technologies and optimize system performance throughout contract duration, ensuring clients benefit from latest innovations in water treatment and management.

Industrial Applications and Sector Opportunities

Water as a Service models demonstrate versatility across diverse industrial applications requiring reliable water supply and specialized water quality standards. Pharmaceuticals and biotechnology represent key sectors requiring reliable ultra-pure water and comprehensive wastewater treatment systems.^[5] These industries demand stringent water quality specifications and consistent supply reliability that specialized WaaS providers can guarantee through advanced treatment technologies and performance-based service level agreements.

Food and beverage processing industries require hygiene-compliant water treatment, reuse systems, and discharge management meeting regulatory standards. WaaS providers deliver customized solutions addressing specific water quality requirements for food safety compliance while managing wastewater treatment and enabling water reuse to reduce operational costs and environmental impacts. Manufacturing sectors including textile, garment, automotive, and component production require reliable water supply for diverse process applications including dyeing, washing, painting, and cleaning operations.

Energy and utilities sectors including power generation, geothermal energy production, and utility operations require integrated water and wastewater management for cooling systems, boiler feed, and process applications. WaaS providers deliver comprehensive solutions ensuring continuous operation reliability critical for energy sector applications with minimal tolerance for service interruptions. Mining operations require substantial water volumes for mineral processing, dust suppression, and operational support services while facing stringent environmental compliance requirements for water quality management and discharge standards.

Technology Integration and Digital Management

Modern Water as a Service implementations incorporate advanced monitoring and control technologies to optimize system performance, ensure reliable supply, and provide transparent operational reporting. Real-time monitoring systems track flow rates, pressure levels, water quality indicators, energy consumption, and equipment performance metrics through Internet of Things sensor networks. Cloud-based data platforms enable remote monitoring, predictive maintenance scheduling, and automated alarm systems for immediate response to operational anomalies.

Digital twin technology enables virtual system modeling for optimization of pumping schedules, prediction of maintenance requirements, and simulation of operational scenarios for capacity planning. Machine learning analytics analyze historical performance data to identify efficiency improvement opportunities and prevent equipment failures through predictive analytics. Advanced algorithms continuously optimize operational parameters for maximum efficiency and reliability while reducing energy consumption and operational costs.

Service providers offer clients real-time access to consumption data, service reports, and billing information through user-friendly mobile applications and client portals. Transparency in operational data and performance metrics enables clients to optimize their water usage patterns and validate service provider performance against contractual commitments. SCADA systems enable remote operation and control with integration to client facility management systems, ensuring operational transparency and facilitating demand planning optimization while maintaining security and reliability of critical water supply operations.

Sustainable Groundwater Management Through WaaS

Water as a Service models offer significant potential for addressing groundwater sustainability challenges through advanced technologies and management practices. Research examining groundwater classification demonstrates application of machine learning for managing deep and shallow groundwater wells, important for sustainable industrial and domestic extraction.^[7] WaaS providers can implement advanced monitoring, efficient extraction technologies, and water recycling systems to optimize groundwater utilization while minimizing depletion risks.

Sustainability frameworks for groundwater resources establish principles for long-term oversight and management applicable to industrial and community applications.^[9] WaaS providers can implement sustainable extraction practices, water conservation measures, and recycling systems aligned with these principles to ensure responsible resource utilization throughout service contract duration. World Bank assessments of groundwater challenges emphasize need for comprehensive management strategies that WaaS models can facilitate through professional expertise and technology deployment.^[10]

WaaS models address water quality challenges through advanced treatment technologies, real-time monitoring, and quality assurance protocols ensuring delivered water meets specified standards. Service providers can leverage cutting-edge technologies for optimizing well design, extraction rates, and aquifer management to ensure long-term sustainability of groundwater resources. Integration of water recycling and reuse systems reduces reliance on freshwater extraction, contributing to overall groundwater conservation while meeting industrial water requirements.

Implementation Considerations and Risk Management

Successful Water as a Service implementation requires comprehensive evaluation of service providers, thorough contract structuring, and systematic risk management approaches. Organizations considering WaaS adoption should prioritize providers with demonstrated experience in relevant industrial applications, proven track records of reliable service delivery, financial stability for long-term commitments, and comprehensive technical expertise in water treatment technologies. Provider evaluation should include assessment of regulatory compliance experience, local operational presence, and client references from comparable applications.

WaaS contracts should clearly define service level agreements including water quality specifications, quantity guarantees, availability requirements, and pricing structures. Contracts must address performance measurement criteria, dispute resolution mechanisms, insurance and liability provisions, and termination procedures protecting both parties' interests while ensuring operational continuity. Technical specifications should detail system design parameters, treatment processes, monitoring protocols, and maintenance schedules establishing clear expectations for service delivery.

While WaaS transfers operational risks to service providers, clients should understand backup system requirements for critical operations, emergency response protocols, and integration requirements with existing facility systems. Comprehensive service level agreements should include financial penalties for non-performance and clear escalation procedures for addressing service quality issues. Although WaaS providers assume regulatory compliance responsibilities, clients retain certain legal obligations as water resource users, requiring clear definition of compliance responsibilities and indemnification provisions in contract structures.

Market Development and Future Outlook

The Water as a Service model represents an increasing approach to industrial water management with significant potential for addressing Indonesia's water resource challenges while supporting industrial sector growth and sustainability objectives. Growing recognition of groundwater depletion risks and water stress conditions will drive demand for sustainable water management solutions. WaaS models offering advanced technologies for water conservation, recycling, and efficiency optimization will become increasingly attractive as water scarcity concerns intensify and regulatory standards strengthen.

Continued development of regulatory frameworks supporting innovative service models while maintaining environmental protection standards will facilitate WaaS market expansion. Streamlined permitting processes, clear performance standards, and recognition of specialized service providers' roles in achieving national water security objectives will create favorable conditions for market growth. Technology advancement including innovations in water treatment, digital monitoring systems, and automation will enhance WaaS value propositions through improved efficiency, reliability, and sustainability performance.

Growing corporate commitments to environmental sustainability, water stewardship, and climate resilience will drive adoption of WaaS models demonstrating superior environmental performance and resource efficiency compared to traditional water management approaches. As the WaaS market matures in Indonesia, increased provider competition, standardization of contract structures, and accumulation of performance data will reduce perceived risks and facilitate broader adoption across industrial sectors. Development of local service provider capabilities and technology partnerships will support market expansion beyond initial early adopter segments into mainstream industrial water management.

Strategic Recommendations for Organizations

Organizations interested in exploring Water as a Service solutions should undertake systematic evaluation processes to determine applicability to their specific operational contexts and requirements. Comprehensive needs assessment should evaluate current water supply arrangements, identified challenges, future requirements, and strategic objectives. Assessment should quantify current costs, risks, and performance gaps that WaaS solutions could address while establishing clear criteria for evaluating potential service providers and expected return on investment.

Structured provider selection processes should include detailed review of proposed solutions, pricing structures, contract terms, and performance guarantees. Where feasible, phased implementation approaches beginning with pilot programs for specific applications or facilities can validate WaaS model effectiveness and provider performance before broader deployment. Pilot programs enable learning, refinement of service specifications, and demonstration of value proposition before larger commitments while minimizing implementation risks.

WaaS implementation typically requires engagement with multiple organizational stakeholders including operations, procurement, finance, legal, and environmental health and safety functions. Comprehensive stakeholder alignment on implementation strategy, provider selection criteria, and ongoing governance processes supports successful program execution. Organizations should establish clear performance monitoring protocols ensuring ongoing service quality assessment throughout contract duration, with regular reviews and continuous improvement processes ensuring WaaS arrangements deliver expected value and adapt to increasing operational requirements.

References

1. Asian Development Bank (ADB). Indonesia Country Water Assessment - Documentation of groundwater overexploitation and land subsidence.
https://www.adb.org/sites/default/files/institutional-document/183339/ino-water-assessment.pdf

2. IWA Publishing - H2Open Journal (2022). Jakarta water supply provision strategy based on supply and demand analysis.
https://iwaponline.com/h2open/article/5/2/221/88196/Jakarta-water-supply-provision-strategy-based-on

3. Seven Seas Water Group. Water-as-a-Service (WaaS) model description and BOO/BOOT contract structures.
https://sevenseaswater.com/water-as-a-service/

4. Ekopak. Water-as-a-Service for enterprises - Comprehensive service model description.
https://ekopakwater.com/en/waas/

5. R3 Sustainability. Water as a Service: Revolutionizing Industrial Water Management - Comprehensive analysis.
https://r3sustainability.com/water-as-a-service-waas-revolutionizing-industrial-water-management/

6. Jasechko, S., & Perrone, D. (2021). Global groundwater wells at risk of running dry. Science.
https://www.science.org/doi/10.1126/science.abc2755

7. Zhou, H., et al. (2024). Classification of deep and shallow groundwater wells based on machine learning. Scientific Reports.
https://www.nature.com/articles/s41598-024-69238-1

8. Mukherjee, A., et al. (2024). Groundwater resources: challenges and future opportunities. Scientific Reports.
https://www.nature.com/articles/s41598-024-79936-5

9. United States Geological Survey (USGS) Circular 1186. Sustainability of ground-water resources.
https://pubs.usgs.gov/circ/circ1186/pdf/circ1186.pdf

10. World Bank (2018). Assessment of Groundwater Challenges and Opportunities.
https://openknowledge.worldbank.org/entities/publication/49d36f6e-5d62-58b5-b906-33abdaaf85e7

11. Indonesia Water Resources Law No. 17/2019. National water resource management framework.
https://peraturan.go.id/id/uu-no-17-tahun-2019

12. Indonesia Government Regulation No. 22/2021. Environmental compliance standards for industrial water systems.
https://peraturan.go.id/id/pp-no-22-tahun-2021