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This is how Costco is using data and sensors to cut water use

July 21, 2015, 1:00 PM UTC
Costo Reports 15 Fall In Quarterly Profits
RICHMOND, CA - MARCH 06: A customer packs groceries into his car outside of a Costco store on March 6, 2014 in Richmond, California. Costco Wholesale reported a 15 percent drop in secnd quarter earnings with profits of $463 million, or $1.05 per share, compared to $547 million, or $1.24 per share, one year ago. (Photo by Justin Sullivan/Getty Images)
Photograph by Justin Sullivan—Getty Images

Years ago, warehouse giant Costco started testing a system of sensors and algorithms to cut water use at a handful of its buildings in Mexico. After saving thousands of dollars at each facility annually, Costco has now expanded the water conservation technology to over 50 buildings across the U.S. and Mexico.

In the future, Costco said it may install the system in all of its new buildings.

Costco VP Todd Thull, who’s responsible for Costco’s new construction in the Southwest, Mexico and Asia, told Fortune that the water efficiency systems have been “a tremendous benefit” and have helped the company cut water use by 22% on average. The savings have already paid for the cost of installing the system and then some.

A Kirkland, Washington-based startup called Apana is the brains behind Costco’s software and sensors. After operating for two years under the name Kirkland Analytics, Apana is relaunching under a new name Tuesday and with a story about how customers like Costsco have been quietly using its product to cut water use.


Apana is among a growing number of startups and big companies that are using the latest computing technologies — the cloud, data algorithms, wireless tech, and low cost sensors — to help companies more efficiently use resources like water and energy. At the same time, as California and the Southwest face an ongoing and debilitating drought, an increasing amount of water-dependent companies are looking at ways to eliminate water waste.

Apana’s tech was developed by co-founders Frank Burns and Matt Rose. Burns has been in the water industry for two decades and years ago ran a company that installs wastewater treatment systems for buildings. That’s how he originally met the Costco team and Thull.

Startup Apana's sensor hardware system that it installs in buildings to conserve water. Startup Apana’s sensor hardware system that it installs in buildings to conserve water.Photo courtesy of Apana.

Costco installed Burn’s original wastewater treatment systems at some of its buildings in Mexico where water use was increasing. These systems clean the water that Costco mostly uses in its food business, like making frozen pizzas, cutting and grinding meats, preparing baked goods, and for refrigeration. The cleaned water can be discharged back into waterways in certain areas.

Early on, Burns realized that companies could save more money by avoiding creating so much wastewater. They would be able to build smaller treatment plants and use less energy.

That realization kicked off Burns’ move into data analytics and away from water cleaning tech. Now Apana is focused on selling sensor and data systems.

Using data from sensors and water meters, Apana’s tech gives Costco and other customers a deeper, minute-by-minute, look into how much water is being used at what time in their buildings. The company’s algorithms issue alerts when they detect unusual spikes in water use, which might be from faulty equipment like a malfunctioning cooling tower or wasteful behavior by employees like thawing out frozen food by running it under the faucet.

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A variety of companies have built these types of data alert systems for electricity use in buildings, but there are fewer out there focused on water consumption. That’s mostly because there hasn’t always been an emphasis on water conservation, and water has been priced at a low cost, or free, in many regions.

But that’s beginning to change as California has moved into its fourth year of drought. Other companies that have built software to manage water use for various industries include Lagoon, Dropcountr, TaKaDu, WaterSmart, Valor Water Analytics, WatrHub, Hortau, ThingWorx, Wellntel, and PowWow Energy.

Apana, which until now has been self-funded, plans on raising its first round of funding later this year.