Desalination: An Ocean of Opportunity
Contents
Introduction
How much water can we use?
Market forces
Facts and Figures
Impact
Relieving pressure
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Final Thoughts
Stipulations to widespread adoption
An Ocean of Opportunity
Can we sustainably increase our potable water capacity?
From afar, it sparkles blue — and has done so for over 4 billion years. While oceans and bodies of water exist on trillions of other planets and moons, the only planet with consistent, permanent, and stable bodies of water on its surface is ours: Earth.
Water may cover 71% of the Earth’s surface, but is it actually in abundance? Looking at the numbers: Roughly 97% exists in oceans as saltwater and 3% elsewhere as freshwater. Glaciers and ice caps lock 79% of that non-saline water, while another 20% rests beneath the ground. We access the remaining 1% of freshwater through rivers, lakes, soil, and living organisms. So the question remains: is water actually in abundance?
An ever-growing population compounded with pressure from climate change has revealed our unmet demand for water. As freshwater scarcity takes over continent by continent, we may need to turn our attention to the oceans.
Desalination, or the process of removing salt and other impurities from seawater, has been a popular solution for already arid but energy rich regions of the world such as the Middle East and Northern Africa. The current process most widely in use involves pumping gallons and gallons of water through membranes at high pressure to create drinkable water.
Fueled by rapid industrialization, growing populations, and the depletion of freshwater bodies, the market for desalination will only continue to grow. And as desalinated water becomes more affordable, its use is sure to expand — whether that constitutes full or supplementary reliance. Yet, there is an important baseline that exists no matter how low energy costs may be at any given time: seawater desalination as a whole will always be relatively expensive.
Market Trends: Facts, Figures, Forces
Facts and Figures
Globally, over 300 million people get their water from desalinated sources, according to the International Desalination Association.
According to a 2019 United Nations-sponsored study, there exist 15,906 operational desalination plants treating a combined 95 million cubic meters of water per day.
However, brine production (salt and waste separated from the water) is estimated to be 141.5 million cubic meters per day.
Reverse osmosis (RO) technology dominates the market, representing 69% of desalinated seawater plants.
Approximately 48% of all desalinated water produced is for the Middle East and North Africa.
Saudi Arabia currently produces a fifth of the world’s desalinated water. Its largest plant, al-Jubail makes, over 1.4 million cubic meters of water every day.
Its Ras Al Khair plant, a modern and hybrid plant, cost $7 billion to build.
Energy consumption in RO processes have “decreased substantially,” a Purdue study says, crediting energy recovery devices, pumps with improved efficiency, and better membranes. High energy use is still the primary concern.
Current water-price estimates for water from the Claude “Bud” Lewis Desalination Plant in Southern California are around $2,800 per acre-foot. For reference, the San Diego County Water Authority charges $1,579 per acre-foot of untreated water.
Texas desalination efforts deal mainly with brackish groundwater, which is less expensive than its seawater counterparts, ranging from $357 to $782 per acre-foot.
Israel, a country that itself once faced severe water shortages, now has a surplus thanks to desalination plants.
Forces
Megatrends such as worldwide population growth, industrialization, and climate change make water scarcity a leading impediment to sustainable development, thus leading to unconventional methods for acquiring water and ensuring availability and management of water and sanitation for all (SDG 6):
Globally 70% of freshwater is used for agriculture
The World Bank also finds that, by 2050, a 15% increase in water withdrawals will be necessary.
Two thirds of the world population face severe water scarcity for at least one month each year.
Two billion people struggle to access clean, uncontaminated drinking water at home.
The average American uses 100 gallons of water per day.
70% of freshwater is used for agriculture
Investment Opportunities
Desalination can be an attractive technology whose greatest appeal is as a solution for water security. Freshwater bodies face mounting pressure from climate change, overuse, and population booms, calling for better promotion of water conservation, recycling, and, perhaps, expanded desalination efforts. In the next five years, large-scale desalination projects will continue popping up.
Hurdles to larger adoption are mainly cost related. Desalination is expensive and energy demanding, and there are many environmental concerns regarding the waste produced. Saudi Arabia, the United Arab Emirates, and other energy-rich countries have invested billions to erase water concerns. Australia and Israel — both arid — have similarly proven to be big and successful players in the desalination market.
The North American market is also expected to grow, especially on the drought-ridden Southwest. While desalination is expensive, California, for one, is willing to overlook cost to prioritize locality and reliability — facing long-term drought, industry there is reducing its dependence on imported water supplies. For instance, a proposed plant in Huntington Beach by Poseidon Water would produce 50 million gallons of drinking water daily, enough for 16% of households in Orange County’s Water District. As of 2021, over $127 million in grants for 70 projects had been awarded through California’s Desalination Grant Program. Texas currently has 53 municipal desalination facilities.
There are also additional revenue streams from desalination in the works, particularly related to using the minerals extracted from the seawater in the brine. For example, Uranium, which provides fuel for nuclear plants, is an element of note.
Key challenges for the industry remain costs — desalination development continues to be nearly nonexistent in low-income countries — and waste disposal. Investment in energy efficiency technologies and other alternative energy forms such as on-site solar generation could slice operational costs, and private capital may spur the emergence of innovative technologies and new companies that are able to recycle or dispose of brine at scale.
Market Segments
Thermal Desalination
Thermal desalination is the oldest method, dating back to the 1960s, and remains a significant player — countries including Saudi Arabia already have the fossil fuels and infrastructure in place to keep them afloat, as they are either located close to fossil fuel plants and use excess steam to flash the water or utilize thermal energy from solar panels to evaporate seawater. The remaining excess is condensation that becomes the freshwater. On average, the energy consumption is 10–15 kWh per cubic meter, and the main categories are multi-stage flash distillation (MSF), multi-effect distillation (MED), and vapor compression.
Both MSF and MED require multiple processes that pass warmed seawater through pressurized chambers. “Flashing” is the process of rapidly lowering the pressure of water to turn it into steam. The main difference between MSF and MED is the temperatures at which evaporation and heat transfer occur, with the latter being cooler. MSF has a low recovery ratio in separating water from brine, creating 78% waste and only 22% water.
Vapor compression is a smaller, scaled process that reduces pressure through mechanical or thermal compression of water vapor, which thus reduces the boiling temperature. This technology is mostly used by the tourism industry or remote locations where freshwater is scarce.
While thermal plants still operate more expensively, due to their long lifespan, researchers are determined to find ways to make them more efficient.
Reverse Osmosis
Reverse osmosis (RO) desalination plants have become quite popular, representing 69% of desalinated water produced worldwide. Its use of advanced membrane technology makes it a cheaper and more efficient alternative to thermal desalination.
Before going through the RO process, water goes through multiple pretreatment phases. Once in the RO section of the plant, water is pushed at high pressure through the membrane, which strains the salt. RO contains pressure vessels featuring thousands of RO semipermeable membranes. Additionally, many RO plants feature energy recovery processes to collect hydraulic energy from the rapid stream of seawater. The Carlsbad Desalination Plant, for example, claims it recovers 46% of energy used during the process.
When thermal plants take in water, a quarter is expected to return as freshwater, while the other 75% leaves as brine. In comparison, RO is closer to 50%. However, RO faces tougher challenges as salinity rises, and instead succeeds best in lower salinity or less-brackish conditions. Researchers also add that success of an RO process is difficult to measure, between variables ranging from water pressure and volume to salinity and recovery ratio. Finally, technology out of Purdue University known as “batch reverse osmosis” could help improve energy efficiency and solve RO’s struggles with higher salinity.
Courtesy: ScienceDirect
Impact
When coupled with water conservation, energy recycling efforts, and using clean energy, desalination can reduce pressure on freshwater systems and bridge the gap between supply and demand of water resources.
Four Southwestern US states divert water from the Colorado River, but it often runs dry by the time it reaches the Gulf of California. This has led to salinization of the estuary, which impedes its ability to perform ecosystem services. By 2050, climate change (in the form of less snowfall), is projected to diminish the river’s annual flow by an additional 20%.
Desalination plants can help cities increase their resilience when dealing with issues such as volatile weather and longer, more severe droughts. In addition, localized water production reduces the impacts of shipping and trucking of bottled water.
Meanwhile, for years, while the Sea of Galilee, Israel’s largest source of freshwater, was drying out, the Israeli Water Authority ran public service announcements about saving water and built treatment systems able to recapture 86% of water used. As a result of that recycling combined with desalination, the sea has been able to recover most of its water lost.
Market Movers: Current and Future Heavy Hitters
market movers
Brookfield Infrastructure Partners (California)
Holds Poseidon Water in its portfolio, which operates the Carlsbad Desalination Plant and is developing the Huntington Beach Desalination Plant.
Current market cap of $24.8 billion, through businesses in water, renewables, real estate, private equity, and more.
Delek Group (Israel)
Conglomerate holding Israel Desalination Enterprises (IDE), a leading innovator in water treatment and desalination, with 400+ plants in 40 countries.
ACCIONA Agua (Spain)
Produces 28 million gallons of clean water daily.
In 2020, won the WEX Global Prize for “Innovation for Desalination” category to propel the circular economy with respect to desalination.
ACWA Power (Saudi Arabia)
Currently delivers desalinated water to 24 million people worldwide.
Holds 16 water desalination plants, half of which supply Saudi Arabia.
Medad Technologies (Singapore)
Developed an adsorbent gel, which uses multiple beds of powerful adsorbents to achieve a continuous evaporation process, while improving efficiency.
Tethys Solar Desalination (Israel)
Rapid construction and deployment of desalination plants powered by solar energy.
Atlantis Technologies (California)
Works with watery recovery, specifically cleaning salty wastewater. Its patented radial deionization (RDITM) technology offers clean water recovery of up to 95%.
A Reflection of Progress
Artistic rendering of a proposed solar-powered desalination plant in Saudi Arabia
Source: NEOM ARTWORK
Venture Capital/PE and Other Fund Investors
CalCEF (California)
A subsidiary of New Energy Nexus, engages with financing companies interested in clean energy solutions.
Khosla Ventures (California)
Includes in its portfolio NanoH2O, which develops, manufactures, and markets RO processes that lower the cost of desalination.
Aquaventure Holdings (United States)
US-based holding company that includes Seven Seas Water, with stakes in the water purification, disinfection, and desalination industries.
Final Thoughts
Desalination technology is and will continue to be a major factor in solving water scarcity worldwide. As it becomes cheaper, its adoption will scale and it will be used in more and more new locations.
It should be noted that desalination also comes with incredibly negative environmental impacts, including its high energy requirement that ultimately perpetuates climate change, the dumping of highly concentrated brine solutions, and the hot discharge from the process that can be fatal for marine life. Some argue that the energy it requires — even when it’s renewable energy — could be better used to offset fossil fuel usage elsewhere.