Water risk drives the market for desalination and water reuse; businesses cannot win “water wars,” says latest report from Global Water Intelligence (GWI).

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Industry rather than municipal supply is now the strongest driver of the desalination market, according to a new report published today by GWI*. Since the financial crisis of 2008, the growth of the market for seawater desalination to augment municipal water supply has slowed to a standstill – but the use of the technology among industrial water users is accelerating, with double-digit growth rates expected over the next five years.

5 year growth in oil & gas sector

Oil & Gas - one of the eight industries covered in this report

Developing new fresh water resources through desalination, and making the most of existing ones through water reuse, is the only way forward for many industries.

Desalination technology removes salt and other dissolved solids from water. It can be used to make fresh water from seawater, to polish process water to use in “ultrapure water” applications such as power generation and washing microchips, or to clean up hazardous wastewater streams like frac’ flowback water from shale gas extraction.

Between 2002 and 2007, the report explains, annual capital expenditure on desalination infrastructure increased from $2.4 billion to $8.7 billion, but over the past two years, expenditure has struggled to clear $5 billion per year as the flow of large municipal projects in Spain, Algeria, Australia and the UAE has all but dried up. Water technology companies are increasingly looking for demand from industrial users to fill the gap. GWI’s Industrial Desalination and Water Reuse report suggests that capital expenditure on industrial desalination and water reuse technologies will grow from $2.8 billion in 2011 to $5.7 billion in 2017.

Amid a rising awareness of water risk, and of the role that water technology can play in increasing productivity, the following themes are emerging as the main drivers of this market:

  • Process water for industrial development in India, China and the Middle East. Power generation and petrochemicals use more fresh water than all other industries put together, but the fastest growing economic regions also have the lowest natural endowment of fresh water. This is driving demand for seawater desalination and water-efficient reuse technologies.
  • Treating the wastewater from unconventional oil and gas extraction. Shale gas, oil sands, and coal bed methane all bring to the surface produced water which is heavy with dissolved solids. Desalination technologies enable these waste streams to be disposed of safely or reused.
  • Watering the minerals boom. You can’t mine without water, but many of the world’s most significant mineral resources are in parts of the world where water is very scarce, such as Western Australia, Northern Chile and Southern Peru. In some places, conflict over water resources has stopped mining projects in their tracks. Desalination and water reuse technologies enable miners to have a zero impact on local water resources.
  • Making performance possible for the electronics industry. Large volumes of highly pure water are used in the microelectronics market, and as the trend towards smaller line widths and larger wafers continues, it becomes essential to develop desalination technologies which can remove every single ion of dissolved salt from the process water.
  • Other industries facing increased demand for desalination and water reuse technologies include food & beverage, pharmaceutical, and pulp and paper.

Christopher Gasson, publisher of the report, remarked: “Industrial water users are waking up to the fact that water could be the biggest barrier to their continued growth. If you are an oil production company in Alberta, an oil refinery on Bohai Bay [China], a power generator in Gujarat, a copper miner in Peru or a semiconductor manufacturer in Taiwan, you are going to need to spend a lot of money on water technology in order to ensure you stay in business over the next five years. There is a fixed amount of water in the world, but demand is growing, particularly in the emerging economies, and in the resource-rich economies that feed them. Developing new fresh water resources through desalination, and making the most of existing ones through water reuse, is the only way forward for many industries.

“People talk about water wars, but the bigger conflict at the moment is between different user groups within a single country. Last year, for example, three people were killed in protests against Southern Copper’s Tia Maria mine in Peru because they thought the company was not doing enough to protect the water environment. It is very difficult for businesses to win a water war like that. In the long run, it is much cheaper to invest in the technologies that make the problem disappear.

“The companies which stand to gain most from the growth in the market for industrial desalination and water reuse are Veolia, GE Water and Siemens Water. GE and Siemens both bought into the water technology sector in 2004, but they were never able to make much of the municipal market. Now they are very well placed for the action on the industrial side – as is Veolia, which has steadily built up an enviable industrial water portfolio over the past decade. Other companies to watch are Aquatech International, which has a strong membrane and thermal desalination portfolio; forward osmosis specialists Oasys Water and HTI; memsys, which has a novel membrane distillation system; and Japanese ultrapure water specialists such as Kurita, Organo and Nomura Micro Science. Some of the mainstream seawater desalination companies like IDE, Abengoa and Acciona are also making the transition to industrial desalination successfully.”

The 270-page report includes a market and technology overview and provides forecast data by technology / system, by year and by country, depicted in a comprehensive series of charts and tables and available on CD-ROM. Christopher Gasson will be pleased to take questions and talk further about the future for industrial desalination; pease see the contact details below..

*Global Water Intelligence (GWI) researches and publishes business data and information about the water markets worldwide. Based in Oxford, UK it also has offices in Singapore and USA (Austin, Texas) and has researchers and office staff in many other countries. It publishes three subscription titles and a free weekly GWI Briefing email (http://www.globalwaterintel.com/accounts/mailinglist/) and around four individual reports per year on particular water sectors/geographic regions. It also organises two major financial conferences for the water industry each year: the American Water Summit in Autumn (Chicago 2012) and the Global Water Summit in Europe in Spring (Seville 2013). GWI was awarded the Queen’s Award for Enterprise in 2011.

Press contact: rn(at)globalwaterintel(dot)com, 27 Park End Street, Oxford OX1 1HU, UK. Tel: +33 627 776 986

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