Desalination Case Study
The market Emergency point-of-use desalination/filtration is a market that caters predominately to aid organizations and NGOs during times of crises. The 2004 Official Water Assistance figures from the World Water Council stipulate a figure of 4.5 billion dollars with the basic drinking water supply and sanitation sector where EPWDF would be placed receiving 750 million dollars. Current water assistance trends are moving away from large system water supply and sanitation, from 3 billion dollars in 1993 to 1.5 billion dollars by 2002. Conversely, water assistance aid has increased as has aid in general world wide with the countries of the Official Development Assistance (ODA) contributing a total 78.6 Billion dollars in 2004 with the Organization
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of Economically Developed Countries (OECD) expecting a further increase in 2006. In essence, increasing investment in the water sector is a precondition to achieving the UN's Millennium Development Goals (MDG). It would cost an estimated extra US$16 billion each year to reach the Millennium Development Goals, agreed by all UN Governments, of halving the proportions of people without access to safe water and sanitation providing further growth opportunities for company and organizations focused on providing ways and means of achieving said goals.
The demand for potable worldwide is tremendous. Since 1950 the world population has doubled but water consumption has increased six-fold, with over 40% of the world's population living in areas prone to water shortages. On current trends over the next 20 years humans will use 40% more water than they do now. The number of people living in water-stressed countries is projected to climb from 470 million to three billion by 2025. With only 0.008% of the planet's water readily available for human consumption and found in lakes, rivers and underground aquifers and 74% locked up in the ice glaciers and the remainder is deep underground or locked in soils as moisture or permafrost, desalination is a promising and lucrative field to satiate the growing demand for potable water. One quarter (25%) of the world's population lives within 25 km of the coast, making seawater a possible main source of freshwater in the near future. The market volume for desalination grew from 2.5 billion dollars in 2002 to 3.8 billion dollars in 2005 with a growth rate of over 15% per annum. Current projections stipulate the worldwide market to be valued at 30 billion dollars by 2015 with a dramatic increase expected in new technologies and small system applications in Asia and particularly in China. Reverse osmosis, as a contributing technology to the SmartFilter's design is a market that depends on a supply of membranes. The market for "cross-flow membrane equipment and membranes will grow from $6.3 billion worldwide in 2004 to over $8.4 billion in 2007, a new report says. Desalination alone will account for over one third of this growth and revenues in this sector will grow to $1.8 billion in 2007". This provides evidence that the SmartFilter's contributing markets are also experiencing a strong period of growth allowing us to rightly predict that cost saving and technological advances are just around the corner. Further evidence of the potential size of the market for this technology can be observed from recent billion dollar acquisition like Ionics by General Electric and U.S. Filter by Siemens in 2004.
Market Analysis
The emergency point-of-use water desalination/filtration(EPWDF) market is currently wide open. With very few viable technologies currently available in the market place, this particular segment is ripe for development and then market leadership. In the parent segment of point-of-use filtration, high price sensitivity is rampant with vendors increasingly driven to offer better deals at the cost of contracting margins. There are four sectors to residential POU systems being
1. Counter top (CT)
2. Under the sink (UTS)
3. Faucet Mount (FM)
4. Distiller units (DU)
Taking heed from the residential markets it is possible to surmise that the market for EPWDF could also face the same margin constricting factors that includes a commoditization of filters. Consumers are observed to make their decision based primarily on price with quality being a concern but not an overriding one. Coincidently consumers are becoming more aware of water quality issues leading to an increase in consumer awareness regarding water treatment products. The US residential water treatment market is estimated at 1.37 billion dollars with POE representing the largest slice with 526.3 million dollars. Growth is expected to be stimulated by this ongoing awareness caused by advertising and health scares. Also, the ongoing competition in the different market segments has already resulted in an expansion of the range of product available to consumers in order to cater for the changes in demand.
Technology Trends "The rate of technological development in this market is relatively low, because of the fact that the majority of technologies are well established. The only exceptions to this rule are when technologies that have been established in the industrial treatment sector are applied to residential systems. However, product development still remains of utmost importance for manufacturers to keep up with the advancing customer requirements. As a result, developments in the market trend relate to efficiency improvements and the fine-tuning of existing technologies. Furthermore, as a consumer market, the aesthetic characteristics of products are becoming increasingly important, as well as continually changing with current fashions."
It is pertinent to assume that similar technology trends will apply to EPWDF although consideration for aesthetic characteristics can be largely ignored. Increasing efficiency, safety and usability (i.e. fine tuning as mentioned above) on the other hand are very real qualifiers for consumer decisions when choosing to purchase a similar unit. Taking into account that most users of the product will be from poor, underdeveloped and educationally challenged regions on earth, ensuring easy of use and robustness will prove the path to achieving competitive success and will set the trend for the market segment.
The Future of reverse osmosis (RO) in the USA RO, process in which the SmartFilter desalinates and filters, is a technology and process very much in its infancy.
The potential growth within this market with America alone can be attributed to an imprecise nature of weather, a skyrocketing population growth and subsequent increases in demand for water in arid, semi-arid and coastal areas despite water being relatively inexpensive and plentiful compared to many other parts of the world. In addition, many communities are turning to desalination technology as a cost effective method of meeting increasingly stringent water quality regulations.
Governmental agencies such as the USBR have a guiding vision that "By 2020, desalination and water purification technologies will contribute significantly to ensuring a safe, sustainable, affordable, and adequate water supply for the United States". Other key drivers in the market include localized water shortages, saltwater intrusion into underground aquifers, political involvement, reduced plant prices and the thought that alternative water supply options such as recycling of sewage effluent remain unacceptable. Some of the key restraints include presently sufficient water supplies, the relative high cost of desalinated water and increased rates of water reuse and recycling for agricultural and industrial use
especially.
RO has led the membrane processes field which have dominated the US desalination plant market in the past. There are a number of key reasons to believe this will continue:
Reverse osmosis is well established as a water treatment technology in the US.
A plethora of companies in North America already offer membrane technologies. Thermal desalination companies are much harder to find.
Middle Eastern customers are used to working with thermal technologies as they have been doing so for more than 30 years. In the US the market is nowhere near so developed, so MSF and thermal desalination is not automatically the first choice process; to the contrary it appears to be RO.
The average size of plants in US is currently much smaller than those in the Middle East and RO units are probably more suited to being installed in smaller applications. They are also often easier to maintain than thermal plants and this could prove a critical factor for customers who don't have budgets for expensive maintenance.
of Economically Developed Countries (OECD) expecting a further increase in 2006. In essence, increasing investment in the water sector is a precondition to achieving the UN's Millennium Development Goals (MDG). It would cost an estimated extra US$16 billion each year to reach the Millennium Development Goals, agreed by all UN Governments, of halving the proportions of people without access to safe water and sanitation providing further growth opportunities for company and organizations focused on providing ways and means of achieving said goals.
The demand for potable worldwide is tremendous. Since 1950 the world population has doubled but water consumption has increased six-fold, with over 40% of the world's population living in areas prone to water shortages. On current trends over the next 20 years humans will use 40% more water than they do now. The number of people living in water-stressed countries is projected to climb from 470 million to three billion by 2025. With only 0.008% of the planet's water readily available for human consumption and found in lakes, rivers and underground aquifers and 74% locked up in the ice glaciers and the remainder is deep underground or locked in soils as moisture or permafrost, desalination is a promising and lucrative field to satiate the growing demand for potable water. One quarter (25%) of the world's population lives within 25 km of the coast, making seawater a possible main source of freshwater in the near future. The market volume for desalination grew from 2.5 billion dollars in 2002 to 3.8 billion dollars in 2005 with a growth rate of over 15% per annum. Current projections stipulate the worldwide market to be valued at 30 billion dollars by 2015 with a dramatic increase expected in new technologies and small system applications in Asia and particularly in China. Reverse osmosis, as a contributing technology to the SmartFilter's design is a market that depends on a supply of membranes. The market for "cross-flow membrane equipment and membranes will grow from $6.3 billion worldwide in 2004 to over $8.4 billion in 2007, a new report says. Desalination alone will account for over one third of this growth and revenues in this sector will grow to $1.8 billion in 2007". This provides evidence that the SmartFilter's contributing markets are also experiencing a strong period of growth allowing us to rightly predict that cost saving and technological advances are just around the corner. Further evidence of the potential size of the market for this technology can be observed from recent billion dollar acquisition like Ionics by General Electric and U.S. Filter by Siemens in 2004.
Market Analysis
The emergency point-of-use water desalination/filtration(EPWDF) market is currently wide open. With very few viable technologies currently available in the market place, this particular segment is ripe for development and then market leadership. In the parent segment of point-of-use filtration, high price sensitivity is rampant with vendors increasingly driven to offer better deals at the cost of contracting margins. There are four sectors to residential POU systems being
1. Counter top (CT)
2. Under the sink (UTS)
3. Faucet Mount (FM)
4. Distiller units (DU)
Taking heed from the residential markets it is possible to surmise that the market for EPWDF could also face the same margin constricting factors that includes a commoditization of filters. Consumers are observed to make their decision based primarily on price with quality being a concern but not an overriding one. Coincidently consumers are becoming more aware of water quality issues leading to an increase in consumer awareness regarding water treatment products. The US residential water treatment market is estimated at 1.37 billion dollars with POE representing the largest slice with 526.3 million dollars. Growth is expected to be stimulated by this ongoing awareness caused by advertising and health scares. Also, the ongoing competition in the different market segments has already resulted in an expansion of the range of product available to consumers in order to cater for the changes in demand.
Technology Trends "The rate of technological development in this market is relatively low, because of the fact that the majority of technologies are well established. The only exceptions to this rule are when technologies that have been established in the industrial treatment sector are applied to residential systems. However, product development still remains of utmost importance for manufacturers to keep up with the advancing customer requirements. As a result, developments in the market trend relate to efficiency improvements and the fine-tuning of existing technologies. Furthermore, as a consumer market, the aesthetic characteristics of products are becoming increasingly important, as well as continually changing with current fashions."
It is pertinent to assume that similar technology trends will apply to EPWDF although consideration for aesthetic characteristics can be largely ignored. Increasing efficiency, safety and usability (i.e. fine tuning as mentioned above) on the other hand are very real qualifiers for consumer decisions when choosing to purchase a similar unit. Taking into account that most users of the product will be from poor, underdeveloped and educationally challenged regions on earth, ensuring easy of use and robustness will prove the path to achieving competitive success and will set the trend for the market segment.
The Future of reverse osmosis (RO) in the USA RO, process in which the SmartFilter desalinates and filters, is a technology and process very much in its infancy.
The potential growth within this market with America alone can be attributed to an imprecise nature of weather, a skyrocketing population growth and subsequent increases in demand for water in arid, semi-arid and coastal areas despite water being relatively inexpensive and plentiful compared to many other parts of the world. In addition, many communities are turning to desalination technology as a cost effective method of meeting increasingly stringent water quality regulations.
Governmental agencies such as the USBR have a guiding vision that "By 2020, desalination and water purification technologies will contribute significantly to ensuring a safe, sustainable, affordable, and adequate water supply for the United States". Other key drivers in the market include localized water shortages, saltwater intrusion into underground aquifers, political involvement, reduced plant prices and the thought that alternative water supply options such as recycling of sewage effluent remain unacceptable. Some of the key restraints include presently sufficient water supplies, the relative high cost of desalinated water and increased rates of water reuse and recycling for agricultural and industrial use
especially.
RO has led the membrane processes field which have dominated the US desalination plant market in the past. There are a number of key reasons to believe this will continue:
Reverse osmosis is well established as a water treatment technology in the US.
A plethora of companies in North America already offer membrane technologies. Thermal desalination companies are much harder to find.
Middle Eastern customers are used to working with thermal technologies as they have been doing so for more than 30 years. In the US the market is nowhere near so developed, so MSF and thermal desalination is not automatically the first choice process; to the contrary it appears to be RO.
The average size of plants in US is currently much smaller than those in the Middle East and RO units are probably more suited to being installed in smaller applications. They are also often easier to maintain than thermal plants and this could prove a critical factor for customers who don't have budgets for expensive maintenance.