The risk of water shortages to business was first identified three years ago at Goldman Sachs and JP Morgan. Since then, leading investors in the major businesses worldwide have been highlighting the risk that water scarcity poses to operations—not just in the third world through supply chains, but also in key markets in the developed world. Water scarcity and infrastructure breakdown has reached a point where they threaten semi-conductor fabrication and soda manufacturing in Atlanta as much as in India.
Utility managers like Eric Rosenblum and Ron Zegers are part of a small cadre of experienced leaders within the water utility who have been facilitating new water management approaches for decades. They have ensured that, with very few exceptions, there is a steady supply of healthy and safe drinking water.Like other water utility managers, these men play a quiet but essential role in our world. Our water infrastructure is not only the hard bound pipes and pumps that treat water and deliver it to us – it’s the lakes, streams and rivers that are our source of freshwater. Protecting these sources has become an essential part of the role of water utilities.
We want innovative video games and haircuts, but we want the same old water.
We want innovative video games and haircuts, but we want the same old water. It is the responsibility of water utilities to avoid any unnecessary risks to water quality, and this makes them among the most risk adverse customers for new technology.They demand that new approaches be well-proven in other utilities before they’re considered. As explained by Andrew Salveson of Carollo Engineers, “One of the major hurdles we face is the municipal copy-cat market, and this presents a hurdle to innovation.”Promising technologies spend $500,000 to $1M just to prove their technology works full-scale at a single utility. Many of the seemingly most promising companies over the past few years have not been able to survive the long and expensive process of proving their solutions in the municipal market. As a result, the benefits of these solutions are often never seen by the general population.Scarcity and infrastructure decay require new solutions for water resources management. The process for bringing water technology to market requires money, but more importantly it requires leadership. The few companies that make it through this arduous process are applying innovation to how they bring to their technology to market.
The Shanghai Tower will serve as a mammoth 125-floor rainwater harvesting structure. The breathtaking outside shell borrows the best designs from nature, collecting rain to purify and replenish 675,000,000 liters of water each year. Combining stores, offices and apartments, the building will serve as an icon for water resource management in China, as the country struggles to find enough clean water for its people and its growing economy.
“Unfortunately, most of the buildings in the world are not Shanghai Towers – most of the buildings aren’t new,” noted Dave Pogue, Director of Sustainability for CB Richard Ellis in the Artemis Project webinar earlier today. “While some of our buildings are new, we also need to be concerned about managing the ‘rest of the mess’,” David Pogue, CB Richard Ellis. “While some of our buildings are new, we also need to be concerned about managing the ‘rest of the mess’,” Pogue explained. CBRE manages over 1.2 billion square feet of property in the Americas, and the bulk of those buildings are not new. Environmental considerations must contend with budgets. “We have a lot of buildings struggling trying to find a way to be better in a water constrained world,” Pogue stated.While water is vital, it is virtually free today. And water seldom gets attention until there is a crisis. Pogue noted that basic water saving devices such as toilets and urinals generate only a trickle of benefits and take 8 to 10 years to pay back. They’re better than nothing, but still just a small drop in the bucket.We’re still waiting for the onsite appliance that reclaims water and treats rainwater with the precision and beauty of a miniature Shanghai Tower. Small-scale onsite waste water systems operate today, recycling water from sinks and toilets to save over half of the drinking water used by an apartment building. Companies like Dominic Sulik’s Natural Solutions Utilities are offering whole building solutions for onsite water management that match much of the savings from the Shanghai Tower. This offering is a service that pieces together existing solutions.We can see the crises are coming, but we are still waiting for the Apple version of a building water system that matches the benefits of the Shanghai Tower. “Its not about the cost of water, it’s about the downtime and the risk for the property,” John Macomber, Harvard Business School.“Its not about the cost of water, it’s about the downtime and the risk for the property,” notes John Macomber, Professor of Sustainability at Harvard Business School. If there is a lower cost of capital for a better risk-adjusted return on the property, then onsite water management makes sense financially.Professor Macomber suggests that real estate properties such as accommodations and hospitality operations—hotels, spas, and hospitals—are examples of some of the early candidates for water tech. “The beach head for water tech is where the landlord pays for the water, where the landlord can effectively measure the benefit of an intervention, and where the volume of water used really matters to the economics.”
Water treatment and delivery systems were built for steady, predictable operation. In the face of water scarcity and budget cuts, utility managers are challenged to squeeze more performance out of water infrastructure with advanced technologies.
“We have two perspectives on improving the way in which we run our infrastructure,” says Rick Holmes, Acting Deputy Manager of the Southern Nevada Water Authority in Las Vegas. “First, we are bringing in technology to help us keep aging infrastructure working longer.”
“Second, we are seeking out new ways of ensuring water quality. We are looking for new ways of addressing pipe corrosion, disinfection by-products, biological monitoring and damage from invasive species like Quagga mussels.”
We look forward to hearing more from the Southern Nevada Water Authority, as well as other leading water utilities in our upcoming webinar “A Visionary View of Advanced Water Tech.”
Everywhere you look people are trying to do more with less. Reduce costs, increase efficiency, reduce energy use, recover resources. There are strong economic drivers to do all of these things, which also happen to be sustainable.
On July 22nd, 2010 I moderated the first in the BlueTech Tracker(TM) Webinar series: Mineral & Resource Recovery from Wastewater. We featured four companies with innovative technologies, and perhaps even more importantly, innovative business models. The companies were Ostara Nutrient Recovery Technologies, Calera, CASTion and Oberon.
Ostara produces a slow release fertilizer product, Crystal Green(TM) from wastewater. Calera, a Khosla Ventures backed company whose technology is part of a new infrastructure designed to view carbon, not as a pollutant, but as a resource. Calera might be accused of having a Superman complex in the cleantech sector, in that their technology simultaneously contributes to solving two of the most pressing environmental issues of our time: climate change and water scarcity. Calera sequesters carbon from power plants, produces a low carbon cement and helps to desalinate water.
The CASTion Corporation has an Ammonia Recovery Process (ARP) which can produce an ammonia fertilizer product from wastewater and recently won a $27.1M contract with the City of New York to provide a cost effective method for the City to achieve compliance at its 26th Ward Wastewater Treatment plant.Oberon FMR concluded the quartet. Oberon takes wastewater from the food processing industry, and through the application of some clever biotechnology (single cell protein synthesis), produces a value added, high protein, fish meal replacement for use in the aquaculture industry.
A few key take-aways:
1. This is about Costs
To get out of the starting gate with wastewater technologies in this area, you have to have a compelling value proposition. Resource recovery can enable a technology provider to off-set operational and capital costs and thereby provide a cost effective solution to their clients.
Ahren Britton, CTO with Ostara put it very succinctly with the observation, “as a standalone wastewater treatment technology, we won’t always be the cheapest way to remove phosphorus; as a fertilizer production company, we might not compete with current ore prices, but put the two together, and that’s what makes for the winning proposition.”
David Delasanta, President of CASTion noted that the decision by the City of New York to go with their ARP system on a new project was driven by economics. The City had a regulatory requirement to remove ammonia and the ARP system represented the lowest cost option occupying the smallest footprint. The City in fact sole-sourced this option from CASTion.
The Sustainability and political angle can help to push these projects over the line, as the person who finally signs off on expenditure is likely to be a political animal. However, to get this far in the process, you first have to convince the people on the ground that this is a good idea, and their concerns tend to be less politically motivated and more related to, ‘Will this work and how much will it cost?‘.
Seth Terry, Oberon VP of Operations said they have found that the Corporate Sustainability angle of their approach to turn food processing wastewater into a feedstock for fish meal replacement production, has piqued the interest of a number of major Corporations and was one of the factors which helped them to secure a contract with Miller Coors to construct a full-scale demonstration facility at their site.
There is a monetary value to a company in terms of brand value to be able to show its shareholders that instead of generating a waste product which required disposal, they were able to ‘up-cycle’ the resources in their wastewater and in doing so, off-set the unsustainable harvesting of biomass from oceans to produce fish-meal for fish farms.
2. Resource Recovery is becoming a geo-political and security issue
Certain resources such as phosphorus are becoming a geo-political issue. China has recently put an export tax on phosphorus to discourage the export of this valuable commodity, to preserve it and keep it at home to enable food production. China is known for its ability to take a long-term view on things and this is an early indicator of how important this resource may become. It is worth noting that like oil, phosphorus resources are found in a number of unstable regions of the world.
3. Companies which succeed in this area need to know two markets
The flip side of producing a product while treating a waste, is that you need to simultaneously build an outlet and channels to market for your product, at the same time as you are developing the infrastructure to produce it. This is challenging when working with a variable feedstock (wastewater) and when the quantities you produce, initially, do not make a dent in the larger market for that commodity.
To succeed, companies need to understand the wastewater treatment market and also understand the market for the commodity they are producing.
In the case of Calera, this means they have to know the concrete and aggregate business. In the case of Oberon, they have to know the fish-meal business. Ostara and CASTion both have to understand the dynamics of the fertilizer industry. When you hear Calera CEO Brent Constanz speak about the nuances of the concrete and aggregate market, and then switch back to the importance of piloting on different wastewater streams, you get a feel for the level and depth of understanding required to succeed in straddling these divergent worlds.
At least a part of the sustainable business advantage these companies have, is their ability to understand and create a business model which meets customers needs on both sides of the fence. Companies that can do this are pulling away from the herd. When you combine this with technical know-how, continued innovation and a strong IP position, you have a sustainable first mover advantage which will be difficult for a ‘me-too’ to catch up with in the short term.
The next Webinar in our BlueTech Tracker(TM) Series is on Thursday July 29th at 12 noon PST and will put the spotlight on Microbial Fuel Cells and Bioelectrochemical systems. This group of technologies has the potential to generate electricity from wastewater and produce fuels and chemicals which can be sold.Again the approach is the same, how to squeeze some value out of that wastewater.Paul O’Callaghan is Principal of O2 Environmental, a consultancy group providing water technology market expertise, founder of the BlueTech Innovation Forum and co-author of ‘Water Technology Markets 2010′.