Inventing to Meet Water Needs

It amazes me how almost all companies in the water business have at least one page explaining global water needs.  It's like everyone tries to sell the same product in exactly the same way in the water business.  I can memorise some of the more oft quoted statistics, mostly taken from the UN World Water Development Reports. 

The funny thing is that half these companies are not really doing anything to solve these problems.  Yes, everyone is indeed looking into cheaper, alternative ways of treating water and wastewater, and when the costs get low enough, the poor will eventually benefit.  But the poor are a "by the way".  It is clear what the target markets are -- the rapidly growing markets of China and the Middle East, where people who can afford present technologies may be willing to pay top dollar for the latest technologies. 

I have always wondered if it were possible to align the needs of the poor and the high-tech developments in the water industry -- I have been repeatedly told that altruism is an idealistic concept for the NGOs.  But more and more, I'm beginning to realise that it is possible.  And India may be leading the way. 

The Economist recently did an article on the new business models in emerging markets.  One of the business models is described as "reverse innovation", or the stripping of all the bells and whistles of modern innovation to the bare essentials that people need, and then toughening them up for the rough environments that they will be used in.  Like Nokia's mobile phones to India, which apparently have flashlights (frequent powercuts), multiple contact lists (several people share a phone), and rubberised keypads. 

I also stumbled upon Acumen Fund, a non-profit venture fund that invests in companies who provide affordable, critical goods and services.  It sounds a bit like the development banks (eg. Asian Development Bank, World Bank), except the fund actually provides venture "patient" capital to early-stage for-profit companies who are developing products for the poor, and they're willing to take on quite high risk companies.  I'm not sure how all of this actually works out in reality, but I'm hopeful that the availability of such funding will encourage more product development aimed at the poor.  Maybe after these products are developed, companies can reverse the "reverse innovation" again, and produce nicely packaged, yet still affordable versions of these products to the richer countries! 

Above: An affordable reverse osmosis system by Environment Planning Group Limited 

Source: Acumen Fund Website  

Money for Water

I tried to do a search of the venture capital (VC) investments in the water industry, and based on findings from Greentech Media, put together a chart of the level of VC investment over the last six years. 

I couldn't find any data on 2007 -- apparently different sources have wildly different opinions on the level of VC funding for that year -- so that's been left blank.  In general, the level of VC funding has fluctuated from year to year, and I think it might be slightly premature to conclude any real trend.  But if 2010 continues to grow at the same rate as in Q1, it may indeed look like the VCs are finally showing interest in water. 

The water industry has traditionally been accused of having a relatively low level of VC funding.  With the water industry estimated at over US$400bil, VC funding works out to about 0.03%.  According to Wikipedia, VC funding for the dot com industry was about 0.06% in 1994, rising to 1.09% in 2000, before crashing to 0.16% in 2003.  I suppose the water industry is nowhere on that scale yet, but neither have I seen anything about the IT industry's level of VC funding being the optimal level. 

Indeed, I couldn't find much information on what an optimum level of VC funding for any industry should be.  I guess the criticism is in comparison to our alternative energy sisters -- solar energy itself saw US$1.4bil of VC funding in 2009 despite a market size of far less than US$100bil.  But the estimated growth rate of the solar PV industry is staggering.  CAGR estimates range from the high 20s up to 40%!  The global water industry, on the other hand, is looking at a more conservative 7%. 

Anyway, assuming the "experts" are right about VC funding being low for the water industry, a google search threw out these possible reasons:

1. 
   
   No "game changing" solutions
2. 
   
   Low returns and long gestation periods
3. 
   
   Water problems can be solved by legislation without the need for technology
4. 
   
   Poor understanding of the water industry
5. 
   
   Water is too cheap -- it is not seen as a profitable industry
6. 
   
   Competition from other cleantech industries seen as more promising and exciting

All the reasons cited are somewhat related.  The fact that water is so cheap and that it is considered a human right by some, means that it is unlikely to ever be very profitable.  And as long as it is not seen as very profitable, it will be difficult to attract much interest and understanding of the industry.  With less interest and competition in the industry, there is a lower likelihood of "game changing" solutions being developed, and there would be no impetus to shorten the long gestation periods.  At the end of the day, it seems easier to legislate water restrictions than to develop new and cheaper water sources. 

As many people have pointed out, water needs to be priced more attractively to pique investors' interest.  Then again, water is an important resource in many industries and allowing the price of water to rise may inflate the prices of many other goods and services.  Perhaps governments should take on the responsibility of rewarding innovation in this industry.  After all, they are the ones who have to ensure an adequate supply of water at an affordable cost.

Energy Self-Sufficiency in Wastewater Treatment Plants

While much of water R&D has been focused on the production of potable water, there has been a growing interest in the generation of energy from wastewater.  Scientists believe that wastewater contains up to 9 times the energy needed to treat it.  This means that wastewater treatment plants could potentially be energy self-sufficient, while producing excess clean energy for other uses. 

Tapping energy from wastewater is not a new concept.  Many modern wastewater treatment plants use the biogas released by the decomposition of organic material to supplement their energy needs.  Energy is also produced in the incineration of the sludge produced at the end of the decomposition process.  But the total energy produced through the current processes is less than 5% of what is estimated to be in there. 

Since the energy is stored in the organic material, R&D has unsurprisingly been centred about improving the efficiency of decomposition (and energy recovery in the process), and microbial fuel cells appear to be leading the charge.  Microbial fuel cells (MFCs) are based on the anaerobic decomposition of organic substances in wastewater, which produces electrons that when sent through a conductor, results in the flow of electricity.  A slight modification of the MFC produces the microbial electrolysis cell (MEC), which produces hydrogen gas.  The hydrogen gas can be used as an energy source in place of natural gas. 

Both MFCs and MECs are still some way from large scale implementation, but some innovative wastewater treatment plants have already managed to achieve energy self-sufficiency! Check out the San Diego Point Loma wastewater treatment plant, which not only produces enough energy for its own needs but also supplies energy to the power grid.  Its energy sources? 

• 
  
  Biogas from the digesters that breakdown the organic compounds is used to power generators
• 
  
  Waste heat from the generators keeps the digesters at an optimum temperature
• 
  
  Hydroelectricity -- the plant happens to be located on a cliff, 90ft (27m) above its ocean outfall, and a hydroelectric plant captures the energy when the treated effluent flows down to the sea

Above: A microbial desalination cell developed by Tsinghua University and Penn State University -- a slight modification on the basic MFC

Source: Bruce E Logan Laboratory, Penn State University

Main sources:
Turning Wastewater Into Clean Energy
Bruce E Logan Lab Research into Bioenergy