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29 March 2024

Desalination industry to clock slower growth

Seawater desalination sector to hit $16bn in 2020. (EB FILE)

Published
By Karen Remo-Listana

The order intake in the desalination industry has fallen by 20.7 per cent this year due to the recession, a huge drop compared to the 11.7 per cent increase recorded in 2008.

This will feed through into a slower expansion of global desalination capacity during 2010 and 2011, according to reports presented by the International Desalination Association (IDA) and Global Water Intelligence (GWI) DesalData service yesterday.

But the rate of growth in orders is expected to pick up in subsequent years, similar to what was witnessed in the past few years.

"The rate of growth slowed in 2008 and 2009 as a function of the global economic downturn, as many plants were put on hold due to the industry's difficulty in obtaining project financing," said Lisa Henthorne, IDA President.

Despite the slow down in orders – primarily attributed to the tightness of the capital/debt market – the industry continues to grow. This is because although there is a shortage of funds today, the fact remains that the need for water continues to grow as population grows, issues on climate change looms and industries continue to develop.

According to the 22nd DesalData IDA Worldwide Desalting Plant Inventory, there are 14,451 desalination plants with a combined capacity of 59.9 million cubic metres per day now online.

This represents an increase of 12.3 per cent over last year. In addition, a further 244 plants with a capacity of 9.1 million cubic metres per day are known to be under contract.

One of the major trends is the sharp growth in demand for seawater desalination.

"Since IDA's last World Congress in 2007, the installed capacity of seawater desalination plants has grown by 29.6 per cent," said Henthorne.

Currently seawater represents 62.4 per cent of the desalination market in terms of output. Brackish water desalination represents another 20 per cent, followed by river water desalination at 7.5 per cent.

Around five per cent of the desalination market treats pure water largely for industrial applications and 5.1 per cent of global desalination capacity is used to treat wastewater streams, typically for water reuse.

The world's largest desalination plants, both online and in the planning stages, are seawater facilities located in the Middle East.

"We tend to build desalination plants in phases, adding onto facilities as demand grows. The Jebel Ali complex here in Dubai is a good example, where an additional 600,000 cubic metres per day of capacity was recently contracted," said Henthorne.

The largest production from an individual installation is the Shoaiba 3 project on the west coast of Saudi Arabia, serving Jeddah, Makkah and Taif, producing 880,000 cubic metres per day.

Seven other commissioned or contracted plants have capacities in excess of 400,000 cubic metres per day. Ras Azzour, on the east coast of Saudi Arabia, has a planned capacity of one million cubic metres per day.

While the Middle East remains the largest market for desalination, Henthorne said there have been changes in the geography of desalination since 2003 as large-scale programmes in Australia, Algeria and Spain have made these markets much more prominent.

"Saudi Arabia continues to lead the list of top 10 countries by total installed capacity since 1945, followed by the United States, the UAE, Spain, Kuwait, China, Japan, Qatar, Algeria and Australia," she said.

The seawater desalination market is slated to grow by 60 per cent from $10 billion (Dh36.7bn) today to $16bn in 2020, as demand from water-scarce GCC surges, said Christopher Gasson, Publisher of Global Water Intelligence.

The market will also be boosted by major expansions in Algeria, Spain and Australia; as well as the added demand from new markets in China, India, and the US.

Another reason is that seawater offers a guaranteed supply of water and seawater desalination has become more affordable in comparison with the alternatives.

"Overall, we are projecting continued growth in the desalination market, and in fact, more than a doubling of the market by 2015 from levels reported in 2007.

"Seawater desalination will drive this expansion," Gasson said.

By 2014, he said the seawater desalination sector will be adding more than the equivalent of a new River Thames each year to the world's renewable freshwater resources.

The Thames discharges 5.7 million cubic metres per day of water into the sea while the total seawater desalination capacity added in 2014 is forecast to be 6.8 million cubic meters per day of water.

"By 2020, the seawater desalination industry will be adding twice that amount. In essence, this is like creating a river that flows backwards from the sea," he said.

According to GWI DesalData/IDA, 150 countries around the world use desalination.

The primary users are municipalities (66.2 per cent), industrial entities (23.5 per cent), power industry (5.5 per cent), agriculture (1.7 per cent), and tourism sector and the military.

Currently, reverse osmosis (RO) accounts for 61.1 per cent of installed capacity, followed by multi-stage flash (MSF) at 25.7 per cent, multi-effect distillation (MED) at 8.3 per cent, electrodialysis (ED) at 3.2 per cent, hybrid technologies at 0.7 per cent and electrodeionisation at 0.3 per cent.

The installed capacity of high-quality water reuse plants in the world currently stands at 28 million cubic metres per day – less than half the capacity of the world's desalination plants.

The market for water reuse is smaller than the market for desalination because the reclaimed water tends not to be used for potable purposes, which means that it is of little benefit to urban water utilities.

This is changing however with the introduction new generation of advanced water reuse technologies, which are opening the market for indirect potable reuse.

The market, however, is also growing, albeit al lower rates. GWI expects water reuse capacity to increase from 31 million cubic metres per day to 78.7 million.

Global municipal water supply could also be increased by 30 per cent simply by reducing leakage, Gasson said. Agricultural water demand, which represents 70 per cent of total abstraction, could be reduced by more than 50 per cent through better irrigation methods and new seed varieties.


Price management need of the hour

If water were properly priced, people would use less water and there would be more money to invest in the technologies and infrastructure the industry needs, said Christopher Gasson, Publisher of Global Water Intelligence.

"Water tends to be most heavily subsidised where least is available. Unfortunately, too little effort goes into demand management," he said.

Economists agree that the GCC's subsidy policy on water cost should be revisited as the cheap cost will continue to spur unsustainable growth rate. In addition to growing economy and population, government subsidies have also resulted in massive and sometimes excessive usage.

"I am a believer that we should pay the actual cost of water," said Fady Juez, Managing Director of Metito. "The more you use, the more you pay, I agree. The first tranche of water, the survival quantity of water, which is the basic necessity for human being to live has to be very low cost and affordable. But above that – if you have a garden or pool then you do have to pay for that indeed."

Juez, who was yesterday elected to the IDA Board of Directors, said if everybody began to pay, then subsidies have to be removed. Henthorne said IDA has been seeing a trend towards privatisation of desalination projects, including here in the region.

"Since 2002, 38 per cent of desalination plant capacity has been privately financed. Privatisation of desalination began in the Caribbean and was instituted in Abu Dhabi in early 2000s. In fact, there is a movement throughout the GCC towards privatisation of both power and desalination," she said.

Juez said there is a world consensus that privatisation can make things more efficient but a public-private partnership is more applicable in the GCC. "The consensus is that you are more efficient if you are privatised, when you are a government entity you are less efficient.

"However, there are some government entities that are extremely efficient. Then privatisation becomes a matter of trying to get the public fund into your organisation," he said.


Task force set up to study environmental effects

The IDA has begun to form a task force to explore the environmental effects of desalination on the Arabian Gulf and recommend strategies to mitigate potential impacts.

The team, which will be composed of leading scientists, environmental experts, government representatives and members of the desalination community, will convene at the IDA World Congress on Desalination and Water Reuse in Dubai.

IDA will also hold a Symposium on Desalination and the Environment in 2010 in the Gulf. The task force's findings and recommendations will be presented during this event.

According to Lisa Henthorne, President of IDA, the task force is part of a larger initiative that IDA is organising to examine best practices, as well as available and future technologies, to address environmentally-related aspects of desalination such as energy consumption, safeguarding of marine life, and concentrate disposal, and promote ways to mitigate potential environmental impacts of desalination around the world. "In many regions, including the Gulf, desalination is the only way to supply fresh, clean water to growing populations and economies," said Henthorne.

Desalination is especially important to countries on the Gulf. Together, these countries, including Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, Oman, Iraq and Iran, account for about 40 per cent of the world's desalination capacity.

For example, IDA estimates that 95 per cent of Dubai's water supply is produced through desalination. At the same time, the unique configuration of the Gulf – a semi-closed water body with limited fresh water inflow from rivers – requires diligent attention to potential effects of the process.

"Seawater desalination is the only way to provide adequate fresh water to the Gulf. It is not going to go away," Patricia Burke, Secretary-General of IDA.

 

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