Running on Empty

• By Les Pennington
• Nov 01, 2000

After a great deal of discussion, debate and heated dialogues, the powers that be in Israel have decided that the best way that the country can meet its current water demands is to invest in large-scale desalination plants.

In late April 2000, Israel's Ministerial Committee for economic affairs approved recommendations for the construction of the country's first major seawater desalination plant. Initial plans for the plant estimate it will provide around 140,000 cubic meters (m³) per day of potable water and construction will cost around $150 million. The plant is to be built by a private contractor under a Build-Operate-Transfer (BOT) contract. The government will accordingly agree to purchase a quantity of the water produced at an established price over a predetermined period. A tender for the project is expected to be issued in late 2000, and full commissioning is hoped to occur around 2004. The plant will be located on the southern shores of Ashkelon and bids are expected to be around $0.70 per cubic meter including investment recovery.

PQ2 The total desalination plant market is currently in the growth stage of its lifecycle and offers potentially great opportunities to companies that are active in or entering this market.

This move towards self-sufficiency regarding water resources was backed in May '00 as the Israeli Ministerial Economics Committee announced that it was planning to allocate around $700 million for the purification and desalination of water. Investment will be sourced into water purification and desalination, wastewater purification for agricultural practices and the cleaning of wells that have become salinated or polluted.

Over the last winter there has been lower than average rainfall across North Africa and the Near East -- which includes Southwest Asia and the Arabian Peninsula -- causing drought conditions and crop failures in many areas. Although not one of the worst hit regions, Israel is also suffering from over-use of water and a lack of water replenishment. Mekerot, Israel's national water company, recently announced that by winter 2001, Israel would have no water reserves. These reserves are being replenished at a slower rate than they are being extracted, and according to figures released by the company, fixed water consumption in 1999 was 800 million m³, as opposed to a replenishment of 700 million m³. The question is how to restock the national water reserves?

Exploring the options
An alternative solution that is being discussed at length is the transportation of water from water-rich Turkey on a contractual basis either by ship or pipeline. At present this solution is receiving widespread coverage, principally for the indecision with which it is being handled. Under current draft plans, Israel will import 50 million m³ of water a year using converted oil tankers. The water purchases could then be increased to 100 million m³ per year. The authorities are keen to point out that this is a temporary measure, yet is seen by many to be a stalling tactic whereby the government is holding back on making the large investment in a desalination plant. However, the deal has still not yet gone through due to an excessive price demanded by the Turkish authorities. Given current costs, imported water will cost between $0.80 and $0.90 per m³ as compared to desalinated water, which will cost between $0.50 and $0.70 per m³.

Given current costs, imported water will cost between $0.80 and $0.90 per cubic meter (m3) as compared to desalinated water, which will cost between $0.50 and $0.70 per m3.

This idea has received widespread criticism in terms of being merely a stopgap solution that will solve the immediate problem but will not provide a serious solution to future water crises. Who can predict what Turkey's water situation may be like in five years? If water imports stop, the situation could be disastrous for the region.

Advantages of desalination
The best solution seems to be the conversion of salt water into potable water for municipal and industrial use. The former long standing Israeli water commissioner, Meir Ben-Meir, was an advocate of the installation of desalination plants in the region and the long term benefits that this type of plant will provide. The government is also keen to point out that this market will contract out plants on a BOT basis, and it is adamant that when the tender is made this summer, the majority of bids will be from private companies rather than government entities such as state-owned water company Mekorot or electricity monopoly Israel Electric Corporation -- it is believed that government involvement will jeopardize private sector participation.

Water scarcity in the region could be a future spark for war between Israel and its neighbours. If Israel ensured it was producing enough water to support its own population, it could no longer be accused of stealing water from its neighbors. With the area around the inland Sea of Galilee being the center of debate in peace negotiations between Israel and the Palestinians, the common co-operation between states in the region concerning water resources could ensure that there is future peace between its peoples.

Of all the different proposals put forward to supply Israel's water shortfall, large scale desalination projects, although not providing an immediate solution, would be able to provide a supply of water for its 20 to 30 years lifetime from a limitless source. With falling prices and technological improvements in desalination plants, this solution to an ever-present problem could prove vital to preserving both peace and life in the Middle East.

Saudi Arabia plans massive investment in infrastructure development
The world's largest market for desalination plants is Saudi Arabia, which has a number of very large scale plants in operation. The region has a lack of perennial rivers or permanent water bodies, and is also suffering from desertification. This has prompted investment in plants and development of such plants.

The total desalination plant market is currently in the growth stage of its lifecycle and offers potentially great opportunities to companies that are active in or entering this market.

Saudi Arabia's Saline Water Conversion Corporation (SWCC) has launched a multi-billion dollar program to increase the production of desalinated water for drinking and industrial use as Saudi Arabia's population and its industrial activity grow over the next two decades. The SWCC represents the public sector in Saudi Arabia and is responsible for all aspects of seawater desalination plant specifications and designs. It oversees new plant construction and commissioning and also takes charge of operation and maintenance as well as expansion and upgrade of existing plants. The most recent annual report of the SWCC outlines plans for 20 new desalination plants to be built under the new program. The plan also calls for the construction of new pipelines to carry the water to urban and industrial centers throughout the Kingdom. The new program envisages 15 new desalination plants along the Red Sea and five along the Arabian Gulf coasts. Some will be single purpose (for the production of desalinated water) and some dual purpose (for the production of desalinated water and electricity).

The new desalination facilities will produce around 3.2 million m³ of water per day, more than doubling Saudi Arabia's current output. The size of the planned facilities varies greatly. The smallest one will produce around 5,000 m³ of water per day for Haql, while the largest will produce an additional 845,000 m³ per day of water for Riyadh. The program also provides for the construction of 18 new pipelines totalling 2,880 kilometers (km). The report states that the new projects represent substantial new business for Saudi Arabian construction and engineering companies. The Governor of the SWCC has said work is in full swing on constructing three desalination plants in Al-Khobar, Jubail and Al-Shoaiba as well as five delivery systems at a total cost of $3.2 billion. On completion of this project, there will be 4,155 km of water pipelines in the Kingdom, serviced by 29 pumping stations. Currently, he said the corporation is studying the possibility of setting up 20 more wate r desalination plants with a d aily production capacity of 2.6 million m³ of water in addition to 12 water delivery system projects with a total length of 2,640 km.

Market for desalination in the United States projected to explode
The United States is increasingly looking towards desalination to solve its escalating water supply problem. Seawater desalination is still catching on, but in California alone, there are 11 existing and seven proposed seawater desalination plants.

In Florida, the Tampa Bay Water Authority recently approved a proposal to construct a plant capable of producing 95,000 m³3 of water per day initially and may be expanded in the future to produce around 130,000 m³ per day. This will be the largest desalinated seawater facility in North America. The plant, which will be built on Tampa Electric Company's Big Bend Power Station site in southern Hillsborough County, should be complete by October 1, 2002 and operating by December 31, 2002, at a cost of around $100 million dollars.

Israel's national water company recently announced that by winter 2001, Israel would have no water reserves.

Under the Tampa Bay Water Authority's Seawater Desalination project -- a key component of the agency's master water plan -- calls for the creation of 200,000 m³ a day of new water sources by 2003 and a total of 420,000 m³ by 2008. The seawater desalination project is one piece of the water supply solution and will provide 10 percent of the region's overall water supply by 2008.

Other communities have tried this method of water provision before. Desalination plants in Key West, Fla., and Santa Barbara, Calif., produced clean drinking water, but it proved too expensive.

Other attempts at building large desalination plants in the United States have not been cost effective. But developers in Tampa Bay say new technology will allow them to produce affordable drinking water. This plant is expected to pave the way for future projects in the United States, which has traditionally been hampered by high costs. However, environmental groups are concerned that the high salinity wastewater pumped back into the ocean will hurt the local environment and destroy species of marine life in the locality. If developers can prove that they can meet environmental regulations, then desalination plants may become a much more common source of fresh water in the future.

Worldwide markets expected to swell
On a wider scale Frost & Sullivan, an international marketing, consulting and training company, predict that desalination is growing in popularity as a method for potable water provision. The Middle East, North Africa and Europe desalination plant markets are presently in the growth stage of their lifecycles. This growth is predominantly encouraged by a real need for potable water for not only human consumption, but for the irrigation of agriculture and for industrial end-users, who all demand a guaranteed supply of good quality freshwater.

Frost & Sullivan have estimated the total Middle East, North Africa and Europe desalination plant markets to be worth around $1.05 billion in 1999, a figure that has been increasing in a fluctuating manner over recent years. This growth is expected to continue throughout the 2000's, with the chief driver being the increasing demand for potable water as per capita water requirements grow and populations multiply.

Regarding a proposed plant in Tampa Bay, Fla., environmental groups are concerned that the high salinity wastewater pumped back into the ocean will hurt the local environment and destroy species of marine life in the locality.

The total desalination plant market is currently in the growth stage of its lifecycle and offers potentially great opportunities to companies that are active in or entering this market.

With increasing water shortages world-wide and dropping plant prices, desalination plants will become more and more popular for the provision of potable water for municipal, industrial and a host of other end-users. As costs fall -- both environmentally and economically -- the ability to tap into the limitless source of water in the world's oceans will prove to be the answer to a problem that is becoming increasingly significant.

Key challenges facing desalination markets:

* Environmental opposition hinders market development; * Initial high investment frightens customers; * Growth in build-own-opertate offers a competitive advantage; * Future demand necessitates flexible plant design; * High cost of plants and ater produced favors other water supply options; * Companies with prior market experience continue to dominate the desalination sector; * Sporadic orders create fixed cost nightmare; * Technologies focus on efficiency and price-performance ratio; * Lack of coherent standards leads to disorganised governing of desalination industry; and * Plant location impacts product design.

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Matthew Barker is a research analyst for Frost & Sullivan, San Jose, Calif. He can be reached via e-mail at matthew.barker@fs-europe.com.

This article originally appeared in the 11/01/2000 issue of Environmental Protection.