As most of us know, water covers 71% of the earth’s surface. Most of us also know that out of all water on earth, less than 3% is potable water fit for human and animal consumption and irrigation. The rest 97% is too salty to be of any use to non-marine lives.
Desalination is a scientific method that helps bridge this gap between available water and usable water. At its core, desalination is a simple process that involves eliminating salt and other compounds from ocean water that makes it unusable.
While the technology of desalination finds mention in the works of Aristotle among other ancient observers, it was not possible on a large scale until the modern era. Before that, many ships would rely on desalination on small scales to sustain their voyage. In today’s world, entire cities run on desalinated water.
As with any scientific method, a market grows with growth in technology. Similarly, desalination is a huge market in today’s world after going through technological innovations. It is especially prevalent in regions with coastlines but a shortage of drinking water, like the Middle East. Let’s find out more about this technology, its market, and the future of the market.
In 2021, the market valuation of the desalination industry was USD 14.5 billion. If that sounds like a massive number, you’ll be surprised to know that the market will be worth USD 35.5 billion over the next decade. These numbers and stats show the industry is far from its maturity. On the contrary, it is an evolving sector that is still coming up with better ways and methods. The market is still booming with “a CAGR (Compound Annual Growth Rate) of 7.1% from 2020 to 2028”. When talking about desalination economics, the sector's recency should always be considered.
The numbers prove that there is much to be explored in the industry, and the next decade will be crucial for both the technologies and the market.
Before we dive into the reasons behind this growth, let us explore a few more key areas of desalination market size and desalination economy.
While desalination is a great technological innovation to meet water-shortage problems, it does come with its challenges. One glance at the regional distribution of desalination plants will reveal the regional disparities.
The major reason behind unequal growth and innovation is the cost of desalination projects. Desalination is not feasible in places without a nearby coastline or high-altitude places. The cost of transporting the desalinated water will overtake the already high costs of the desalination process. That’s the primary reason most desalination plants serve areas near coasts.
On a global scale, the Middle Eastern and African countries show the highest growth in desalination projects. These two regions alone accounted for more than 40% of the global market share in 2020. Featuring 14 sets of equipment, the UAE Taweelah A1 seawater desalination plant is the world's largest low-temperature multi-effect desalination system. Each set produces 17,143 cubic meters of water per day. Other Asian countries are also showing promise, with India, Bangladesh, China, and Pakistan coming up with their own desalination projects. Outside Asia and Africa, Australia has invested heavily in desalination projects over the last few years. The United States of America also has a few scattered projects across the country.
At present, few big companies account for the major share of global desalination projects. These companies are :
Manufacturing equipment for water desalination projects requires large-scale collaboration and advanced manufacturing tools. The industrial pipes, water filtration units, and water transport facilities need to be cutting-edge to effectively carry out the procedure. Very few companies are at that level of expertise yet, but more players will join the market as the desalination market size grows.
The desalination market will also see an increase in competition due to technological progress. The cost of producing freshwater from saline seawater is decreasing. In 1985, the cost of producing one ton of desalinated water was around $1.2. At present, the price of a ton of desalinated water is between US$0.6-0.9. With lowered costs, the demand for desalinated water will grow, especially in regions with pertinent water shortages.
Technology will play a key role in the desalination market. At present, there are three major techniques available: Reverse Osmosis (RO), Multi-stage Flash (MSF) Distillation, and Multi-effect Distillation (MED). Of these three methods, Reverse Osmosis has become the most widespread due to lower costs and increased efficiencies. However, there are merits and demerits to each, and we’ll come to that later.
Out of all jurisdictional segments, the municipal bodies account for the most use of desalinated water. Municipal bodies distributed more than 50% of desalinated water in the world in 2020. Since municipal bodies are concerned with freshwater distribution in urban and suburban areas, their market share is also the highest.
Another sector to put desalination into application is the industrial sector. However, industrial plants do not necessarily use desalination methods for converting unusable water into usable water. Instead, desalination methods help industries deal with industrial waste. Many countries require industrial plants to follow strict wastewater management protocols. Desalination helps these plants decontaminate wastewater and then release it.
According to UNICEF, 2/3rd of the world’s population face acute water scarcity. Out of the many possible solutions, desalination has come up as one of the most potent. Water conservation techniques are not enough for most regions with water scarcity because of a growing population. Desalination is the only option for many of these places.
The desalination economy will grow further with improvements in water storage and transport facilities. Transporting desalinated water from the plant to the urban centers is still a challenge, both technologically and financially. Modern industrial pipes can meet this challenge, and that would mean further growth in the demand and supply of desalinated water.
The market will see increased competition as desalination becomes more cost-effective. While the Covid-19 pandemic and subsequent lockdowns of industrial facilities led to a decline in the growth of the industry, it is growing at an even faster rate post-pandemic. Most of this demand is coming from consumers switching to a healthier lifestyle being reluctant to risk consuming contaminated water.
To summarize the desalination market situation, it is a growing sector with significant challenges. However, technological progress has the potential to overcome the challenges and make the industry more efficient and cost-effective.
Desalination technologies have come a long way from primitive methods of evaporation and condensation. Modern desalination plants use cutting-edge technology to generate huge output at a low per-unit price. Of all the desalination technologies available, three are most common and efficient.
Many of us are familiar with the term Reverse Osmosis. It is a technology used in both domestic and industrial water filtration units. Reverse Osmosis is the most common technique by far and generates the highest revenue. Its widespread adoption has many reasons - low installation cost, ability to work with different kinds of water, and higher output.
In RO, water is passed through semipermeable membranes that filter out salt molecules and produce clean water. There are multiple stages to the RO process, but it is still the most resource-effective compared to other methods.
As the name suggests, Multi-stage flash involves various stages of evaporation and condensation to produce clean water. These processes happen at low temperatures and pressures. In terms of output, MSF is the best of all available methods. However, it has higher installation and maintenance costs compared to RO. As the technology grows and becomes more cost-effective, it can drive the global desalination industry and take the place of RO.
Multiple-effect distillation works through multiple steps, where the heat from the previous batch is used to heat the next batch. Sometimes MED will get power from a nearby power plant to make the heating system more efficient. Multi-effect distillation is less prevalent than MSF or RO because of energy requirements and high costs.
The following table compares three seawater desalination processes based on their key technical parameters:
|
The main technical parameters |
Multi-stage flash evaporation |
Low temperature and multi-effect |
Reverse osmosis |
|
Operating temperature °C |
<120 |
<70 |
Room temperature |
|
Main energy |
Steam, electricity (Heat energy, electric energy) |
Steam, electricity (Heat energy, electric energy) |
Mechanical energy (Electric energy) |
|
Steam consumption t/m3 |
0.1-0.15 |
0.1-0.15 |
None |
|
Power consumption kWh/m3 |
3.5-4.5 |
1.2-1.8 |
3-5 |
|
Salt content of typical source water （ppm TDS） |
30,000-45,000 |
30,000-45,000 |
30,000-45,000 |
|
Product water quality （ppm TDS） |
<10 |
<10 |
<500 |
|
Typical stand-alone water production capacity（m3/d） |
3,000-70,000 |
3000-20,000 |
1-20,000 |
As is evident from the table, each method has its pros and cons. However, the pros of RO outweigh its cons, and that makes it the most prevalent option. With further growth in technology, that might change very soon.
Desalination in the past was almost always a government venture. With changing market forces, desalination’s future is now looking different. At present, there are various models under which desalination plants operate. The two main financing and ownership models of desalination plants are BOT (build-operate-transfer) and BOO (build-own-operate).
The BOT model lets a private firm construct the desalination plant, operate it for the given tenure, and transfer it to the government at the end of the tenure. The company running the plant for the agreement period charges a commission to get a return on investment. This model finds favor in countries where the economy is closed and external players cannot enter as easily. From an administrative perspective, it gives the government the power to make key decisions and retain ownership in cases of dispute.
In the BOO model, a company builds and operates a desalination plant, and also enjoys its ownership. For firms operating in the BOO model, the government usually provides a subsidy or guarantees a minimum support price. Such a model works great in free markets where the government minimizes interference in the market.
Both the BOO model and BOT model work in different circumstances, and often in tandem with each other.
In countries like the UAE, Israel, Spain, Italy, and China, desalination projects are heavily subsidized and policies make it easier for companies to step into the market. Power generation and water supply equipment are exempt from import restrictions in the UAE, and 4% tariffs are imposed. The governments of Spain, Italy, Israel, and other countries have taken a similar stance. The goal is to encourage competition which will lead to decreased costs and increased outputs.
Desalination projects are also collaborative in many cases. For instance, the European Union will actively support China’s desalination projects with funding and expertise. Similarly, the United States of America passed an act in 2004 that grants a subsidy to desalination plants. The Japanese government subsidizes almost 85% of total desalination plant set-up costs in the country. With all these governments coming together to support the desalination industry, the potential of growth is at an all-time high.
Desalination is a complex yet promising technology that has the potential to solve water scarcity at a global level. However, the market is still far from its zenith. While the market has opened up for external participation, the barriers to entry are still high. Despite the logistical and financial challenges, estimates suggest a steady growth for the next decade at least.
Desalination projects require high-quality raw materials and industrial equipment, to begin with.
At Glen Engineering, we supply high-quality industrial pipe spools, pressure vessels, industrial pipelines, and a lot more. Book a consulting session with Glen Engineering to know more.