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Desalination Market
Water Without A Pinch Of Salt
July 2009
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Table Of Contents
Introduction
Business Avenues
Technology
Competitive Landscape
State-wise Desalination plants
Market Drivers, Restraints and Industry Challenges
Future Capacity Additions
Market Destined
Conclusion
Introduction
- India Water Needs
India with 16 percent of world population has only 4 percent of water resources. The major
source of water is monsoon, which occurs for only a few weeks in a year.
There is great disparity in states for water availability. States like Rajasthan, which are large, in
terms of area and population, share only 1 percent of the water resources.
About less than 15 percent of the water, which India get through monsoon, is preserved by the
government in dams. Besides, lack of sufficient funding for maintenance of the infrastructure is
increasing problems of water availability.
Drought, floods, and water contamination add salt to this growing problem.
In order to meet the growing food demand , the Indian Government is targeting to double its
growth rate in irrigated areas over the next five years.
Rapid industrialization, growth in urbanization, and increase in food production will demand
more water resources.
With such a planned growth the World Bank report states that Indias demand of water will
exceed supply by 2020.
Introduction
- Industrial and Municipal Water Demand
72
70
60
50
CAGR 3%
50
40
30
20
10
0
2008
2020
20000
15000
CAGR 8%
10000
5000
5815
0
2008
2026
Introduction
- Seeking Alternative Water Sources
Population:
Water
Resources
Ratio
Increase in Water
Disputes among
States
Increase in
Food
Production
Growth in
Industrialization
and Urbanization
Flaws in Monsoon
Water Storage
Industrial
Water
Contamination
Introduction
- Desalination
Desalination of sea water and brackish water is one the feasible and identified solutions to
counter the problem of water scarcity.
Water scarcity is higher in coastal areas in comparison to other parts of the country.
Desalination water technology is widely used in water scarce states such as Gujarat, Tamil Nadu,
and Rajasthan.
Tamilnadu
has
maximum
number
of
state
government-owned
desalination
plants
in
Doshion has proposed for municipal and industrial desalination plants at Barmer, Jaisalmer,
Bharatpur, Jaipur, Jalore, and Sirohi in Rajasthan.
Water produced from desalination plants are used not only for human consumption, but also for
industrial production. Water desalination technology is also found to be useful for treating water
from water streams.
The high cost of producing water per liter by using current technologies is the main deterrent for
adopting desalination as a solution.
Business Avenues
Desalination service providers/ manufacturers can look for two
types of business avenues
Desalination Service
Providers/Equipment
Manufacturers
Industrial Desalination
Plants : Large companies
inclination to have
captive desalination
plants to meet their
process water demands.
The model used in tenders/projects
by industrial institutions is custom
build and transfer. In some projects, O
& M is also taken care for 3 to 5 years.
State Government-Owned
Desalination Plants:
Government comes out
with desalination plants
to fulfill states
household and municipal
water needs
The model used in tenders/projects
by government is BOOT (build,
own, operate and transfer). Usual time
spread is of 10 to 20 years
Technology
Thermal
Multi-stage flash
(Most Commonly used)
Generally built in units of about
4,000 cum/d to 30,000 cum/d
Feed temperature : 90C -120C
Membrane
Electro dialysis
Effectively neutralizing the
individual charges
Membranes are arranged
alternatively
of water
Less chemical usage
Reverse Osmosis
Successful commercialization
feed flow
since 1970
10
Technology Usage
There are around 1,000 desalination plants functional in
RO
22%
MSF
7%
MED
71%
MED
26%
another
desalination.
developing
technology,
namely
RO
63%
MSF
11%
solar
Source : Frost & Sullivan
11
Competitive Landscape
Desalination market in India is highly fragmented. There are around 1,000 desalination plants
functional in India, in which Tier 1 companies take a very small share.
Tier 1 consists of companies such as VA Tech Wabag, IDE Technologies, BGR Energy Systems,
Doshion, Ion Exchange, GE Water & Process Technologies, Befesa Agua, Degremont, IVRCL
Infrastructures, and Aquatech International.
Most of the projects running in India are on PPP and BOOT Model.
The foreign companies are performing well in the market. Israel's IDE is working on 20 projects
in India, in which 13 are functional and seven are in manufacturing and assembling stage.
Successful joint ventures similar to the one between Hyderabad-based IVRCL and Befesa, Spain
for Chennai-based Minjur desalination project are also gauging attention, as more multinational
players are eyeing to enter this market.
Saudi Arabia's Bushnak Group has formed joint ventures with Pallava water services Pvt. Ltd. to
help set-up desalination units in southern India. The first plant is coming at Karaikal,
Pondichery.
12
Gujarat
47%
Bengal.
Krishnapatnam
Large
Orissa, and
projects
port,
such
as
Kasnau-Matasukh
for
coastal
regions
to
go
for
desalination.
Increasing awareness for excess ground water contamination has forced industrial and
institutional setups to look for desalination plants for water needs. State governments strictly
working for the norms of industrial usage of ground water. The market in non-coastal regions
mostly consists of large industrial and institutional corporate houses.
13
Pushing Forces/Driver
1-2 Years
3-4 Years
5-7 Years
High
High
High
High
Medium
Low
Low
Medium
Medium to
High
Low
Low
Medium
Rank
Pulling Forces/Restraint
Order of Impact
1-2 Years
3-4 Years
5-7 Years
Cost of production
High
Medium to
high
Medium
Restructuring
High
Medium to
Low
Low
Low
Medium to
High
High
Low
Very Low
Very Low
14
Market Drivers
Government And Political Support
Urban infrastructure development support under JNNURM and INR 536.60 billion has been allocated
for urban water supply under 11th five year plan that will support more desalination plants in India.
Political leaders agree to the argument of using desalination to rectify water problems in their
respective states. Ms.Jayalalitha and Mr.Karunanidhi in Tamilnadu are strongly supporting
desalination. Gujarats Chief Minister, Mr. Narendra Modi, has taken inputs from companies like
Hyflux and GE Water for using desalination plants in Gujarat.
Industrial Water Use Restriction
Increase in ground water contamination by industries is pushing state governments to impose
restriction on ground water use. Such restrictions will give boost to desalination plant usage by
industrial setups.
Reduced Plant Prices
An RO plant costs approximately 60 percent of its cost 10 years ago. This reduced price gives
incentives to build new plants.
Population Growth and Water Shortage
Water scarcity and decreased per capita water availably push the use of desalination plants.
15
Market Restraints
Cost of Production
Cost of production of water from desalination plants is as low as 15 paisa per liter, but it is still high
in comparison to water from other sources. Increase in cost of water will inflate overall production
costs for any industrial unit. This factor impedes the adoption of desalination plants.
Restructuring
Infrastructure maintained by industries, which started a decade ago will have to go for restructuring
to accommodate desalination plant. Such restructuring is not supported by most of the industrial
setups.
Wastewater Recycling and Improved Production process
Many industrial units are installing plants for water recycling and reducing water usage. This, in turn,
will reduce the opportunities for desalination plants.
Global Economic Recession
Although India is not much effected by global recession, still a few projects have been put on hold
by industries to keep their energies focused on the core work.
16
Industry Challenges
Industry Fragmentation: Desalination market in India is highly
fragmented with so many Tier-2 and regional players. Creation of
industry wise standards is a major challenge.
Bureaucratic Hurdles :
Protests:
Recent
There
fishermens
protest
against
groups
are
desalination
many
projects,
2005
Andhra
in
Orissa,
Pradesh,
Pondicherry.
and
Adani
Challenges
However,
growth
of
and
bureaucratic
2015,
1,449,942
CAGR : 25.31 %
2008,
291,820
Total installed capacity of desalination plants in India was 291,820 cubic m/day in 2008. With
growing demand and more focus on desalination by states, the capacity is expected to reach
1,449,942 cubic m/day by 2015. There are many projects, which are approved by respective
government bodies and are in initial phases of development. Government projects have invited
tenders for desalination plants on BOOT model. The construction of Minjur desalination plant in Tamil
Nadu is expected to get completed by the end of 2009.
Kutch Desalination Plant, Tata Mundra, Adani SEZ, Nagpur Municipal Water Reuse Project, Tata Power,
Vrishabhavathi Valley, NTPC Tamilnadu Energy, and so on
Tata Power
NTPC Tamil Nadu
19800
100000
Port Blair
150000
14000
100000
100000
Tata Mundra
31822
Tuticorin
200000
Krishnapatnam Port
Karaikal
5500
Adani SEZ
28000
147,000
Vrishabhavathi Valley
227000
Other
Capacity in cubic m/day
Projects mentioned above are the ones which are either announced or in their
development stage. Please note that this is not a exhaustive list of projects. These
projects with large capacities are expected to give support to the water demandsupply balance in future.
19
Market Destined
Life Cycle of Indian Desalination Market
STP
Others
22%
Gujarat
30%
Water Desalination
Tamilnadu
19%
Andra
Pradesh
Source : Frost & Sullivan
29%
The Indian desalination market is very nascent and in the development stage of its life cycle.
Development
Growth
Maturity
Other water treatment processes market and sewerage treatment process market have grown
respectively faster and are in the growth phase.
With an expected compounded annual growth rate of 25.31 percent in the coming 5 to 7 years,
desalination market is expected to outperform the other water treatment markets. Government
support, private sector participation, and awareness will help in the growth of this market. With
foreign players eyeing this market, it will witness some best practices, in terms of technologies
and processes, being adopted in near future.
20
Conclusion
The Sector is bound to rise!!!
Water being necessary for consumption, household usage, industry production, and agriculture, its
demand will rise with economic and population growth. Desalination of seawater and brackish water
is accepted as an alternative source to fulfill growing water demand. Coastal states like Tamil Nadu,
Gujarat, and Andhra Pradesh are increasing their desalination capacities to meet water demand.
Private sector participation and joint ventures are helping this sector to grow faster. Reduced plant
costs and government push will increase participation in this market. JNNURMs' objectives for urban
development and 11th five year plans dedication to urban water supply are giving financial support
to state governments for more desalination plants. RO is preferred among the technologies available
in India for desalination. Research institutes are playing an important role in deciding the
technologies being used for municipal desalination plants. With new technologies such as nuclear
and solar desalination, the cost of production can go down. About 20 large projects are in pipeline in
different states. Implementation of these projects will give boost to the overall desalination capacity
of India.
The desalination industry is very fragmented, with players serving the market with niche and
customized products. Large players can expect good growth in this market, since the capacities,
which are way beyond the knowledge and technical capabilities of their smaller counterparts?, are
increasing.
21
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