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Assessment Of Indian

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

For instance, Mumbais water requirement currently at


3,500 MLD is projected to reach 13,000 MLD by 2026,
posing a challenge to the state and national
governments in striking a balance to satisfy water
needs among various entities such as industries,
agriculture, and domestic.

Desalination Water Services Market: Water Consumption by


80
Indian Industries (India), 2008

72

Billion Cubic Meters


(bcucm)

70
60
50

CAGR 3%

50

40
30
20
10
0
2008

2020

Million Liters per Day


(MLD)

The widening gap between growing water needs of


urban population and scarcity in supply in major
coastal cities in India is a major concern.

Desalination Water Services Market: Water Requirement in


Five Big Coastal Cities Mumbai, Kolkatta, Chennai, Surat,
and Vizag (India), 2008
25000
21903

20000
15000

CAGR 8%

10000
5000

5815

0
2008

2026

The Indian industries consumed about 50 billion cubic


meters of water, out of which thermal power plants
responsible for generating about 60 percent of
electricity demand, consumed 77 percent of total
industrial consumption.
The establishment of ultra mega power plants (UMPP)
to fulfill the growing electricity demand and the growth
of other industrial sectors such as pharmaceuticals,
chemicals, and refineries will strain the thin water
resources.

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

States are looking for alternative sources to


address water scarcity issues.

Seawater and Brackish water desalination can play an important


role in countering the problem of water scarcity in India

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

Nochikuppam, Kasimedu, and Velachery (area around Chennai), Ayodhyakuppam, Narippaiyur,


Ramanathapuram (45 plants), Rameshwaram, and Kalpakkam. New plants are coming at
Karaikal, Tuticorin, Nemili, and Minjur.


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

Multiple Effect Distillation


Takes place in a series of vessels
Generally built in units of about

2,000 cum/d to 10,000 cum/d


Feed temperature : 70C

Vapour Compression Distillation

Membrane
Electro dialysis
Effectively neutralizing the

individual charges
Membranes are arranged

alternatively

Electro dialysis Reversal Process


Capability of high recovery

of water
Less chemical usage

Reverse Osmosis

Done through vapor generated

Efficiency: 20-70 % of the

by a compressor or a steam jet


Generally built in units of about
20 cum/d to 2,000 cum/d

Successful commercialization

feed flow
since 1970

10

Technology Usage
There are around 1,000 desalination plants functional in

Desalination Water Services Market:


Technology used in current capacity
(India), 2008-2009
Total Capacity : 291,820 Cum/day

India. The current total capacity stands at about 291,820


cubic meters per day. Major Research institutes such as
BARC focus on hybrid technology that is a combination of
thermal and membrane desalination. Most of the municipal

RO
22%

plants due to this reason use both the technologies.


Currently, most of the plants in India are using RO
technology. IDE

MSF
7%

MED
71%

technologies, Israel implemented MED

technology for Reliance India. MED is mostly being used for


big capacity plants in India.
MSF includes the use of thermal and nuclear power for
desalination. With India becoming more strong in terms of

Desalination Water Services Market:


Technology By Number of Plants,
Total Plants : 1,000 (India), 2008-2009

commercial nuclear power (In-progress of Indo-US nuclear

MED
26%

deal), more investments can be seen in this technology.


BARC has started working on desalination technology using
atomic energy.
Growing concerns about environment is forcing attention
toward

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

State-Wise Desalination Plants


Indian Desalination Services market : Current
Desalination Plants State Wise
Capacity: 291,820 Cum/day, (India), 2008-09
Others
16%

Gujarat and Tamil Nadu have been more


active in setting up desalination plants in
comparison to other coastal states in India.
Others include states such as Maharastra,

Gujarat
47%

Andhra Pradesh, Rajasthan,


West

Bengal.

Krishnapatnam

Large

Orissa, and

projects

port,

such

as

Kasnau-Matasukh

Lignite Mines, Visakhapatnam, and so on


Tamilnadu
37%

are scheduled to be functional in the coming


years.

Source : Frost & Sullivan

Drinking water scarcity is one of the major


reason

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

Market Drivers and Restraints


Order of Impact
Rank

Pushing Forces/Driver
1-2 Years

3-4 Years

5-7 Years

Government and political support

High

High

High

Industrial ground water use restriction

High

Medium

Low

Reduced plant prices

Low

Medium

Medium to
High

Population growth and water shortage

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

Waste water recycling and improved


production process

Low

Medium to
High

High

Global economic slowdown

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,

SEZ and its desalination

which were announced


in

2005

Andhra

in

Orissa,

Pradesh,

Pondicherry.

and

Adani

Challenges

However,

plant in Bhuj, Gujarat


has raised questions on
the

growth

of

due to slow execution

desalination plants near

and

the coastal lines.

bureaucratic

hurdles, they have not


started yet.
Improper Training and Skill sets : As the desalination market
in India is new, there is a scarcity of proper human resources.
Improper training of the staff handling the plants is a major
challenge for this growing industry.
17

Future Capacity Additions


2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006

2015,
1,449,942

CAGR : 25.31 %
2008,
291,820

Capacity in cubic m/day

Source: Frost & Sullivan

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.

Major Projects like Krishnapatnam Port,

Kutch Desalination Plant, Tata Mundra, Adani SEZ, Nagpur Municipal Water Reuse Project, Tata Power,
Vrishabhavathi Valley, NTPC Tamilnadu Energy, and so on

are in their development phase and

expected to be operational from early 2011.


18

Future Capacity Additions


25000

Tata Power
NTPC Tamil Nadu

19800
100000

Minjur Desalination plant


Kutch Desalination Plant
Projects

Port Blair

150000
14000

Nemili Desalination Plant

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

Source: Frost & Sullivan

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

Indian Desalination Services market : Expected


Desalination Plants State Wise
Capacity: 1,449,942 Cum/day, (India), 2008-09

Others
22%

Other Water Treatment


Process

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.

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