There are multiple catalysts creating fundamental demand for desalination plants:
- Population growth in arid regions.
- A reduction in snow packs caused by global warming.
- Extreme drought caused by global warming.
- Polluted and unusable fresh water resources.
Seawater reverse osmosis ("SWRO") technology is the leading solution to the potable water crisis. However, SWRO plants have the potential to emit high levels of CO2, which will only exacerbate the long-term problems facing the planet as a result of global warming. The good news: many regions seeking an increase in potable water capacity are blessed with abundant sunshine. This article will unveil a green vision for desalination plant design: a zero emissions solar powered plant, incorporating energy recovery devices (ERDs) and a compressed air energy storage ("CAES") system backup. The companies providing technology to enable such a plant to move from design to reality are also discussed.
The overall concept is rather simple. First, we'll power the SWRO plant with a solar array provided by First Solar (NASDAQ:FSLR) and electric components from General Electric (NYSE:GE). To insure minimal downtime when the sun isn't shining, the solar array will also power a compressed air energy storage ("CAES") backup system provided by the Dresser-Rand Corporation (NYSE:DRC). The CAES system will be energized during daylight hours by the solar array while the array concurrently powers the SWRO plant. When the solar array is not producing enough power to run the plant, the CAES system will take over and run the plant at either full or reduced capacity depending upon the specific design constraints of cost and water/storage capacity requirements, etc. The SWRO plant itself will be equipped with energy recovery devices (ERDs) from Energy Recovery (NASDAQ:ERII). These include isobaric pressure exchangers as well was advanced turbo equipment.
Let's take a look at a specific plant and see if these proposed design initiatives could be incorporated. The Carlsbad, California desalination plant is being designed to deliver 54 million gallons/day of fresh water. IDE Technologies, an Israeli company contracted to design and deliver equipment for the plant, says Carlsbad is the largest desalination plant in the western hemisphere.
Power & Solar Acreage Requirements
Although I have not been able to find the Carlsbad plant's energy requirements, this Bloomberg article gives a 15,000 kW-hr per 1 million gallons estimate. Based on this estimate, we have:
15,000 kW-hr/1 million gal * 1day/24hr * 54 million gallons/day = 33.75 MW.
According to First Solar's website, this is similar in output to the Cimarron Solar Facility in northern New Mexico. This facility generates about 30 MW of power with 490,000 modules on a 250-acre site. The facility displaces about 45,000 metric tons of CO2 emissions annually.
Obviously, 250 acres in Southern California is hard to come by at any price, but the scenario is mostly for illustrative comparisons and can be used for scaling water capacity versus solar array acreage requirements. For instance, a SWRO plant with a 10 million gallon capacity would require approximately 1/5th the area of the above example (or ~50 acres).
For SWRO plants located near on/offshore wind farms, wind power could also be used as an alternative power source.
Energy Recovery Devices
Energy recovery devices, whether energy recovery turbines (ERTs) or isobaric pressure exchanges, can be used to increase efficiency and decrease power requirements. These devices work by capturing hydraulic energy from the high-pressure reject stream of SWRO processes and transfers this energy to low-pressure feed water with an efficiency of over 98%. Since isobaric pressure exchangers consume no electrical power and recycles otherwise lost energy in the form of pressure, the overall energy consumption of the process is drastically reduced. System functional block diagrams incorporating ERDs in SWRO plants are shown below.
Energy Recovery Inc. recently won a large contract award to supply the Carlsbad plant with 144 of its PX Pressure Exchanger Q300 devices. These devices are estimated to save 116 million kWh (kilowatt-hours) of energy per year, the equivalent of $12 million. This energy savings will also reduce CO2 emissions by 41,000 metric tons per year -- roughly the annual greenhouse gas emissions from 8,542 passenger vehicles.
Compressed Air Energy Storage System
Dresser Rand recently won a $200 million contract to supply equipment to be used in a new 317 MW compressed air energy storage ("CAES") facility to be constructed for the Electric Reliability Council of Texas market. This is only the second CAES system built in the US but validates the technology moving forward. The world's first two CAES projects -- the 290 MW plant in Huntorf, Germany, built in 1978, and the 110-megawatt McIntosh, Alabama plant, built in 1991 -- have proven their worth over their combined decades of operation. While CAES systems are much cheaper than pumped hydro designs, they do have geographic restrictions: the availability of vast underground cavern structures or salt domes to use as reservoirs for all that compressed air. Luckily, Texas, with its recent drought problems, has an abundance of salt dome storage capacity near its coastline:
Use of a CAES system will increase the amount of source power over and above that required to simply run the SWRO plant. That is, the green power source, be it wind or solar (or even a combination of both), would have to have enough capacity to run the SWRO plant while simultaneously energizing the CAES system so that it can take over operation when the sun doesn't shine or the wind doesn't blow.
Plant Design and Operation
Consolidated Water (NASDAQ:CWCO) has a long history of designing and operating SWRO plants in the Caribbean. They would be a perfect company, along with IDE Technologies of Israel, to adopt new green friendly technologies to their SWRO plant designs. You can read more about CWCO's operations and investment potential here.
Summary and Conclusion
Population growth, global warming, pollution, and drought are here to stay for the foreseeable future. With them is a growing need for fresh water supplies. As a result, seawater reverse osmosis plants are popping up all over the world, including here in the US.
In 2012, Florida had 33 brackish and 2 seawater desalination plants in operation with seven brackish water plants under construction. The number of desalination plants in South Florida has grown 46% over the past 5 years while the amount of desalination water produced by these plants has increased 94% during the same period.
Under Prop 50, California conducted two rounds of funding to invest about $50 million to support 48 desalination projects including: 7 construction projects, 14 research and development projects, 15 pilots and demonstrations, and 12 feasibility studies.
But it would be a mistake to emit more CO2 into the atmosphere to make fresh water needed, in part, from too much CO2 in the atmosphere. While the viability of the SWRO plant proposal in this article is highly dependent on regional variations in weather and geology, it is the type of solution responsible engineers and governments should be considering in order to satisfy demand for fresh water while not further warming the Earth in the process.
The companies highlighted in this article are all positioned nicely to profit from the growing trends in clean energy and/or fresh water demand. First Solar is a leader in the solar industry. It has recently dropped as a result of a quarterly earnings miss and is affordable here: it has a PE<10 and EPS estimates of $3.83 for 2013. This article by Seeking Alpha contributor Jacob Steinberg discusses FSLR's recent deal with GE and the cadmium-telluride technology that came with it. First Solar should be bought on dips -- but don't buy all at once. Scale in as appropriate.
You can read my earlier articles on Dresser Rand, Consolidated Water, and Energy Recovery Inc. Of the three, the first two pay dividends and should grow nicely in the coming years. On the other hand, ERII is a more risky proposition considering the company has been posting slight losses. But it is a turnaround play poised for profitability. For those with a bigger risk/reward appetite, Energy Recovery may be an irresistible opportunity that could double in the next year. You can read my analysis of ERII and its patented PX isobaric pressure exchanges here. Good Luck!
Disclosure: I am long CWCO, DRC, ERII. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am an engineer, not a CFA. The information and data presented in this article was obtained from company documents and/or sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for investment decisions you make. Thanks for reading and good luck!