The Liquid Upside for Energy Recovery's Desalination Technology

| About: Energy Recovery, (ERII)
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For the Week of October 4 – 10, 2009

Preeminent environmentalist Lester R. Brown of the Earth Policy Institute last week raised the discomforting question: “Could Food Shortages Bring Down Civilization?” Brown’s concern: Water irrigation losses.

According to Brown:

A World Bank study of India’s water balance notes that 15% of its grain harvest is produced by overpumping. In human terms, 175 million Indians are being fed with grain produced from wells that will be going dry. The comparable number for China is 130 million. Among the many other countries facing harvest reductions from groundwater depletion are Pakistan, Iran and Yemen.

The only sustainable way to prevent this coming calamity may be to start building desalination plants, but given all the energy it takes to desalinate, that can be an expensive undertaking. Enter Energy Recovery Inc. (NASDAQ:ERII), a self-described leader in the design and development of energy recovery devices for desalination.

Also last week, Energy Recovery announced that on October 14 it will deliver a presentation at United Nations headquarters on “Affordable Desalination as the Sustainable Solution.” The company will be highlighting its technologies, which it says operate at up to 98% efficiency and reduce the energy consumption of seawater reverse osmosis systems by up to 60%, “making desalination a cost-effective solution for clean water supply.”

Energy Recovery, which is starting to find its way into leading alternative energy stock indices, bears close inspection by every investor, not just “green” investors. While the world has awakened to the trillion-dollar need for building and repairing basic infrastructure, the attention paid to the global water crisis has only just begun.

The stock’s not cheap – it currently sells for about 40 times earnings – but unlike many other alternative energy firms, Energy Recovery is profitable today . . . and may become a whole lot more so in years to come