Dubai Chamber of Commerce and Industry
Water Investment Opportunities
December 2012
Page 22012
Introduction: Why is the Water Sector Important to Dubai and Relevant to Investors?Demand for potable water in Dubai has been rising by over 10% per year –
significantly outperforming its population and GDP growth
Technological advances have seemingly made natural limitations on water supply in a desert climate moot…
Dubai’s economic model depends on a steady and inexpensive supply of safe water for citizens and businesses that is increasingly being tested
The cost of UAE-produced water is among the highest in the world
Abundant consumption has put a severe strain on natural resources
Substantial improvements can be made across the value chain that would see investors reap rewards, which would improve efficiencies
Page 32012
Outline: Case for Water-Efficient InvestmentsInvestments for Producing, Wisely Consuming and Redistributing Water
are available and desperately needed in the UAE because:
Natural Reserves are Dwindling and Becoming Less Usable;
Transportation Network Shortcomings Lead to Losses;
By-products of Desalination are Straining the Environment;
Costs of Producing Desalinated Water are Extremely High;
Pricing Structure Encourages Consumption in the Interior;
Heavy Reliance on IWPPs is Disconnected from Rural Consumer Base;
Reliance on MSF & MED Technologies has its Drawbacks;
Available Domestic Production Resources are not used to the Full Effect;
Desalination Technological Landscape is not Fully Explored;
Domestically-controlled Shipping Fleet Opens Further Import Options.
Page 42012
I. Dwindling Domestic Water Reserves are Foreboding
Groundwater is currently taken from reserves as natural net annual recharge accounts for only 0.01% of total supply
Meanwhile, cultivated land has risen from 69,000 hectares in 1960 to 419,000 hectares in 2007
2003 2006
0
500
1,000
1,500
2,000
2,500
3,000
Other Groundwater
Forestry wells
Agriculture wells
Mm3/yr Declining Water Supplies in Abu Dhabi
0
50,000
100,000
150,000
200,000
250,000
300,000
1960 2007
Groundwater -brackish
Groundwater -moderately brackish
Groundwater - fresh
Mcm Declining Groundwater Supplies in Abu Dhabi
Page 52012
II. Transportation Network Losses
DEWA says more than 11% of Dubai’s water is lost to leaks
The network has been improved upon in recent years, however the vast real estate development spree has put strain on the system
Fault lies with welders, installers, companies and consultants putting up specifications on individual development projects without supervision
Leaks are a problem worldwide, but here the lost resource is more costly
Page 62012
III.Water Practices Straining the Local EnvironmentEAD’s monitoring program found 80% of their groundwater samples
exceeded WHO contaminant level recommendations
This, coupled with increased boron concentration, means approximately 90% of the UAE’s groundwater is unfit for human consumption
Heavy dependence on desalination has also raised salinity of Gulf water
1998 2000 2002 2004 2006 2008 2010 2012
40,000
41,000
42,000
43,000
44,000
45,000
46,000
47,000Dubai Average Feedwater Salinity, by Yearppm
Page 72012
III.Water Practices Straining the Local Environment
Heavy dependence on desalination involves significant externalities that are largely unaccounted for:
0
5
10
15
20
25
30
35
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1990 2000 2006 2007 2008 2009 2010
Electricity consumption per capita
CO2 emissions per capita (rt)
kWh tCO2Pollutants are Consistently High along with Consumption
Page 82012
IV. Cost of Producing UAE Desalinated Water
19
64
19
68
19
69
19
70
19
71
19
72
19
74
19
75
19
76
19
77
19
78
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79
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81
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82
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83
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86
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87
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88
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89
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90
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91
19
92
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93
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94
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95
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96
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97
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98
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99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Reverse Osmosis
Multi Stage Flash
Multi Effect Distillation
Hybrid
Electrodialysis
UAE Desalination Capacity Additions by Year and Technology (in m3/d)
Page 92012
IV. Cost of Producing UAE Desalinated Water
2005 2007 2008
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
165,000
170,000
19.0%
19.5%
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%Abu Dhabi Water Desalination-related Fossil Fuel ConsumptionDesalination Fuel Use as % of Total Final Energy Consumption
bn BTU Fossil Fuel Use for Desalination Production
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$-
$5
$10
$15
$20
$25
$30
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Foregone Natural Gas Export Revenue due to ADWEA system usage
Natural gas consumption in power/desal as % of total production
$ bn Water & Power-Related Natural Gas Consumption and Opportunity Cost
Rising salinity levels raise processing costs
In Abu Dhabi alone, natural gas use for utilities has presented an opportunity cost amounting to $124.28 billion in the past decade
Page 102012
IV. Cost of Producing UAE Desalinated WaterReal Cost = Economic Cost + Environmental Cost
$1.95/m³ + not quantified
Domestically produced potable water is among the most expensive in the world, yet:
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Umm Al Quwain
Sharjah
Ras Al Khaimah
Fujairah
Dubai
Ajman
Abu Dhabi
Desalination Capacity by Emirate and Year, Online and Presumed Onlinem3/d
Page 112012
V. Rural Pricing Structure Encourages Consumption
Desalinated water costs the least for farmers, yet it is the most expensive to provide:
Jan AM
Jan PM
Feb AM
Feb PM
Mar AM
Mar PM
Apr AM
Apr PM
May AM
May PM
Jun AM
Jun PM
Jul AM
Jul PM
Aug AM
Aug PM
Sep AM
Sep PM
Oct AM
Oct PM
Nov AM
Nov PM
Dec AM
Dec PM
0
5
10
15
20
25
Bulk Supply Tariff Total Sector CostFees Farms/ Nationals in remote areas Fees Nationals in Other AreasExpat Domestic/ Commercial/ Industrial Agricultural water cost
fils/kWh Abu Dhabi Direct Water Costs and Charges, 2009
Page 122012
VI.Reliance on IWPPs has its Drawbacks
IWPPs are meant to achieve economies of scale and were therefore the primary capacity additions in the past decade – but are far from rural users:
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
100
200
300
400
500
600
700
800
900
1,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Non-IWPPNon-IWPP %IWPP %
Gross MGD Desalination Capacity, ADWEA System
Page 132012
VI.Reliance on MSF & MED has its Drawbacks tooVery few efficiency advancements have been made in what is viewed as
old technology in much of the rest of the world – where they instead have focused on RO:
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
01
23
45
67
89
10
Thermal Efficiency Improvement: Gain Output Ratio in the UAE (kg/kJ)
Page 142012
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Making Full use of Domestic Resources:
Rural Production:
Although the per unit cost of production is usually significantly higher, transportation expenses are slashed – which in the UAE can make it twice as high
Industrial Heat:
Heat generated by producing energy-intensive goods can be harnessed and used to desalinate water to specifications needed by the industry itself
Sea-born Springs:
Natural springs are not only land-based, and technology exists to capture that water without having to undergo expensive desalination
Page 152012
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Making Full use of Technological Advances:
Reverse Osmosis Membrane Breakthroughs:
Although the majority of installed desalination capacity is MSF, RO is featured in many of the new and planned installations which could benefit from the efficiency gains championed by new membranes developed recently
Closed Circuit Desalination Technology:
Altering the way desalinated water is processed can reap strong efficiency gains
Ion Concentration Polarization and Modular Arrays:
Turning the way water can be cleansed on its head can be VERY cost effective
Page 162012Q3-2010 Economic Indicators, Q2-2010
So what immediate investment
opportunities exist in the water space
- that are competitive with the UAE real cost
of water?
Page 172012
I. Bulk Water Reception Terminal & Bottling Plant
With the cost of transportation of bulk water having fallen in recent years – importing large quantities of freshwater, bottling it, consuming it
domestically as well as re-exporting it is an economical solution if the shipping network can be controlled & a receiving terminal built
Page 182012
II. Tailored Water Solution for Enhanced Oil Recovery
By optimizing the compatibility of the water used in EOR applications with reservoir chemistry, it is possible to further increase on an oil well’s yield
by 5-15% while significantly reducing the use of chemicals
Page 192012
III.Hydroponic Agriculture
Large-scale hydroponics is approximately 30% more productive than conventional methods while using up to 40% less water – and is already
being tested in the UAE
Page 202012
IV. Closed Circuit Desalination Technology
Using the same equipment in an RO system, extract purified permeate from pressurized source water, and circulate it continuously until the
sought-after quality is achieved: with lower variable costs
Page 212012
V. Nano-filtration & NanoH2O Membranes
The QuantumFlux (Qfx) line of highly-efficient RO membranes feature 99.85% stabilized salt rejection, and are able to operate under
challenging conditions in solar-powered systems
Page 222012
VI.Industry Based Membrane Distillation Process
The distillation technology uses waste heat to evaporate waste water through a fine membrane. The evaporated water condenses on the other side of the membrane as treated water for re-use in the industrial facility.
Page 232012Q3-2010 Economic Indicators, Q2-2010
And what other investments need
government support or are still
in the development
phase?
Page 242012
VII. Air-to-Water Harvesting
Air to Water technology extracts the humidity in the air and converts it into liquid water, replicating a naturally occurring phenomenon and
merely scaling it up using a power source.
Page 252012
VIII. Retrieving Fresh Water from the Sea
A technology able to harness freshwater springs in the Gulf and capture it for use without the need for desalination – and is 3-6 times cheaper than
RO desalination technology.
Page 262012
IX. Ion Concentration Polarization Elements & Modular Arrays
A developing technology that is said to be able to separate water from solutes and contaminants far more effectively than RO – without extreme hydraulic pressures/heat sources bringing operational costs to $0.2/m³.
Page 272012
X. Brine Harvesting
Mitigate the environmental damage done to Gulf waters by processing brine and sell it on to industrial users – which range from stock feed,
medical and chemical uses by wallboard manufacturers and waste water treatment plants.
Page 282012Q3-2010 Economic Indicators, Q2-2010
Thank you
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