The industrial water and wastewater market in the United States will face moderate growth in the next few years, as industry increasingly turns to pollution prevention and the recovery and reuse of water.
That was the opinion voiced by four panelists who gathered recently for a WaterWorld Roundtable discussion that focused on the state of the U.S. Industrial Water/Wastewater market.
“The industrial marketplace in the United States is not seeing a lot of growth at the moment, but it is certainly exciting,” said Dick Brownell, Vice President of Technical Services with the consulting firm Malcolm Pirnie. “The dynamics are changing in the industry. People are seriously looking at their costs — at ways to prevent wastes from getting to a place where they are very expensive to treat.”
Al Slatin, a consultant with L.H. Alton Associates, agreed. “It has dawned on people that there is money in what they have been throwing away. Rather than dumping it into their wastewater stream, they are salvaging it.
“I worked with an aluminum can company. Their wash water after can forming contains a mixture of aluminum oxides, chemicals used to clean the cans, and the drawing oil. They now run that water through separating equipment and a large chunk of what used to be classified as a hazardous waste goes back into the plant
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as lubricating oil and another large chunk gets sold back to the smelter to be refined as aluminum. What’s left is essentially pretty clean water.”
Low Cost of Water Presents Obstacle to Recycling
While water recycling is attractive, it can be expensive, the panelists agreed.
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“The economics in the end have to justify the additional capital expenditure you generally incur to do recycling,” said Andy Seidel, Vice President for U.S. Filter’s Wastewater Group. However, “I think that more and more we are seeing the economics swing in favor of water recycling.”
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One roadblock to water reuse and recycling is the relatively low cost of water in the United States. Many utilities are working hard to keep those costs down and remain competitive, the panelists agreed.
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“A lot of American utilities are under pressure on the water and the wastewater side to go to best management practices,” Brownell said. “If that drives down the cost of water or the cost to provide joint industrial and municipal treatment, then there will be an interesting race to see if you should be recycling or partaking in the economic gains that occur from optimization of normal utility operations.
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“There are some innovative water utilities in the public sector that are saying ‘what does my customer want? Can I sell them a special service?’” he said.
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While the industry as a whole is experiencing slow growth, some areas of the market are expanding, especially the electronics industry and applications calling for ultra-pure water. Modernization of industry will also drive the market, as many companies that built treatment systems 20 years ago work to bring them up to today’s standards, the panel agreed.
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“There’s an excellent opportunity to make changes where the technology has really made a big step forward,” Brownell said. “Think of how small boiler operation has changed. Today, you can get 95 percent efficiency with a good hydraulic boiler. When a lot of equipment was installed, 45 percent was a big number.”
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Another area of movement will be the increase in outsourcing of treatment both for process water and wastewater. Many companies are attracted by the idea of focusing on their core area of expertise and letting someone else deal with the headaches associated with water treatment and federal, state and local regulations governing wastewater.
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While most cities can keep up with the water demands of their local industry, some areas have been stressed to keep pace.
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“You look at the Silicon Forest area in Oregon and I think you see unbelievable growth and industrial demand for water, especially with all those chip plants around there. I think that there are going to be pockets where there is acute demand that can’t be satisfied by the municipal infrastructure alone, and there has to be a move to some kind of private endeavor to meet that demand,” Seidel said.
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The outsourcing movement will be driven in part by the consolidation of the equipment and manufacturing end of the water and wastewater market. The equipment market, which has long been fragmented into smaller companies, has seen a large number of mergers and acquisitions in recent years.
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“Companies like Culligan, U.S. Filter and now Waterlink are capable of offering industrial customers the opportunity to outsource their water and wastewater treatment,” said Dean Hertert, Vice President of Waterlink. “Until now, there haven’t been very many companies able to walk up to the industrial customer and propose that they outsource. I think there are several vendors able to do that now. I think there is a remarkable opportunity out there that is on the verge of opening up, and it will become a faucet of new revenues.”
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A major part of that growth will be offered by companies that can provide complete package treatment systems, or design-build custom systems, Seidel said.
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“We always look at treatment systems as a complete package where you have recycle, process water and wastewater all in one. That has been a compelling presentation for us.” Seidel said.
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“We’ve seen a huge increase in design build work. We’ve probably done $150 million in design build projects in the last year. That scope would include outsourced engineering contracts,” he said. “We’ve seen a big growth, especially in the electronics industry, where ultra high-purity water is viewed as the most critical utility other than high-purity gases.”
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U.S. Filter is not only in the equipment business. Recently, the company purchased a large block of agricultural land in California with the main goal of obtaining water rights associated with the land. While much of the water will continue to be used for agriculture, the company is also looking at ways to market the water.
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“You could sell a company the water and the facility to process the water. You could also cut a contract for 20 or 30 years to own and operate that facility. I think there are a lot of opportunities,” Seidel said.
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The company is also looking long-term at other possibilities, including the buying and selling of water — a concept known as “wheeling.”
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“We are a Southern California company and we understand the need for water, the shortages and the problems that inadequate water supply presents. In California 85 percent of the water is used by agriculture but the cities are growing very quickly. It is somewhat inconceivable that you are going to destroy one of the largest industries in California, which is agriculture, so people can water their lawns and wash their cars,” Seidel said. “At the same time that demand is acute in the cities, especially in the drought years.”
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“Water is bound at some point to become a commodity that could potentially be traded,” he said. “Certainly the wheeling of water is one area that is getting us interested.
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“Take the Southern California Aqueduct. If Arizona starts taking its full allotment of water, you are going to create some capacity in the aqueduct, so available capacity doesn’t become an issue anymore when it comes to wheeling.
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The reauthorization of the Clean Water Act has been stalled in Congress for a number of years, and no one knows for sure when the act will be reauthorized or what form it will take.
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“If the senior senator from my state (Washington), Slade Gordon, has any say, Clean Water will be defined as land too thin to walk on,” Slatin said. “One alternative is to just ease up on regulations. That’s one move I think we should be concerned about. We have made so much progress, but the pressures to move backward are there.”
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“I think that effluent guidelines will continue to come out, although there has been more effort in the last 20 years to develop guidelines than we will see in the next 20 years,” Brownell said. “Watershed management issues are quite important. There will be efforts to improve water quality for specific chemicals in various places that may impact certain municipalities or industries directly.
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“One of the issues that will affect everybody, municipalities and industry, are nitrogen and phosphorus concerns, which are related to feed lots and human activity of all types,” he said. “I think we will see some interesting opportunities to trade nitrogen and phosphorus credits.”
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There have been many advances in treatment technologies over the years, and that will continue, with monitoring, separation technology and automation leading the way, according to the panelists.
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“One of the things that is going to help tremendously is the improved monitoring and measurement that will occur over the next few years,” Brownell said. “It’s going to help us optimize what we do. It will appeal to a lot of people when the cost per measurement goes down and the benefits you can derive from those measurements are clearer. You then can make more intelligent decisions.”
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“I also think that equipment is getting better,” Slatin said. “We are now seeing UV equipment that will work on water with high turbidity. We’re seeing several companies marketing equipment that will deliver pathogen-free dry sludge. In the last 10 years we have made enormous strides that will make life a lot easier for people.”
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“Recycle technologies will improve,” Seidel said. “There is so much work going on right now with membrane technologies and recycling tertiary wastewater, whether it be for industrial users or municipal users. There are advancements every day in membrane surface modifications that allow for better fouling indices. I think there is a lot of work going on there that is going to provide a great deal of benefit.”
