Report predicts desalination will pick up speed

PALO ALTO, Calif., March 10, 2004 -- The threat of localized water shortages in the United States, though most evident in the west, is becoming alarmingly common in southern states such as Florida, Texas, California, New Mexico and Georgia. Regional efforts are being taken to address this growing problem and alternative sources for freshwater, such as desalination sustainability approaches are being explored.

New analysis from Frost & Sullivan (www.water.frost.com) of the "U.S. Desalination Plant Market," reveals this market reached $237.3 million in 2000, but stuttered slightly in 2001 and 2002, reaching $189.0 million and $80.4 million, respectively. 2003 showed a considerable jump however, with the seawater plant in Tampa Bay, Fla., coming online.

Future years are expected to see sustained growth as witnessed throughout the 1990s, though it is likely that the Tampa plant is a temporary spike in the market.

Desalination refers to a water treatment process, which removes salts from water, making it viable for human use and consumption. There are a number of methods of desalination, but the results are always the same -- fresh water is produced from brackish or seawater.

With the nation's continuing population growth and industrial development, both factors affecting the fresh water supply, water supply issues are becoming increasingly prominent in people's minds. Concern about the fresh water situation is rising not only locally, but also progressively on a national level.

"Based on the 1922 Colorado River Compact, Florida, Colorado, Wyoming, Utah, Nevada, New Mexico, Arizona and California still all draw from the Colorado River. Although various amendments have been made to the compact over the years, the allocation remains virtually unchanged, despite the region's continuing population growth," states Frost & Sullivan analyst, Matthew Barker.

Florida, like many other costal states, faces drought conditions, saltwater intrusion and a rapidly growing population; all factors compounding the already-stressed water supplies. To combat the problem, Florida is turning to desalination, building one of the largest plants in the United States in Tampa Bay.

One factor giving some in the industry pause to adopt this method is the cost involved. Desalination costs more than treating relatively salt-free surface water and groundwater, but the growing demand for fresh water in many areas of the nation due to drought, water shortages, population increases and the desire for higher quality water, has spurred unprecedented interest in the process of desalting seawater or brackish water as a means of increasing water supplies.

Perhaps the most significant and far-reaching restraint in the U.S. desalination market is environmental concern. Environmental lobby groups and public opposition can be a powerful tool against the development of desalination plants. However, there are no fatal flaws in desalination technologies and desalination plants have a substantial history of environmentally safe operations. There is a need, however, to identify, understand and address environmental concerns that are increasingly being raised by the general public.

"The inability of multiple communities to share costs of desalination and disposal facilities sited in various regions can also block the widespread application of desalination and water supply purification technologies," notes Barker. "However, public utilities, water authorities and financial institutions amongst others are carefully watching the Tampa plant and it is likely that they will wait to see how well the plant performs both mechanically and financially".

Efficiency gains and revolutionary technological developments are expected to rapidly make desalinated water cost competitive with other water provision options. As competition intensifies, price cuts will provide some respite to cost-conscious customers and further boost uptake of desalination equipment.

The introduction of desalination's innovative technologies needs to be substantiated with rigorous promotional campaigns to increase awareness and drive adoption. Advertisements, demonstrations and other educational efforts provide desalination plant operators with the information necessary to make purchase decisions.

Looking at several new concepts or variations on existing concepts, we see hybrid desalting plants that combine desalting processes, more efficient control systems, reverse osmosis/power plant cogeneration, improved pre-treatment, use of alternative energy sources, ongoing membrane development and the commercialization of new processes such as capacitive deionization have potential for advancing desalting technology.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the analysis of this market, send an e-mail to Nuha Kadri, industrial media relations executive, at nkadri@frost.com with the following information: your full name, company name, title, telephone number, e-mail and title of the brochure you are interested in receiving. Upon receipt of your information, an overview will be sent to you via e-mail.

The "U.S. Desalination Plant Market," a part of the Water subscription, provides a comprehensive analysis of different factors influencing the adoption of desalination technology in the United States. The study also discusses the impact of regulatory programs, economic and market measurement trends, as well as various customer issues on the competitive environment. It provides trends by geography, feedwater quality, technology and discusses various market influences on the desalination plant market. Interviews and executive briefings are available to the press.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff spans the globe with offices in every major country.