Resource Efficiency in Desalination Driving Affordability...o Potential for 100 - 150 new SWRO mega projects (>50,000 cubic meters/day) to maintain water supply status quo2 10 Desalination

NASDAQ:ERII

ResourceEfficiencyinDesalinationDrivingAffordabilityNovember20,2019

JoshuaBallard,ChiefFinancialOfficer,EnergyRecovery

Confidential&Proprietary

FORWARDLOOKINGSTATEMENT

2

Thispresentationcontainsforward-lookingstatementswithinthe“SafeHarbor”provisionsofthePrivateSecuritiesLitigationReformActof1995.Forward-lookingstatementsinthisreportinclude,butarenotlimitedto,statementsaboutourexpectations,objectives,anticipations,plans,hopes,beliefs,intentions,orstrategiesregardingthefuture.Forward-lookingstatementsthatrepresentourcurrentexpectationsaboutfutureeventsarebasedonassumptionsandinvolverisksanduncertainties.Iftherisksoruncertaintiesoccurortheassumptionsproveincorrect,thenourresultsmaydiffermateriallyfromthosesetforthorimpliedbytheforward-lookingstatements.Ourforward-lookingstatementsarenotguaranteesoffutureperformanceorevents.Wordssuchas“expects,”“anticipates,”“believes,”“estimates,”variationsofsuchwords,andsimilarexpressionsarealsointendedtoidentifysuchforward-lookingstatements.�

Theseforward-lookingstatementsaresubjecttorisks,uncertainties,andassumptionsthataredifficulttopredict;therefore,actualresultsmaydiffermateriallyandadverselyfromthoseexpressedinanyforward-lookingstatements.Youshouldnotplaceunduerelianceontheseforward-lookingstatements,whichreflectmanagement’sopinionsonlyasofthedateofthispresentation.Allforward-lookingstatementsincludedinthispresentationaresubjecttocertainrisksanduncertainties,whichcouldcauseactualresultstodiffermateriallyfromthoseprojectedintheforward-lookingstatements,asdisclosedfromtimetotimeinourreportsonForms10-K,10-Q,and8-KaswellasinourAnnualReportstoStockholdersand,ifnecessary,updatedinourquarterlyreportsonForm10Qorinotherfilings.Weassumenoobligationtoupdateanysuchforward-lookingstatements.Itisimportanttonotethatouractualresultscoulddiffermateriallyfromtheresultssetforthorimpliedbyourforward-lookingstatements.


o  Formorethan20years,EnergyRecoveryhascreatedtechnologiesthatsolvecomplexchallengesforindustrialfluidflowmarkets

o  Wedesignandmanufacturesolutionsthatreducewaste,improveoperationalefficiency,anddrivesignificantcost-savingsforourcustomersinWaterandOil&Gas

o  Ourworldwidesalesandtechnicalserviceorganizationprovideson-sitesupportforourproducts

ENERGYRECOVERYSNAPSHOT

3

*Officespace,manufacturingfacilityunderconstruction

HeadquartersSanLeandro,California

Madrid,Spain

Dubai,UAE

Shanghai,China

CommercialDevelopmentCenterKaty,Texas*

R&D,ManufacturingOn-Site

WaterSalesOffices

Oil&GasOperations


Ourtechnologieslowerproductioncostsofcleanwaterandoil&gas,enablingmoreaffordableaccesstothesecriticalresources

4

WHYENERGYRECOVERY?

*EnergyRecoveryestimate

OurWatersolutionsareindesalinationfacilitiesonsevencontinents,reducingcarbonemissionsandhelpingtocombatwaterscarcityaroundtheglobe

ThePX®PressureExchanger®energyrecoverydevicerevolutionizedseawaterreverseosmosisdesalination(SWRO),reducingenergycostsbyupto60%*

In-developmentVorTeq™technologycanreduceemissionsandenergyintensityofoil&gasproductionwhileloweringcosts–fewerpumpfailures,smallersitefootprint

Desalination'sGlobalImpactandGrowth


WATERSCARCITYISAGLOBALCHALLENGE

6


FRESHWATERSCARCITYISINCREASING,CREATINGGLOBALDEMANDGAPS

7

Theworldwillonlyhave60%ofthewater

itneedsby2030

1/4ofallpeopleliveinhighwater-stress

territories

Potablewaterdemandexpectedtoincrease

30%by2050

Globalpopulationisexpectedtogrowfrom7.7Bto9.7Bin2050

Allstatistics-UnitedNations

60% >2BPeople 30% 26%


$2.1B $2.0B$2.5B

$3.0B

$3.7B

$5.2B

$6.6B$6.8B

2014 2015 2016 2017 2018 2019 2020 2021

8

SWRODesalinationCAPEXSpendIncreasingasWorldAdaptstoWaterScarcity2

DESALINATIONIS2-3%OFGLOBALFRESHWATERSUPPLY1

1RaymondJames,2DesalDataForecasts

Actual Projected

Confidential&Proprietary 9

DeclineinSpecificEnergyConsumptionofSWROSystem1

SWROISTHEMOSTCOST-EFFICIENTDESALINATIONSOLUTION

1PennsylvaniaStateUniversity

1978 1980 1990 2000 2002 2005 20080

5

10

15

20

25

SpecificEn

ergyCon

sumption(kwh/m

3 )

FirstPXPressureExchanger

installed1997inCanaryIslands

PXPressureExchanger(PX)revolutionizedSWRO–PXscanreduceenergycostsbyupto

60%


o  Thermaldesalinationdominated,butoperationalcostsare~2xhigherthanSWROtoday§  $1BSWROretrofitoftwoSaudithermalplantswillgenerateOPEXsavingsof$360M/year1

o  Potentialfor100-150newSWROmegaprojects(>50,000cubicmeters/day)tomaintainwatersupplystatusquo2

10

DesalinationCapacityIncreasesandPercentMarketSharebyDecade1

THERMALDESALINATIONDECOMMISSIONINGCREATINGINCREMENTALDEMAND

1DesalDataForecasts;2EnergyRecoveryestimates�

Thou

sand

cub

ic

meters/da

y

16%41%

55%74%

02,0004,0006,0008,000

10,00012,00014,00016,000

1961-1970 1971-1980 1981-1990 1991-2000 2001-2010 2011-2018

Thermal SWRO

84%

59%

45%

26%

100%97%

3%

InsidethePXPressureExchanger


SWRODESALINATIONPROCESSOVERVIEW

12


WithoutEnergyRecoveryDevices(ERDs)=Approx.60%ofEnergyWasted

WithPXPressureExchanger=Energyrecycled,upto60%decreaseinenergyuse

13

PXPRESSUREEXCHANGERRECYCLESHYDRAULICENERGY,REDUCESENERGYCOSTS

1Oceanorothergeologicalmass

TheOcean1 TheOcean1

Energywastedashighpressurebrinehitsvalve

SeawaterLow

pressurepotablewater

Pumppusheshighpressureseawaterthrough

membranes

PXtransfersenergyfromhighpressure

brinetoseawater

IncomingseawaterroutedtopumpandPX

Mainpumpsizereducedbyupto60%

Lowpressurepotablewater


o  Ourpressureexchangeractslikeafluidpiston,transferringenergybetweenhigh-andlow-pressurefluidsthroughcontinuouslyrotatingducts

§  Providesbenefitsinavarietyofindustrialapplicationsusinghigh-pressurefluidso  Weusepressureexchangertechnologyinseveralproducts,includingourPXPressureExchanger

14

PressureExchangerInternalComponents FluidFlowsinaPressureExchanger

OURCORETECHNOLOGYISTHEPRESSUREEXCHANGER

Transfersenergywithonlyonemovingpart(rotor)

RotorandDuctSleeve

EndCover

Cartridge

Housing


62bar/900psiTypicalBrinePressureWhenEnteringPXPressureExchanger

2.5bar/36psiNormalTirePressureofMediumSizedCar

100bar/1457psiPressure1000mUnderSea

o  Microngapsbetweeninternalpressureexchangercomponentsformafluidbearing

§  Gaps(thinnerthanhumanhair)fillwithfluid,lubricatingpressureexchanger

§  Allowsrotortorotatewithouttouchingsleeve,endcovers

o  Highlyengineered–structural,bearingandfluidflowdesignpromotesdurability,longevity

§  Pressureexchangermaintainsstructuralintegrityatsignificantpressures

§  Madewithcorrosion,abrasionanderosionresistantmaterials

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PRECISION,STRENGTHKEYTOPRESSUREEXCHANGERPERFORMANCE


HOWPRESSUREEXCHANGERTECHNOLOGYWORKS

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Pressureisexchangedcontinuouslyastherotorspinsathighspeed

SealedPhase

Twofluidsonoppositesidesofpressureexchanger;rotorductissealed,isolatinghigh,lowpressurefluidstreams

1

21

4

23

Rotorductrotatestopressureexchangephase

Rotorductrotatestosealedphase

PressureExchangePhase

1.  Lowpressuredrivenfluidenterstherotorduct

2.  Highpressuremotivefluidenterstherotorduct

3.  Lowpressuredrivenfluidcontactsmotivefluid,expellingitatlowpressure

4.  Highpressuremotivefluidcontactsdrivenfluid,expellingitathighpressure

1.  Lowpressuredrivenfluidthatwillbepressurizedandsentintosystem

2.  Highpressuremotivefluid


CERAMICMANUFACTURINGDRIVESDURABILITY,LOWERSSWROFACILITYLIFECYCLECOST

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AluminaRawMaterialWecarefullyselectthehighestqualityaluminapowder.

SprayDryUsingourproprietary

formulation,weblendandspraydrytherawaluminatobesuitableforgreen

bodyformation.

PressingWeuseacoldisostaticpresstoproducehighqualitygreenbillets.

GreenMachiningACNCmachineshapesthegreenbilletsinto3-Dshapes.Excessceramicdustiscollectedtoreuse

duringphase2.

2 3 41


CERAMICMANUFACTURINGDRIVESDURABILITY,LOWERSSWROFACILITYLIFECYCLECOST

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FiringGreenpartsarekiln-firedtoensuredurability.

HardGrinding100%ofourceramicsareinspectedtoensurequalitybeforebeinggroundtomeet

thefinaldimensionalandfittolerances.

FinishedCeramicThisprocessresultsinprecise,

high-purityceramiccomponentsthatareinserted

intothevesselofourPXPressureExchanger.

5 6 7


17Mcubicmeters/dayofpotablewaterproduced

>50Mpeople’sdailywaterconsumptionmet

$2.0B/yearsavedforcustomers

>11.5MmetrictonsCO2emissionsprevented/year–equalto>2.4Mcars

>20Kdevicesinstalledworldwide

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GLOBALREACHOFENERGYRECOVERYWATERSOLUTIONS

EnergyRecoveryestimates,assumesalldeployeddevicesareinoperation

Confidential&Proprietary 20

o  Watergrossmarginshavegrownfrom�lessthan54%in2014toapproximately�70%todayo  Desalinationindustrytrendscontinuetopointtoalengthenedgrowthcycle

Revenue:25%CAGR2014-2018;SignificantProjectedGrowth

STRONGHISTORICALANDPROJECTEDREVENUEGROWTH

$30M$45M

$58M$69M $75M

$87M

$107M $120M

2014 2015 2016 2017 2018 2019 2020 2021

Actual Projected

+15-17%

+20-25%

+10-15%


STRATEGICOBJECTIVES

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Buildandenhanceinfrastructureforgrowth

CommissionCommercialDevelopmentCenter

CommercializeVorTeqGrowandexpandmarketpresenceinSWROdesalinationandbeyond

ThankYou


CONTACTUS

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JoshuaBallard,CFA,CMA

+1(510)483-7370|Office+1(832)814-2380|Mobile

[email protected]

EnergyRecovery,Inc.

1717DoolittleDriveSanLeandro,CA94577,USA

energyrecovery.com

http://www.energyrecovery.com/

Documents

Resource Efficiency in Desalination Driving Affordability...o Potential for 100 - 150 new SWRO mega projects (>50,000 cubic meters/day) to maintain water supply status quo2 10 Desalination