Water Without a Pinch of Salt_Desalination Market in India_post Editing (1)

8/10/2019 Water Without a Pinch of Salt_Desalination Market in India_post Editing (1)

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Assessment Of IndianDesalination Market

Water Without A Pinch Of Salt

July 2009


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Table Of Contents

Introduction

Business Avenues

Technology

Competitive Landscape

State-wise Desalination plants

Market Destined

Future Capacity Additions

Market Drivers, Restraints and Industry Challenges

Conclusion


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Introduction- India Water Needs

India with 16 percent of world population has only 4 percent of water resources. The major

source of water is monsoon, which occurs for only a few weeks in a year.

There is great disparity in states for water availability. States like Rajasthan, which are large, in

terms of area and population, share only 1 percent of the water resources.

About less than 15 percent of the water, which India get through monsoon, is preserved by the

government in dams. Besides, lack of sufficient funding for maintenance of the infrastructure is

increasing problems of water availability.

Drought, floods, and water contamination add salt to this growing problem. In order to meet the growing food demand , the Indian Government is targeting to double its

growth rate in irrigated areas over the next five years.

Rapid industrialization, growth in urbanization, and increase in food production will demand

more water resources.

With such a planned growth the World Bank report states that Indias demand of water will

exceed supply by 2020.


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Introduction- Industrial and Municipal Water Demand

5815

21903

0

5000

10000

15000

20000

25000

2008 2026

M i l l i o n

L i t e r s

p e r

D a y

( M L D )

50

72

0

10

2030

40

50

60

70

80

2008 2020

B i l l i o n

C u b i c M e

t e r s

( b c u c m

)

CAGR 8%

CAGR 3%

The widening gap between growing water needs of urban population and scarcity in supply in majorcoastal cities in India is a major concern.

For instance, Mumbais water requirement currently at3,500 MLD is projected to reach 13,000 MLD by 2026,posing a challenge to the state and nationalgovernments in striking a balance to satisfy waterneeds among various entities such as industries,agriculture, and domestic.

The Indian industries consumed about 50 billion cubicmeters of water, out of which thermal power plantsresponsible for generating about 60 percent of electricity demand, consumed 77 percent of totalindustrial consumption.

The establishment of ultra mega power plants (UMPP)to fulfill the growing electricity demand and the growthof other industrial sectors such as pharmaceuticals,chemicals, and refineries will strain the thin waterresources.

Desalination Water Services Market: Water Requirement inFive Big Coastal Cities Mumbai, Kolkatta, Chennai, Surat,

and Vizag (India), 2008

Desalination Water Services Market: Water Consumption byIndian Industries (India), 2008


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Increase in WaterDisputes among

States

States are looking for alternative sources toaddress water scarcity issues.

Introduction- Seeking Alternative Water Sources

Population :Water

ResourcesRatio

Growth inIndustrializationand Urbanization

Increase inFood

Production

Flaws in MonsoonWater Storage

IndustrialWater

Contaminati-on

Seawater and Brackish water desalination can play an importantrole in countering the problem of water scarcity in India


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Introduction- Desalination

Desalination of sea water and brackish water is one the feasible and identified solutions to

counter the problem of water scarcity.

Water scarcity is higher in coastal areas in comparison to other parts of the country.

Desalination water technology is widely used in water scarce states such as Gujarat, Tamil Nadu,and Rajasthan.

Tamilnadu has maximum number of state government-owned desalination plants inNochikuppam, Kasimedu, and Velachery (area around Chennai), Ayodhyakuppam, Narippaiyur,

Ramanathapuram (45 plants), Rameshwaram, and Kalpakkam. New plants are coming at

Karaikal, Tuticorin, Nemili, and Minjur. Doshion has proposed for municipal and industrial desalination plants at Barmer, Jaisalmer,

Bharatpur, Jaipur, Jalore, and Sirohi in Rajasthan.

Water produced from desalination plants are used not only for human consumption, but also forindustrial production. Water desalination technology is also found to be useful for treating water

from water streams.

The high cost of producing water per liter by using current technologies is the main deterrent for

adopting desalination as a solution.


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Business Avenues

Desalination Service

Providers/EquipmentManufacturers

Desalination service providers/ manufacturers can look for twotypes of business avenues

Industrial DesalinationPlants : Large companies

inclination to havecaptive desalinationplants to meet their

process water demands .

State Government-OwnedDesalination Plants:

Government comes outwith desalination plants

to fulfill stateshousehold and municipal

water needs

The model used in tenders/projectsby government is BOOT (build,

own, operate and transfer). Usual timespread is of 10 to 20 years

The model used in tenders/projectsby industrial institutions is custom

build and transfer. In some projects, O& M is also taken care for 3 to 5 years.


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Technology

Thermal Membrane

Multi-stage flash(Most Commonly used)

Generally built in units of about4,000 cum/d to 30,000 cum/d

Feed temperature : 90C -120C

Multiple Effect Distillation

Takes place in a series of vessels Generally built in units of about

2,000 cum/d to 10,000 cum/d Feed temperature : 70C

Vapour Compression Distillation

Done through vapor generatedby a compressor or a steam jet

Generally built in units of about20 cum/d to 2,000 cum/d

Electro dialysis

Effectively neutralizing theindividual charges

Membranes are arrangedalternatively

Electro dialysis Reversal Process

Capability of high recoveryof water

Less chemical usage

Reverse Osmosis

Efficiency: 20-70 % of thefeed flow

Successful commercializationsince 1970


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RO

63%

MED

26%

MSF

11%

MED71%

MSF7%

RO22%

Technology Usage

Desalination Water Services Market:Technology used in current capacity

(India), 2008-2009Total Capacity : 291,820 Cum/day

There are around 1,000 desalination plants functional inIndia. The current total capacity stands at about 291,820cubic meters per day. Major Research institutes such asBARC focus on hybrid technology that is a combination of thermal and membrane desalination. Most of the municipal

plants due to this reason use both the technologies.

Currently, most of the plants in India are using ROtechnology. IDE technologies, Israel implemented MEDtechnology for Reliance India. MED is mostly being used forbig capacity plants in India.

MSF includes the use of thermal and nuclear power fordesalination. With India becoming more strong in terms of commercial nuclear power (In-progress of Indo-US nucleardeal), more investments can be seen in this technology.

BARC has started working on desalination technology usingatomic energy.

Growing concerns about environment is forcing attentiontoward another developing technology, namely solardesalination. Source : Frost & Sullivan

Desalination Water Services Market:Technology By Number of Plants,

Total Plants : 1,000 (India), 2008-2009


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Competitive Landscape

Desalination market in India is highly fragmented. There are around 1,000 desalination plants

functional in India, in which Tier 1 companies take a very small share.

Tier 1 consists of companies such as VA Tech Wabag, IDE Technologies, BGR Energy Systems,

Doshion, Ion Exchange, GE Water & Process Technologies, Befesa Agua, Degremont, IVRCL

Infrastructures, and Aquatech International.

Most of the projects running in India are on PPP and BOOT Model.

The foreign companies are performing well in the market. Israel's IDE is working on 20 projects

in India, in which 13 are functional and seven are in manufacturing and assembling stage.

Successful joint ventures similar to the one between Hyderabad-based IVRCL and Befesa, Spain

for Chennai-based Minjur desalination project are also gauging attention, as more multinational

players are eyeing to enter this market.

Saudi Arabia's Bushnak Group has formed joint ventures with Pallava water services Pvt. Ltd. tohelp set-up desalination units in southern India. The first plant is coming at Karaikal,

Pondichery .


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Gujarat47%

Tamilnadu37%

Others16%

State-Wise Desalination Plants

Source : Frost & Sullivan

Indian Desalination Services market : CurrentDesalination Plants State Wise

Capacity: 291,820 Cum/day , (India), 2008-09

Gujarat and Tamil Nadu have been more

active in setting up desalination plants incomparison to other coastal states in India.

Others include states such as Maharastra,Andhra Pradesh, Rajasthan, Orissa, andWest Bengal. Large projects such as

Krishnapatnam port, Kasnau-MatasukhLignite Mines, Visakhapatnam, and so on

are scheduled to be functional in the comingyears.

Drinking water scarcity is one of the major

reason for coastal regions to go fordesalination.

Increasing awareness for excess ground water contamination has forced industrial and

institutional setups to look for desalination plants for water needs. State governments strictlyworking for the norms of industrial usage of ground water. The market in non-coastal regions

mostly consists of large industrial and institutional corporate houses.


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Market Drivers and Restraints

Rank Pushing Forces/DriverOrder of Impact

1-2 Years 3-4 Years 5-7 Years

1 Government and political support High High High

2 Industrial ground water use restriction High Medium Low

3 Reduced plant prices Low Medium Medium toHigh

4 Population growth and water shortage Low Low Medium

Rank Pulling Forces/RestraintOrder of Impact

1-2 Years 3-4 Years 5-7 Years

1 Cost of production High Medium tohigh Medium

2 Restructuring High Medium toLow Low

3 Waste water recycling and improvedproduction process Low Medium to

High High

4 Global economic slowdown Low Very Low Very Low


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Market Drivers

Government And Political Support

Urban infrastructure development support under JNNURM and INR 536.60 billion has been allocatedfor urban water supply under 11th five year plan that will support more desalination plants in India.

Political leaders agree to the argument of using desalination to rectify water problems in theirrespective states. Ms.Jayalalitha and Mr.Karunanidhi in Tamilnadu are strongly supportingdesalination. Gujarats Chief Minister, Mr. Narendra Modi, has taken inputs from companies likeHyflux and GE Water for using desalination plants in Gujarat.

Industrial Water Use Restriction

Increase in ground water contamination by industries is pushing state governments to imposerestriction on ground water use. Such restrictions will give boost to desalination plant usage byindustrial setups.

Reduced Plant Prices

An RO plant costs approximately 60 percent of its cost 10 years ago. This reduced price gives

incentives to build new plants.

Population Growth and Water Shortage

Water scarcity and decreased per capita water availably push the use of desalination plants .


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Market Restraints

Cost of Production

Cost of production of water from desalination plants is as low as 15 paisa per liter, but it is still high

in comparison to water from other sources. Increase in cost of water will inflate overall production

costs for any industrial unit. This factor impedes the adoption of desalination plants.

Restructuring

Infrastructure maintained by industries , which started a decade ago will have to go for restructuring

to accommodate desalination plant. Such restructuring is not supported by most of the industrial

setups.

Wastewater Recycling and Improved Production process

Many industrial units are installing plants for water recycling and reducing water usage. This , in turn ,

will reduce the opportunities for desalination plants.

Global Economic Recession

Although India is not much effected by global recession, still a few projects have been put on hold

by industries to keep their energies focused on the core work.


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Industry Challenges

Industry Fragmentation: Desalination market in India is highly

fragmented with so many Tier-2 and regional players. Creation of industry wise standards is a major challenge.

Protests: Recent

fishermens protestagainst Adani groups

SEZ and its desalinationplant in Bhuj, Gujarat

has raised questions onthe growth of

desalination plants nearthe coastal lines.

Bureaucratic Hurdles :

There are manydesalination projects ,

which were announcedin 2005 in Orissa,

Andhra Pradesh, andPondicherry. However,

due to slow executionand bureaucratic

hurdles, they have not

started yet.

Challenges

Improper Training and Skill sets : As the desalination market

in India is new, there is a scarcity of proper human resources.Improper training of the staff handling the plants is a major

challenge for this growing industry.


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2015,1,449,942

2008,291,820

200620072008200920102011201220132014201520162017

Future Capacity Additions

Capacity in cubic m/day

Total installed capacity of desalination plants in India was 291,820 cubic m/day in 2008. With

growing demand and more focus on desalination by states, the capacity is expected to reach1,449,942 cubic m/day by 2015. There are many projects, which are approved by respective

government bodies and are in initial phases of development. Government projects have invited

tenders for desalination plants on BOOT model. The construction of Minjur desalination plant in TamilNadu is expected to get completed by the end of 2009. Major Projects like Krishnapatnam Port,Kutch Desalination Plant, Tata Mundra, Adani SEZ, Nagpur Municipal Water Reuse Project, Tata Power,

Vrishabhavathi Valley, NTPC Tamilnadu Energy, and so on are in their development phase andexpected to be operational from early 2011.

CAGR : 25.31 %

Source: Frost & Sullivan


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AndraPradesh

29%

Others

22%

Gujarat30%

Tamilnadu19%

Market Destined

Life Cycle of Indian Desalination Market

Water Desalination

Development Growth Maturity

Other Water TreatmentProcess

STP

The Indian desalination market is very nascent and in the development stage of its life cycle.

Other water treatment processes market and sewerage treatment process market have grown

respectively faster and are in the growth phase.

With an expected compounded annual growth rate of 25.31 percent in the coming 5 to 7 years,

desalination market is expected to outperform the other water treatment markets. Government

support, private sector participation, and awareness will help in the growth of this market. With

foreign players eyeing this market, it will witness some best practices , in terms of technologies

and processes, being adopted in near future.

Source : Frost & Sullivan

Indian Desalination Services market : ExpectedDesalination Plants State Wise

Capacity: 1,449,942 Cum/day , (India), 2008-09


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Water Without a Pinch of Salt_Desalination Market in India_post Editing (1)