Latest / Make Water Work Podcast / Rodney Clemente: Water Bankruptcy & The Cost of Doing Nothing | Make Water Work 033

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Rodney Clemente: Water Bankruptcy & The Cost of Doing Nothing | Make Water Work 033 · Make Water Work Podcast

• 0:00
  In your lifetime, you probably never
• 0:02
  turned on your tap and nothing came out.
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  You probably never once got a notice
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  that says, "We are going to only allow
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  you to use water from 9:00 to 5:00. You
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  can't wash your Hummer, water your lawn,
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  or fill up your pool." We're spoiled in
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  that way. So, the mentality here in a
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  lot of water rich countries is, you
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  know, kind of not not on my watch. You
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  know, it's it's there. It's always been
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  there and it always will be. Welcome to
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  the Make Water Work podcast, where we
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  dive into the people, ideas, and
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  innovation shaping the future of water.
• 0:32
  I'm your host, Isaac Pellerin, and
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  alongside my co-host, Megan Glover, the
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  founder of 120 Water, we bring you
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  insights from hundreds of incredible
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  conversations we've had over the past 9
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  years with inspiring and energizing
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  leaders in the water industry. Each
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  week, we share those stories and
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  conversations with entrepreneurs,
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  community champions, and innovators who
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  are making water work for everyone.
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  Whether you're a water professional, a
• 1:00
  curious innovator, or simply passionate
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  about our most precious resource, this
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  podcast is for you. Let's get started.
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  Welcome to the Make Waterwork podcast.
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  I'm Isaac Pellerin and I'm excited to we
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  get to have these conversations with
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  entrepreneurs, leaders, innovators, and
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  those who um who are public servants for
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  um for the water industry who make water
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  work for everyone. Today we have a guest
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  uh named Rodney Clemente who's a senior
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  vice president of water at energy
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  recovery, really global strategy and
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  growth for the company's water segment.
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  And there's a incredible UN report that
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  came out not too long ago and so we're
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  gonna dive a little bit into that and
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  then talk more about what can we do
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  about it. So Rodney, welcome to the Make
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  Waterwork podcast.
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  >> Thank you for having me, Isaac. It's my
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  pleasure to be here.
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  >> Yeah, it's it is so good to have you.
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  And
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  >> thank you.
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  >> You know, we have had so many guests on
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  this podcast and I've never met someone
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  who didn't have a story about how water
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  found them. And so I love starting this
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  with asking, "How did water find you?"
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  >> Yeah, it's a great question and it's a
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  great opening. Uh it's a great opening
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  question. Um I'd be lying to you if I
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  said, you know, when I graduated from
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  high school, college, and whatnot, you
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  know, I was um you know, thinking about
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  water, water, water, um on the mind. Uh
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  but it kind of was. So um you know, I
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  grew up here in Virginia Beach, uh
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  Virginia, and unless you're in kind of
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  tourism or or the military, there wasn't
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  a lot of manufacturing around. And I was
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  always pretty good in math and science
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  and knew I kind of wanted to pursue a
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  career in in the engineering field. And
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  I got um you know I had found out you
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  know from a friend of a friend that um
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  you know there was a local entrepreneur
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  um you know that was uh creating a small
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  startup company uh that was going to
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  sponsor local um you know aspiring
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  engineers um you know through their
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  undergrad. and you know, not coming from
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  wealth or a wealthy family, I thought
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  this was a great opportunity for me to
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  get like a free college degree, uh,
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  working for a a small startup uh, that
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  was focused in water, which I didn't
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  know what that meant at the time.
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  >> Um, and, um, here we are, you know, kind
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  of 28 years later, um, same company,
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  that small garage kind of
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  entrepreneurial startup has now become,
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  you know, a global leader in supplying
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  energy recovery devices to the global
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  desalination business. Um and we have a
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  pretty dominant market share and
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  position in that industry. But again be
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  lying to you if I said u you know water
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  was on the brain but um water definitely
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  became a life passion of mine and we
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  continue the ball rolling almost uh you
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  know three four decades later.
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  >> Yeah. Yeah. That's amazing that that's
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  what we find so much you know my own
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  story is um you know it's not something
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  that really enters your mind. you're in
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  some field and then all of a sudden you
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  you realize that you have a skill set
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  that can be applied um somewhere or um
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  >> right
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  >> um yeah and have an impact. Um
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  I I'm fascinated by
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  just the growth of of energy recovery
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  and just the the way that um kind of
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  walk walk us through what the company's
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  evolution has has been um since you uh
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  since you started.
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  >> Sure. For sure. So, I mentioned like the
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  the kind of garage operation. We had a
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  small workshop here in in the Virginia
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  Beach area in Chesapeake, actually, uh,
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  where we had a handful of individuals
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  that were really trying to perfect the
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  technology. And what our technology does
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  is it really reduces the operational
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  expenses of desalination. And we'll get
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  into this a little bit more detail later
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  on in the talk, I'm sure, but
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  desalination is a pretty energyintensive
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  process. Um, and what we do is we were
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  able to shrink the largest consumers of
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  power within the process. So it's the
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  high-pressure pumps that are uh
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  consuming a lot of the the uh power
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  within the plants. And what we do is we
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  dramatically reduce the size of that
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  high-pressure pump by recycling the the
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  pressurized otherwise wasted Brian
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  energy. So we knew we had something we
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  knew we had a widget. Um we knew we had
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  something that we had to get to finally
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  work and spin up and and operate well.
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  So the early years, you know, call it
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  the the mid to late 90s was really spent
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  on perfecting our manufacturing process
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  and and um you know and and uh working
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  in R&D um you know to really perfect the
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  technology. At the turn of the century,
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  you know, call it the the early 2000s,
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  we felt like we really had the device
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  working. You know, it was working well.
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  Um we started to have some early
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  commercial success. That led us to
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  believe that the desalination plants
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  were starting to adopt our technology.
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  uh but that the we also saw that the
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  trend was that desalination plants and
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  water treatment facilities were starting
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  to get larger and larger in capacity. So
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  our technology is a standard device you
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  just put them in parallel um you know to
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  achieve unlimited capacities but they
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  were still relatively small. So each uh
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  device was you know call it you know 10
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  to 50 gallons per minute per unit and we
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  felt like we needed to at least um you
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  know have something 100 gpm, 200 gpm,
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  300 gpm in size to really be able to
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  move the needle with adoption in the
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  larger desalination um large scale
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  infrastructure infrastructure projects.
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  >> So at the turn of the century we spent a
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  lot of time trying to scale up the
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  technology. Um you know as we did that
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  we moved the company from um you know
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  the east coast to the west coast. So
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  we're now located in the Bay Area um you
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  know kind of on the other side of San
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  Francisco in small manufacturing town um
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  or industrial town called San Leandro
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  and um again um a lot of time spent um
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  you know scaling up the technology and
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  once we finally did that you know call
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  it in 2005
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  2006 we finally penetrated the market
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  and won our first largescale uh
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  desalination uh supply contract for
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  energy recovery devices and that was in
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  Perth Australia um it was 140,000 cubic
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  meter per day plant. U at that time it
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  was one of the largest in the southern
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  hemisphere. Um the contract was almost
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  larger than what our company's market
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  cap was and we were still a private
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  company um still living on equity kind
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  of angel investment at the time but we
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  did have an eye on um you know going
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  IPO. Yeah.
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  >> Uh so we started to gain some really
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  strong market share and some momentum.
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  Call it around you know 2005 to 2008
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  >> and um you know our revenues followed
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  the natural kind of entrepreneurial um
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  you know startup revenues you know zero
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  really at zero you're burning cash right
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  we were burning a couple million bucks a
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  year easy you know having to call our
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  our investors to keep the lights on. Um
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  and then finally around 2005 2006 we
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  were starting to break even a little
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  bit. And then in 2008
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  um probably during the worst possible
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  time you know during the global
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  financial crisis we decided you know
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  kind of damned the torpedoes full speed
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  ahead you know we're going to go we're
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  going to go full speed with this IPO and
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  it was relatively uh I would say it was
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  relatively uh successful we went IPO on
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  the NASDAQ 2008
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  about 8 to nine bucks a share you know
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  call it 850 per share and that put us
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  around
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  um you know half a billion dollars in
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  market cap.
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  >> Yeah. So there was a lot of buzz around
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  um water treatment, water scarcity,
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  desalination, energy efficiency,
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  optimization, sustainability, and we
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  checked a lot of those boxes.
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  >> Um you know, we weren't only good for
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  the environment, we were also good for
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  the for the wallet, you know, as we as
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  we um you know, like to say. So um you
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  know post IPO um we continue to develop
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  and and innovate and um you know dump
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  some R&D cash into into maintaining
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  product leadership and today we have a
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  dominant share in the global
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  desalination space. Um, you know, we
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  have, um, probably over 40,000 devices
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  deployed, you know, all around the
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  world, helping produce billions of, uh,
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  help helping to save billions of dollars
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  on energy costs, producing millions and
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  millions of cubic meters per day of
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  water, and reducing the carbon footprint
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  of these desalination facilities by, you
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  know, 20, 25, 30 million tons of of CO2.
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  So I I want to say mission accomplished
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  in a way but we're not happy you know
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  with where we are and we want to see if
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  we can uh move the needle further in in
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  solving the world's water crisis.
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  >> Yeah. Yeah. That makes a lot of sense.
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  And you know when we think about the the
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  crisis that we have um in the world when
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  it comes to water there's a number of
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  ways to to think about it. We uh UN
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  recently put out the um the global uh
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  water bankruptcy report which which is
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  certainly alarming but it really is
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  highlighting the fact that we've had
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  some of these sustainable um development
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  goals to get to a certain place by 2030.
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  um we're what like four four years away
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  from that and we're and the KPIs leading
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  to that is telling us that you know 7
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  75% of the world's population lives in
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  countries classified as water insecure.
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  And so having access to clean wa clean
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  drinking water, water sanitary services,
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  those things that help communities um
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  exist and thrive are are at risk when we
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  look at the future. So that's that
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  that's kind of what I took away from the
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  report. I would I would love to know um
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  if there's anything else you took away
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  from the report or just you know what
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  your reaction is is to that um in
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  general.
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  >> No, thank you. Um, you know, I would
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  like to applaud the UN for one, um, you
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  know, putting some aggressive goals out
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  there, right? They understood that water
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  scarcity is an issue. They understand
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  that, um, you know, if we do nothing,
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  the do nothing option status quo would
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  lead to maybe, you know, catastrophic
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  um, you know, water events and and water
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  scarcity issues all around the world.
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  So, I do applaud them for putting some
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  aggressive um, goals out there. How to
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  execute those goals are are another
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  thing. Um right you know some for
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  example some of the sustainability
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  development goals um you know within the
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  u report suggest that you know we have a
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  ton of uh wastewater effluent entering
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  to our environment from municipal
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  municipalities heavy industries and the
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  like um and they wanted to see if we
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  could reduce or at least half that um
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  you know by 2030 and I think even get to
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  like 80 90% by
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  >> um you know several years after that. So
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  again applauding the goal but again how
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  do we execute against those goals is is
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  something that I've been struggling and
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  try to wrap my head around um as a water
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  executive um you know within the
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  community the broader ecosystem of of
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  the water treatment industry.
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  >> The global water bankruptcy um you know
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  the key word there is bankruptcy
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  >> um and you know there's a growing
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  divergence between freshwater supplies
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  and demand just is it's just math. Um
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  right the the amount of fresh water on
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  the planet is more or less fixed.
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  There's no more fresh water coming into
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  the onto the planet from outer space,
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  for example. There's no more magical
• 11:46
  fresh water coming out of the ground.
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  What you got is what you got. And you
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  know all the statistics with how much of
• 11:50
  that is salt water versus how much of it
• 11:52
  is fresh water, how much of it is
• 11:53
  captured in the glacier ice caps, how
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  much is in deep aquifers underground.
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  At the end of the day, like the report
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  suggests that we are in water debt and
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  it is time to pay the bills, right? And
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  we are having a really hard time paying
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  that water debt. Um, you know, in short,
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  you know, the natural water resources
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  that we do have are not being
• 12:15
  replenished and they are being strained
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  to a level where they can't reach
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  historical levels of um, replenishment.
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  And that's the challenge. Um, it's the
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  challenge because I can't think of too
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  many industries on the planet that don't
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  rely on water. I mean, it's it's part of
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  it's part of who we are literally. Um,
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  you know, the human body is primarily
• 12:36
  made up of water. um you need water to
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  sustain life, you know, all the
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  statistics in the world. So, we have to
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  do something and the something um you
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  know, is is the is the billion-dollar
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  question, you know, what do we do, you
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  know, as an industry?
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  >> Yeah. Yeah. And when it comes to, you
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  know, I I think this is would be helpful
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  for some of our listeners too who maybe
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  um it could be easy to think, well, we
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  have so much water, let's just take it
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  from the ocean. And so kind of help us
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  understand what desalination
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  is. Um um because I think it sounds
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  simple to say, well, it's right there.
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  We can just use it, right? But there's a
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  whole process. Um help help demystify
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  the process a little bit um of what it
• 13:22
  takes to actually um have desalination
• 13:25
  as a technology.
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  >> Sure. And I'll be focusing on reverse
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  osmosis desalination. There's really two
• 13:30
  types of of desalination techniques.
• 13:32
  There's thermal desalination. So this is
• 13:34
  kind of the legacy I would say legacy
• 13:35
  dominant the old dominant um
• 13:38
  desalination technology which is
• 13:39
  literally boiling the ocean. You know
• 13:41
  it's the evaporation and condensation of
• 13:43
  of desalination. Um big problem there is
• 13:47
  to boil water takes a lot of energy. So
• 13:50
  you're you were able to almost cut that
• 13:53
  if not more cut that energy intensity in
• 13:55
  half by going to um a membrane
• 13:57
  separation or reverse osmosis
• 13:59
  technology. And that's a real fancy way
• 14:01
  of saying a filter. A reverse osmosis
• 14:04
  membrane is a really sophisticated fancy
• 14:06
  water filter. It's so sophisticated that
• 14:09
  you can pump water into this filter,
• 14:11
  overcome the naturally occurring osmosis
• 14:14
  process and reverse that by applying
• 14:16
  pressure on one end and out comes
• 14:18
  permeate and potable water on the other
• 14:20
  end and a really concentrated brine
• 14:22
  stream on the other end.
• 14:24
  >> And yes, you know, this can be done at
• 14:26
  scale. Um the largest uh water treatment
• 14:28
  plants in the world are up to 1 million
• 14:30
  cubic meters per day. Uh these are
• 14:33
  massive massive facilities uh primarily
• 14:35
  located in the Middle East and North
• 14:36
  Africa at the moment. Uh but the largest
• 14:38
  in this hemisphere um the largest in the
• 14:40
  US is the Carlsbad facility which is
• 14:42
  about 200,000 cubic meters per day. And
• 14:45
  just to give you some some rough scope
• 14:46
  there, that's enough for about you know
• 14:49
  call it um you know 4 to 600 million
• 14:52
  inhabitants um down in the greater San
• 14:54
  Diego Carlbad area. And the US does
• 14:56
  consume a bit more water than you know
• 14:59
  per capita um you know than than the
• 15:01
  rest of the world. So um you know that
• 15:03
  gives you just some scale and scope of
• 15:04
  of desalination. But great ocean's big.
• 15:10
  >> Yeah.
• 15:10
  >> Pump away. Right. So the the Achilles
• 15:13
  heel of desalination
• 15:15
  is um energy intensity.
• 15:18
  >> Yeah.
• 15:19
  >> I mentioned that you needed to pump
• 15:21
  water through this filter. You're not
• 15:23
  pumping water through this filter at 10
• 15:25
  psi, 30 psi, city water, like tap water.
• 15:28
  You're pumping water through this filter
• 15:30
  at call it nominal 800 to 1,000 PSI. So,
• 15:34
  it's a lot of pumping power and pressure
• 15:38
  that's required to pump this seawater
• 15:40
  through these super filters or these
• 15:41
  membranes to overcome the naturally
• 15:43
  occurring osmotic um pressure of the
• 15:46
  seawater. And that's the issue
• 15:49
  >> energy intensity, carbon uh carbon
• 15:52
  footprint and what do you do with the
• 15:55
  brine? So energy intensity and
• 15:56
  environmental impact are the two
• 15:58
  Achilles heels of desalination.
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  Otherwise pump away, right? So so I
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  think um you know as as part of this
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  discussion um I'm not you know I work in
• 16:07
  the desalination industry which is just
• 16:09
  a small sector of the the the broader
• 16:11
  water industry. Um, so of course, um,
• 16:14
  you know, there's going to be some some
• 16:15
  promotion of desalination, but I'm more
• 16:18
  of a proponent of a diversified,
• 16:21
  um, you know, water a strategic
• 16:23
  diversified water portfolio. You know,
• 16:26
  having a really diversified balanced
• 16:28
  approach on how you look at water. Um,
• 16:31
  you know, in the past, um, you know, it
• 16:33
  was a very binary discussion.
• 16:35
  >> You know, do I build a desalination
• 16:37
  plant or not? I think those discussions
• 16:40
  have transitioned into it an all-in
• 16:42
  discussion. We got to do a little bit of
• 16:44
  desalination. We got to do a little bit
• 16:46
  of water reuse and recycling. We got to
• 16:49
  do a little bit of conservation. We got
• 16:51
  to do a little bit of you know so it's a
• 16:52
  it's a more comprehensive discussion.
• 16:55
  >> I wish there was a um you know
• 16:58
  one-sizefits-all uh solution but you
• 17:01
  know just geographically you know the
• 17:03
  Southeast Asia is a lot different than
• 17:04
  the Middle East. Middle East is a lot
• 17:06
  different than the Southwest and the US.
• 17:08
  The southwest in the US is a lot
• 17:09
  different than the Atlantic east of the
• 17:11
  US. So, it's just you really got to look
• 17:13
  at what you got. You got to look at what
• 17:14
  the cards and the hand you were dealt
• 17:16
  and you kind of got to go through that
• 17:17
  optimization exercise to find kind of
• 17:19
  that right product mix for you.
• 17:21
  >> Yeah. Yeah. I couldn't agree more. It's
• 17:23
  I think it's one of the things that I
• 17:25
  actually really appreciate about being
• 17:27
  in the water industry is that
• 17:29
  >> it anchors you to the place like you
• 17:31
  have you have to respect and understand
• 17:34
  the place where you're applying the
• 17:35
  technology because it's it is nuanced
• 17:38
  and sometimes we love technologies that
• 17:40
  like just go horizontal and scale but
• 17:45
  that almost becomes place agnostic and
• 17:48
  there's something kind of poetic about
• 17:50
  water that says hey don't forget that
• 17:53
  You're rooted in a place and you have to
• 17:55
  understand the resources and the
• 17:56
  specifics of that place.
• 17:58
  >> Exactly. Exactly. And you know people
• 18:00
  ask me about desalination all the time.
• 18:02
  They say why aren't we doing it why
• 18:03
  aren't we doing it in the US? So there's
• 18:05
  about 20,000 um it's hard. This is
• 18:07
  ballpark number. There's about 20,000
• 18:09
  diesel plants around the world. So you
• 18:11
  know when I say mega project plants um
• 18:13
  you know large scale infrastructure
• 18:14
  plants I'm talking about 50,000 cubic
• 18:16
  meters per day and above. And in the US
• 18:18
  there's three of those
• 18:20
  >> you know four of those. There's not a
• 18:22
  lot, right? When you start going into
• 18:23
  the m middle east, there's there's
• 18:24
  there's hundreds, you know, there's
• 18:26
  hundreds and if not thousands. Um but
• 18:28
  all that to say like there's um there's
• 18:31
  capacity, you know, there's 150 million
• 18:33
  cubic meters per day of installed
• 18:34
  capacity today. And um you know,
• 18:38
  desalination, I used to speak of this
• 18:39
  and I used to be ashamed to say this. Um
• 18:42
  you know, desalination is a technology
• 18:43
  of last resort. So when people say where
• 18:46
  is the market headed, where are the
• 18:48
  desalination plants? It's in the desert.
• 18:51
  >> It's it's where there's a last resort.
• 18:54
  Um, imagine a sprawling city like Dubai
• 18:59
  >> being built in the desert. Like how does
• 19:01
  this happen? You know, how do you how do
• 19:03
  you fuel the how do you feed the people?
• 19:05
  How do you do agriculture? How do you
• 19:06
  feed um, you know, the people? How do
• 19:08
  you quench their thirst? How do you do
• 19:10
  industry? How do you support the growth
• 19:12
  of this population in the desert?
• 19:14
  >> It's done with desalination.
• 19:16
  Mhm.
• 19:17
  >> And so there's still, you know, the US
• 19:19
  is still in Europe, in many parts of
• 19:20
  Europe, there's still a lot of parts of
• 19:22
  the world that are still considered very
• 19:23
  water rich. Um, you know, it I'm in
• 19:25
  Virginia Beach. It rains like crazy
• 19:27
  here. I mean, it really does. You dig
• 19:29
  you dig two feet, you hit water. Um,
• 19:31
  right. I'm I'm I'm two miles from the
• 19:32
  ocean. Um, so you got to again, you got
• 19:35
  to meet water where you are. Um, so
• 19:36
  that's a great way to put it. Yep.
• 19:38
  >> Yeah. Yeah. and I'm in Indiana just
• 19:40
  south of the Great Lakes. So, you know,
• 19:42
  we there's there's that aspect where,
• 19:45
  you know, in as you said, the US
• 19:48
  compared to some others like we have
• 19:51
  pretty good um access to to water to
• 19:56
  aquifers. Um and then you know I was at
• 19:59
  a regulatory um agency conference in DC
• 20:03
  a couple weeks ago and someone was
• 20:04
  making the comment you know
• 20:07
  technically and this is for water
• 20:09
  regulators for municipal like
• 20:10
  technically water is free the cost is in
• 20:14
  treating it like so um and I think
• 20:18
  especially with the rise of um in the
• 20:22
  consciousness of the public of data
• 20:24
  centers and those kind of things I think
• 20:25
  people are starting to realize that
• 20:28
  moving water is heavy. It takes energy
• 20:31
  to move it. It takes energy to treat it.
• 20:33
  And so a lot of the co there that's a
• 20:36
  lot of the cost is in like like oh
• 20:39
  cooling like all all these applications.
• 20:41
  And so, um, I kind of want to lead into
• 20:45
  like kind of the state of the the
• 20:48
  desalination market and kind of what
• 20:50
  like permitting, public perception,
• 20:53
  financing, what th what those kind of uh
• 20:56
  landscape looks like. Um,
• 20:58
  >> sure. Sure. Yeah. It it's very
• 21:01
  sightspecific, I would say. And just to
• 21:04
  give you like some order of magnitude
• 21:05
  here, um again, the Carl'sbad facility,
• 21:08
  which is just shy of 200,000 cubic
• 21:10
  meters per day in in in the US, cost
• 21:13
  over a billion dollars to build.
• 21:16
  The same 200,000 cubic meter per day
• 21:19
  plant in Saudi Arabia will probably cost
• 21:21
  $300 million to build. So there's this
• 21:24
  massive 2 to 3x multiplier for
• 21:26
  desalination plants that are built
• 21:27
  outside the Middle East. You talk about
• 21:29
  facilities in Australia where it's
• 21:31
  pretty hard to get to and labor costs
• 21:33
  are high and you know energy is is an
• 21:35
  issue. Um you know these plants are
• 21:37
  probably five to six seven times um you
• 21:40
  know more expensive to construct you
• 21:42
  know per cubic meter of water than in
• 21:44
  the Middle East. So there's still this
• 21:46
  big discrepancy on costing of a
• 21:48
  desalination plant. Just to give your
• 21:50
  audience some some rough numbers here,
• 21:52
  like when you look at a desalination
• 21:54
  project, you know, a large scale um
• 21:56
  desalination project, it's about 50/50.
• 22:00
  You know, the life when you look at the
• 22:02
  the cost over the life of the plant, 50%
• 22:04
  of the the cost is on the capex and
• 22:07
  roughly 50% of the cost is on opex. So,
• 22:09
  you know, the upfront capital cost to to
• 22:12
  build the plant and then there's the
• 22:13
  upfront uh or there's the 25 30-year
• 22:16
  operational life of the plant. And when
• 22:19
  you think of capex, like what does this
• 22:21
  mean? Like so capex is obviously like
• 22:23
  the civil works. You got to put intake
• 22:25
  pipes and discharge pipes out into the
• 22:27
  ocean. Uh there's financing costs.
• 22:30
  There's a strong um you know, cost of
• 22:31
  capital. You know, that's tied to
• 22:33
  desalination plants that rise and fall
• 22:35
  with the the global interest rates and
• 22:36
  whatnot. Um there's land rights which
• 22:38
  are expensive. I mean desalination
• 22:40
  plants are typically built on some
• 22:41
  pretty prime real estate you know kind
• 22:43
  of located near you know some nice
• 22:45
  beaches and waterfront property all the
• 22:48
  stuff in the world. So capex is a very
• 22:50
  understandable thing. OpEx is like
• 22:52
  repairs and maintenance, you know, the
• 22:54
  staff, labor, but the number one of the
• 22:57
  largest components to the operational
• 22:59
  expenses for desalination plants is the
• 23:01
  cost of power and why um and I want to
• 23:05
  talk about the the cost of desalination
• 23:07
  like when you think of um you know how
• 23:10
  much does it cost like dollars per cubic
• 23:12
  meter of water and one cubic meter of
• 23:14
  water by the way is a thousand liters.
• 23:18
  Okay, just to put that into some
• 23:19
  perspective. So in the Middle East
• 23:21
  nominally to produce um a thousand
• 23:25
  liters of water or you know a typical
• 23:27
  water bottle is like 500 milliliters of
• 23:29
  water. So 2,000 of those 2,000 water
• 23:32
  bottles in the Middle East desalinated
• 23:34
  water cost about 50ents.
• 23:38
  I've ran through the airport and didn't
• 23:39
  even blink. I grabbed that same bottle
• 23:41
  of water and I paid probably 10 bucks
• 23:42
  for it. Right.
• 23:43
  >> Yeah.
• 23:43
  >> So it's also this relative discussion
• 23:45
  that we have to get into as well. uh
• 23:48
  that same uh cubic meter of water in
• 23:51
  Australia in the US can cost $2. You
• 23:55
  know, it can cost four to five times
• 23:56
  more. So that's when you start getting
• 23:58
  into this pushpull. Do we do diesel or
• 24:01
  not? And again, a large component of
• 24:03
  that is power. In the Middle East, these
• 24:05
  are a lot of energy producing nations.
• 24:08
  Saudi Arabia, Qatar, right?
• 24:11
  Three cents of power. California 25
• 24:15
  cents, right? So you have this seven,
• 24:18
  eight times more expensive power cost
• 24:21
  and what did we say earlier?
• 24:23
  >> The largest expense in the Achilles
• 24:24
  field of desalination from an
• 24:26
  operational expensive is energy.
• 24:28
  >> So you multiply that energy in kilowatts
• 24:31
  times the 25 cents, that's a much bigger
• 24:33
  number than multiplying it by 2 cents, 3
• 24:35
  cents, 5 cents. So, we're also starting
• 24:38
  to see a trend in del uh where renewable
• 24:41
  energies are starting to be coupled to
• 24:42
  desalination plants and this is starting
• 24:44
  to help normalize um you know some of
• 24:47
  the some of the cost like a lot of the
• 24:49
  new plants being constructed in Morocco.
• 24:51
  North Africa is exploding literally with
• 24:53
  u new desalination activity with Algeria
• 24:56
  and Morocco leading the way. A lot of
• 24:58
  those plants are starting to be coupled,
• 24:59
  particularly in Morocco, with renewable
• 25:01
  energy sources, um, solar power,
• 25:04
  >> right? And that's starting to help
• 25:05
  normalize some of the pricing.
• 25:07
  >> Yeah. Yeah. Yeah. That that's
• 25:09
  phenomenal. And like where where do
• 25:11
  these um where does this kind of
• 25:14
  technology live in in context of that
• 25:19
  diversified portfolio that you were
• 25:20
  talking about like water reuse um and um
• 25:25
  um decentralized systems like what um
• 25:28
  >> yeah would look for you more about that
• 25:30
  >> again very territory specific if you're
• 25:33
  talking about like the Middle East Saudi
• 25:34
  Arabia for example like u you know Qatar
• 25:37
  a lot of these um you know GCC countries
• 25:41
  70 80 90% of their water is produced
• 25:44
  from desalination seawater reverse
• 25:46
  osmosis. When you think about other
• 25:48
  countries like Singapore is a good
• 25:50
  example because they have a very clear
• 25:52
  clearly identified water strategy. Um
• 25:54
  they have um they have a pipeline that
• 25:57
  comes from Malaysia. So they import
• 25:58
  water um you know with a pipeline from
• 26:00
  Malaysia.
• 26:02
  >> They also reclaim a lot of water. So
• 26:03
  they have this reclamation system where
• 26:05
  they claim 100% of the rainfall is
• 26:08
  captured within their networks and
• 26:09
  drainage systems that they're able to
• 26:11
  treat and reuse. They have new water and
• 26:13
  that's a really fancy marketing term for
• 26:15
  toilet to tap.
• 26:17
  >> Um so they reuse municipal water,
• 26:20
  municipal waste water for drinking
• 26:21
  water. Uh which was one of the first
• 26:22
  countries to really market and promote
• 26:24
  this.
• 26:24
  >> Um most countries do that on some scale
• 26:26
  but they send it back down in aquifers.
• 26:28
  They blend it with other traditional
• 26:29
  water. They use it for agriculture. They
• 26:31
  drink it. Right. and that just got
• 26:33
  approved in in California uh for example
• 26:35
  and then and desalination plants.
• 26:37
  >> So you could see their diversification
• 26:38
  strategy is very clear. They say we
• 26:40
  don't want to be totally reliant on
• 26:41
  Malaysia.
• 26:42
  >> We get into an we get into an argument
• 26:44
  with our neighbors and they close the
• 26:45
  valve or raise the rates. We could be in
• 26:48
  trouble. Uh let's build let's build a
• 26:50
  drought proof. The only real drought
• 26:51
  proof uh resistant and resilient um
• 26:54
  water technology available is seawater
• 26:57
  reverse osmosis. it could not rain for a
• 27:00
  hundred years and the ocean will be
• 27:01
  there right to be tapped. Um so you know
• 27:04
  when I say drought proof I mean uh you
• 27:06
  know in that way so they built they
• 27:07
  strategically built um you know large
• 27:10
  scale desalination plants to be able to
• 27:12
  have that diversification just in case
• 27:14
  and then the reclamation the reuse the
• 27:16
  recycling also a nice blend. So again it
• 27:19
  you kind of got to meet water where you
• 27:21
  are you know back to that kind of theme.
• 27:23
  But when I think of um you know
• 27:25
  diversification I do think of those
• 27:27
  things. I think of um drought proof and
• 27:30
  resilient resources like desalination. I
• 27:33
  think of conservation and pollution and
• 27:36
  recycling. I think of reuse you know
• 27:39
  direct and indirect potable reuse. Um
• 27:42
  all those things comprehensively I think
• 27:44
  make for a strong
• 27:46
  >> um balanced and diversified water
• 27:49
  portfolio.
• 27:50
  >> Yeah. Yeah. It makes me like th this is
• 27:54
  maybe going a little bit off um off
• 27:57
  tangentially, but you know if I think
• 27:59
  about just this year
• 28:01
  um I know Colorado had an awful winter,
• 28:07
  not much snowfall and so now there's
• 28:10
  going to be concern about the Colorado
• 28:11
  River Basin and all and you know that
• 28:14
  water makes its all the way its way all
• 28:16
  the way down to um California depends on
• 28:20
  depends on that water. Um, and so, um,
• 28:24
  yeah, like I'm trying to I I keep trying
• 28:27
  to think of like where does desalination
• 28:32
  what's the tipping point for del to
• 28:34
  become more um,
• 28:39
  yeah, more more acceptable in the US um,
• 28:43
  as we're facing some of those very
• 28:45
  serious droughts that seem
• 28:48
  um, don't seem to be reversing. thing.
• 28:51
  Um,
• 28:51
  >> yeah. And it's interesting because we we
• 28:53
  have like kind of an inside joke within
• 28:55
  the desalination community. Every time
• 28:57
  there's a large scale desalination
• 28:58
  project that gets tendered or announced
• 29:00
  in certain certain areas or segments, it
• 29:02
  starts raining and and when it starts
• 29:04
  raining, people forget, right? Because,
• 29:06
  you know, Colorado River reached um
• 29:09
  uh you know, dismal levels. Um Lake me
• 29:13
  unprecedented lower levels. And then
• 29:15
  what happened? it rained
• 29:17
  >> and and it reached historical levels if
• 29:19
  not you know higher and people said okay
• 29:21
  we're good you know we're good for now
• 29:23
  and I think that's one of the problems
• 29:24
  it's like this culture around water
• 29:26
  where you know we can snap our fingers
• 29:28
  and get it like you turn on the tap you
• 29:30
  in your lifetime you probably never um
• 29:33
  you know in Indiana
• 29:35
  turned turned on your tap and nothing
• 29:37
  came out
• 29:38
  >> you probably never once got a notice um
• 29:41
  that says we are going to only allow you
• 29:43
  to use water from 9 to
• 29:46
  you probably never got a notice that
• 29:48
  says um you can't wash your Hummer,
• 29:50
  water your lawn, or fill up your pool,
• 29:53
  right? So, we're we're spoiled in that
• 29:54
  way. So, the mentality here in a lot of
• 29:56
  water rich countries is, you know, kind
• 29:58
  of not not on my watch. You know, it's
• 30:00
  it's there. It's always been there and
• 30:02
  it always will be. And, you know, to
• 30:04
  further like compound this this story is
• 30:07
  like you you see like day zero in the
• 30:09
  news for South Africa like they're
• 30:11
  they're going to run out of water.
• 30:12
  There's literally a timer on on the
• 30:14
  South African um government's website
• 30:16
  that says, you know, we're 10 days away
• 30:18
  from running out of water, 9 days away
• 30:20
  from and day zero comes and guess what?
• 30:23
  No one runs out of water. Well, what did
• 30:24
  they do? They increased the water
• 30:26
  prices. So, they conserved, they told
• 30:28
  people not to use, you know, so they did
• 30:30
  some stuff and um you know that that's a
• 30:33
  dangerous game to play. And I think the
• 30:36
  mentality has to be again forward
• 30:38
  thinking, diversification and don't
• 30:41
  think about the cost um to produce water
• 30:45
  for your particular end use. Think about
• 30:48
  the cost of doing nothing.
• 30:50
  >> Yeah. And a good example of this is, and
• 30:52
  I don't want to pick on like any
• 30:53
  particular industries here, but um you
• 30:56
  know, in a lot of manufacturing and
• 30:58
  heavy industries that consume large
• 31:00
  amounts of water, you know, the UN and a
• 31:03
  lot of um regulatory bodies, well,
• 31:05
  mostly regulatory bodies has says, look,
• 31:07
  you need to treat this water. No more
• 31:09
  dumping it into the environment or
• 31:11
  you're going to get fined, right? You
• 31:13
  need to reuse and recycle it. They do
• 31:15
  the math and more often than not, they
• 31:17
  paid the fine.
• 31:19
  >> Mhm. They say it's cheaper for me to pay
• 31:22
  the fine than build an advanced water
• 31:23
  treatment plant.
• 31:25
  >> The NPV doesn't work out. The math
• 31:27
  doesn't work out, you know. So, I'm just
• 31:29
  going to keep paying this fine. I'll
• 31:31
  write this $2 million check every year
• 31:32
  because that desalination plant's going
• 31:34
  to cost me $50 million to build. I can
• 31:36
  do this for 25 years, you know, ignore
• 31:38
  ignoring ignoring a discount rate and
• 31:41
  cost capital, but um
• 31:42
  >> and you know, be fine.
• 31:44
  lines are so long that you know even
• 31:47
  when it comes down to the individual
• 31:48
  it's like I'll retire by the time this
• 31:51
  match like it's easy to kick the can
• 31:54
  down the road.
• 31:55
  >> But what if you couldn't what if what if
• 31:58
  government said
• 32:00
  >> you can no longer
• 32:03
  you can no longer take from that river
• 32:05
  because you're you're starving the local
• 32:07
  farmland down down down river. And we've
• 32:10
  seen that happen. We've seen that happen
• 32:11
  in countries like Chile. you know, Chile
• 32:14
  operates uh the largest copper mines on
• 32:16
  the planet, you know, that are water
• 32:18
  intensive and they're pulling water that
• 32:21
  are that's literally um you know,
• 32:22
  upstream of like some agricultural and
• 32:25
  municipal facilities and the government
• 32:27
  says you can no longer do this. You
• 32:29
  know, you you kind of got to offset this
• 32:31
  with some other way. So, they're
• 32:32
  building desalination plants. You got to
• 32:34
  kind of think of it in that way like
• 32:35
  what what's the cost of um not the end
• 32:38
  use of the water the cost to what's the
• 32:40
  cost of not having water
• 32:43
  >> because the price the price to be able
• 32:44
  to not produce copper for example is
• 32:46
  catastrophic you know for for the copper
• 32:49
  mine. So you got to start thinking about
• 32:50
  it in that way I think.
• 32:52
  >> Yeah. Yeah. No, I I think that makes a
• 32:54
  lot of sense and I and I am encouraged
• 32:56
  by how much um when I spend time in um
• 33:01
  in DC around the regulatory there's so
• 33:04
  many new regulatory frameworks being
• 33:06
  proposed for the different
• 33:08
  diversification
• 33:10
  um of of water sources. um you know,
• 33:13
  water reuse is definitely taking kind of
• 33:16
  feels like it's starting to enter the
• 33:18
  spotlight um because uh because of the
• 33:21
  data center conversation, but I think
• 33:23
  regardless what it keeps highlighting
• 33:25
  and what I keep seeing bubble up to the
• 33:27
  top is the recognition that
• 33:30
  um and I think this is actually really
• 33:33
  really important for an important
• 33:35
  message for the public to start to
• 33:37
  understand is that it takes power to do
• 33:40
  anything with water and water is heavy.
• 33:43
  And so when you when you put those two
• 33:46
  things together, now we're talking about
• 33:47
  what's the most effective, efficient
• 33:50
  ways of moving and treating water um to
• 33:55
  say that's why we value it. We don't
• 33:57
  value it just because it's there. We
• 33:58
  value it because we want it to consume
• 34:00
  it. We want to use it for this
• 34:02
  application. Um and so it requires us to
• 34:06
  make decisions and tradeoffs and be
• 34:09
  thoughtful about it. Um,
• 34:11
  >> yes. And you said something earlier that
• 34:13
  that really resonated with me that, you
• 34:14
  know, water's free. You know, we believe
• 34:17
  it's our inherent right to have access
• 34:18
  to to fresh water. And there's this is
• 34:22
  probably for another day because it's
• 34:23
  probably another hour or two
• 34:24
  conversation, but you know, the the
• 34:27
  price of water,
• 34:29
  you know, how do if you look at like the
• 34:30
  global water tariffs around the world,
• 34:32
  the the pricing u uh delta or variance
• 34:36
  is massive.
• 34:38
  You know, how some countries value water
• 34:40
  versus others tells you a lot, right?
• 34:42
  And some suggest that we don't have a
• 34:45
  water problem on this planet. You know,
• 34:46
  some suggest we have a water pricing
• 34:48
  problem.
• 34:49
  >> And some people suggest we don't have a
• 34:51
  water pricing problem. We don't have a
• 34:52
  water problem. We have an energy
• 34:54
  problem. And if you had a world of
• 34:56
  unlimited energy, would you really have
• 34:58
  a desalination problem? Like if energy
• 35:00
  was free,
• 35:02
  what's the problem? Right? So, you know,
• 35:04
  these are these are the questions that
• 35:06
  come to mind. And it's that age-old
• 35:07
  water energy nexus. You need energy to
• 35:09
  make water. You need water to make
• 35:10
  energy. They're interdependent. They're
• 35:12
  dependent. Um all the stuff in the
• 35:14
  world. Um so we got to we got to figure
• 35:16
  out that puzzle and uh no one has been
• 35:19
  able to yet. Um you know, and I've had
• 35:21
  professors with their life's work has
• 35:23
  been on on the pricing of water and the
• 35:25
  e the economics of water. And water is
• 35:27
  very bankable, right? I mean, um, you
• 35:30
  know, think about, um, you know, a
• 35:31
  product, any product where you're scared
• 35:33
  that it may expire or may sit on the
• 35:35
  shelf too long or somebody may not use
• 35:37
  it or there's no demand. Like, water
• 35:39
  doesn't have that problem. There's
• 35:40
  always going to be demand. There's
• 35:42
  always going to be somebody that's going
• 35:43
  to need it. There's take or pay
• 35:44
  agreements where you don't take it, you
• 35:46
  pay anyway, right? But there's always
• 35:48
  going to be somebody that's going to
• 35:49
  need water. So, it's a very bankable
• 35:52
  thing. um the returns are reasonable but
• 35:54
  there is an inherent culture around
• 35:58
  water where water is very personal. It's
• 36:00
  it's like a product uh like no other. Uh
• 36:03
  the only thing I can think of that's
• 36:04
  equivalent to water on this planet is
• 36:06
  air and so far we're not charging for
• 36:09
  that, right? I mean air is air but you
• 36:11
  know why not?
• 36:14
  >> Yeah,
• 36:14
  >> it's a it's an interesting discussion
• 36:16
  for sure.
• 36:16
  >> Yeah. No, it is. And I I love I love
• 36:19
  where this where this conversation could
• 36:21
  go um if if we did have two hours. I I
• 36:24
  always talk about like to I do spend a
• 36:27
  lot of time with folks on the municipal
• 36:30
  side. And so, um, I think that's one of
• 36:33
  the things that when I talk to water,
• 36:36
  uh, municipal communicators who are try
• 36:39
  instill to their communities the value
• 36:42
  of water and why they need to, you know,
• 36:44
  rate increases, justifying rate
• 36:46
  increases and those kind of things. I'm
• 36:48
  like, you also just sense um there's a
• 36:51
  sense of pride of where where they come
• 36:53
  from. It's like this this water is our
• 36:56
  resource. We use it in um they'll talk
• 37:00
  about their water. If I run to someone
• 37:02
  on a plane and they're going to the same
• 37:04
  conference, they're like, "Well, here's
• 37:05
  the water, but also our craft brewery.
• 37:07
  Love our craft brewery here. Here's
• 37:09
  what's special about my about the place
• 37:11
  where I live." And so, um I think it
• 37:14
  that's right.
• 37:14
  >> At the very least, kind of your point,
• 37:16
  it forces amazing conversations for us
• 37:19
  to have. Um, and I I can't imagine being
• 37:22
  anywhere else where I get to have
• 37:24
  conversations that's like this is an
• 37:26
  important conversation that we're having
• 37:28
  because
• 37:31
  >> because we care about about water, we
• 37:33
  care about the resource and we care
• 37:35
  about what um what we're doing with it
• 37:37
  and that we can keep providing it. Um,
• 37:40
  >> so just kind of as we close, I'd love to
• 37:41
  just ask too like if you fast forward
• 37:44
  five,
• 37:45
  >> 10 years, what does the global um del
• 37:48
  market look like? Um, and kind of where
• 37:50
  where do you see it going?
• 37:52
  >> Yeah, it's a great question. Um, I was
• 37:56
  kind of shocked to learn how much of
• 37:58
  today's freshwater supplies are supplied
• 38:00
  by desalination plants.
• 38:03
  It's 1%.
• 38:05
  >> Mhm.
• 38:05
  >> So 1% of all the fresh water available
• 38:07
  that we consume today. Although I
• 38:08
  mentioned 20,000 desalination plants,
• 38:10
  150 to 200 million cubic meters per day
• 38:13
  of installed capacity, it's 1%.
• 38:16
  So you know all that to say that I you
• 38:18
  know desalination plants are very
• 38:20
  scalable and I if I could pick one word
• 38:24
  it's going to be large right I think
• 38:25
  desalination plants will be will become
• 38:28
  larger in the future they'll be they'll
• 38:30
  have they'll have there'll be more of
• 38:31
  them um I think it's going to be
• 38:33
  exponential growth I think growth is
• 38:35
  inevitable just by the sheer mathematics
• 38:38
  um you know again surrounding that
• 38:40
  divergence between freshwater supply and
• 38:41
  demand and history has shown that we've
• 38:44
  had like these at least in my lifetime,
• 38:46
  you know, three or four mega cycles, um,
• 38:48
  you know, in reverse osmosis where, you
• 38:50
  know, we had a contract capacity for a 5
• 38:52
  to 10 year period of X and then it you
• 38:55
  just see this step change um, you know,
• 38:58
  going up. So I think that as we continue
• 39:01
  to exhaust kind of our natural um you
• 39:04
  know freshwater resources, as we have
• 39:06
  this water bankruptcy um you know idea,
• 39:08
  this water debt that we have to pay and
• 39:10
  we're not um you know reusing recycling
• 39:13
  fast enough, desalination techniques um
• 39:16
  and technologies are only going to play
• 39:18
  a bigger part in the world's um you know
• 39:21
  global water um supply and
• 39:23
  diversification
• 39:24
  again just by mathematics alone. Um, now
• 39:27
  I think as an industry we we still got
• 39:29
  to continue to drive down the cost. Um,
• 39:31
  you know, I mentioned that 2,000
• 39:33
  standard water bottles was about 50
• 39:35
  cents. Um, you know, groundwater or
• 39:38
  surface water treatment instead of 2,000
• 39:40
  bottles, you can have 10,000 bottles.
• 39:42
  So, it's still when you compare it to,
• 39:44
  you know, um, treating lake lake or
• 39:46
  river water, surface water or
• 39:48
  groundwater, it's still, you know, five
• 39:50
  to 10 times more expensive. So as long
• 39:53
  as we can continue to drive down that
• 39:54
  cost, as long as we can continue to
• 39:56
  innovate, you know, within our industry,
• 39:58
  as long as we can continue to address
• 40:00
  the two Achilles heel, which is energy
• 40:02
  intensity and environmental impact, um
• 40:06
  sky is the limit for desalination. And
• 40:08
  we we're starting to talk, we've been a
• 40:10
  lot of talks have happened over the past
• 40:11
  couple of years about a circular economy
• 40:13
  uh within desalination. We mentioned a
• 40:16
  lot about the energy intensity of
• 40:18
  diesel. We didn't talk too much about
• 40:20
  the environmental impact and um I
• 40:23
  mentioned that on one end of this super
• 40:25
  filter you get permeate fresh water on
• 40:27
  the other end you get a really highly
• 40:29
  concentrated brine stream. What do you
• 40:30
  do with this brine stream?
• 40:32
  >> Yeah,
• 40:33
  >> you dump it back into the ocean. Now
• 40:35
  there's uh diffuser technology that um
• 40:38
  suggests you know when you measure the
• 40:40
  discharge pipe 10 meters away um you
• 40:42
  know the diffusion is almost
• 40:44
  undetectable
• 40:46
  um 10 20 mters away from the discharge
• 40:48
  pipe which is great. So there's not much
• 40:49
  of a problem. I mean, the the ocean's a
• 40:51
  big ocean and, you know, it's a it's a
• 40:53
  drop in the the drop in a bucket, if you
• 40:55
  will, but there's discussion about can
• 40:57
  we harness any valuable minerals and
• 41:00
  materials out of that brine stream
• 41:03
  before we discharge it back into the
• 41:05
  ocean? Is there ways to have
• 41:07
  desalination plants that have zero
• 41:09
  liquid discharge, not even a drop back
• 41:11
  into the ocean? And if you can find a
• 41:13
  way to harness the sodium chlorides, the
• 41:15
  magnesiums, the trace elements of
• 41:17
  lithium,
• 41:18
  >> etc., etc., etc. from that brine
• 41:20
  concentrate stream. Now you can start
• 41:21
  offsetting some of the cost of
• 41:23
  desalination and have that circular
• 41:25
  economy where you're not only um
• 41:27
  reducing the the cost to desalinate
• 41:29
  water, but you're also producing fresh
• 41:30
  water and valuable
• 41:32
  >> uh minerals.
• 41:33
  >> And I think that could be the future. Uh
• 41:35
  we got to see if that works. But there
• 41:36
  was a I don't know if you heard of the
• 41:38
  Neome uh vision in Saudi Arabia where
• 41:40
  they were trying to build a city in the
• 41:42
  desert uh the most futuristic city known
• 41:45
  to man. But the desalination projects
• 41:48
  there called for um 100% powered by
• 41:52
  renewable energy,
• 41:54
  not a drop of brine back into the ocean
• 41:58
  and harnessing and harvesting um um any
• 42:02
  precious materials out of the brine. So
• 42:03
  brine valorization. So it was a it was a
• 42:05
  grand vision for sure and I think
• 42:07
  >> it's something that we can strive for as
• 42:08
  an industry.
• 42:09
  >> Yeah. Yeah. I love that. I think that
• 42:11
  that's where that's where innovation
• 42:13
  gets gets born. there's opportunity when
• 42:15
  we when we say these are the constraints
• 42:17
  we want to operate under.
• 42:18
  >> Absolutely. Absolutely.
• 42:19
  >> Let's see what we can do.
• 42:21
  >> Um well Robney, thank you so much for
• 42:23
  >> Thank you Isaac. My pleasure
• 42:24
  >> for being a guest. It's um it's a
• 42:26
  pleasure to to kind of you know you've
• 42:28
  opened my eyes a lot on what uh what
• 42:31
  DEAL really um really is. Um and you
• 42:34
  know congratulations on phenomenal
• 42:36
  journey just um growing
• 42:39
  >> um yeah growing a business. It's it's
• 42:42
  not easy. Um and um and there's still a
• 42:45
  lot of growth ahead of us. And so um
• 42:47
  thank you so much and thank you to all
• 42:49
  of you who tune in. Um I love getting to
• 42:52
  have these conversations and um so
• 42:54
  please feel free to let us know if
• 42:56
  there's anyone else you want to hear
• 42:57
  from on the Make Waterwork podcast and
• 43:00
  we'll see you next time. Thanks for
• 43:03
  listening to the Make Waterwork podcast.
• 43:05
  If you enjoyed today's episode, please
• 43:07
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• 43:09
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• 43:14
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• 43:20
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