Why do so many new water technology companies struggle?

I was at an American Membrane Technology Association (AMTA) workshop last December focused on the use of membranes in the oil & gas and mining industries and in a discussion with a professor who had done a lot of research on forward osmosis (FO) applications I learned of the demise of Oasys Water in the past 12 months. Oasys was one of the water tech shooting stars a few years ago, promising great new applications for forward osmosis for seawater desalination and oil and gas produced water treatment. The professor I was speaking to was a big proponent of forward osmosis ten or so years ago and his group at the Colorado School of Mines had done a lot of work looking at the use of FO for produced water treatment applications.

Over that time he said the producers of the FO membranes have failed to deliver a robust product with issues such as contaminant leakage, fouling and membrane integrity not being solved. I believe another FO company called Hydration Technologies (HTI) has been restructured and refocussed. I don’t want to get into the technical issues of FO but rather why did these start-ups with a lot of investor backing and seemingly great technology fail?

Here are a few of my thoughts as to why I think many water tech start-ups struggle:

Technology is brought to market too soon

In the excitement over the great potential for a technology, it is brought to market too soon without enough testing in real world applications to iron out technical flaws and while product development is still underway. I suspect executives are too impatient to sort out these details and want to get the product to market ASAP and assume the technical flaws can be worked out on field trials for commercial opportunities. I agree that you don’t want to delay launching a product until every minor technical detail is finalized but word travels fast in the water industry and a failed pilot study can be a critical set back to a new technology. There is a delicate balance between getting a product to market ASAP to capture an opportunity and start bringing in some revenue and continuing costly product development until the technology is perfect. I assume that in some cases start-ups are pressured by investors to commercialize a product too soon, so they can start getting a return on their investment.

Once brought to market, all product development stops

I have experience working for a company where once the new technology was commercialized, all efforts were put into field demonstration testing to get some sales while research and product development efforts were put on hold. Even when there was feedback from the field testing that some product improvements were needed to eliminate some issues, there were no resources available to work on these issues. I can see how in the urgency to demonstrate market acceptance and make investors happy after years of sinking money into product development there would be pressure to focus solely on making sales, but inevitably the field testing will find some product flaws and there must be resources allocated to further product development to keep the product competitive. Also, customer needs change and companies must adapt to keep meeting these needs. At the AMTA workshop one presenter explained how fracking chemistry has been improved to allow high salinity produced water to be reused in fracking whereas several years ago it was necessary to desalinate this water for reuse. That pretty much killed a key market Oasys Water, HTI and other forward osmosis companies were targeting!

Poor understanding of market

The municipal water treatment market is a conservative industry. If that is the target for a new technology the startup must be very patient and prepared for a very long sales cycle starting with small installations and very slowly building up to larger systems. Even if the technology is amazing and appears to have little competition, end users will be wary of buying an important piece of process equipment from a company that is new to the market without a track record and evidence that the company will still be around in several years to provide the customer with the technical support, parts/consumables necessary to keep the equipment operating in the future. Process equipment is typically a large capital investment and very few if any water utilities want to be the first to adopt it, even if it is widely used overseas. Industrial customers can be a bit more open to new technology and are often a good proving ground before entering the municipal market. But I still have seen companies with technologies proven overseas enter the US market expecting to hit the ground running and start selling to larger systems and end up very disappointed by the lukewarm reception from engineers and end users.

Other Start-ups to Watch

There are a few water tech startups I am watching with interest to see how they hold up in the next few years.

Nanostone Water, a ceramic membrane manufacturer, has been around for over 5 years now and in the last 1-2 years has been more aggressively pursuing commercial installations. In the early days its activities focused on pilot studies to prove the technology and also finish product development without racing to get sales, which I think was very prudent and showed great patience by the company’s investors. In recent years it seems like the development phase is mostly finished and the expectations are to start getting some sales, primarily in the drinking water market. I am not sure why the conservative drinking market has been initially targeted unless it is considered that the technology is ready for that market so that immediate sales can be pursued while development continues on more challenging applications. I would think for relatively non-challenging drinking water treatment in general it will be very difficult for a ceramic membrane to economically compete with a polymeric membrane. Especially considering that there are some very good polymeric membranes on the market that have minimal integrity issues on drinking water, where superior integrity is the main benefit offered by ceramic membranes. There could still be some legacy Memcor and Zenon systems out there that have to pin a lot of membranes, but polymeric membranes have come a long way since the late 90s/early 2000s and these systems should not be used as the standard for polymeric membranes.

There are some niche challenging potable applications such as backwash water recovery that Nanostone has done a good job in getting some early retrofits as mentioned in my previous post, but I don’t think they are ready for competing against polymeric membranes for mainstream filtration applications. Another big advantage of ceramic membranes is the significantly higher flux possible compared to polymeric membranes. I would therefore look at the wastewater reuse market where organics result in reduced fluxes for polymeric systems, more cleaning and therefore more chance of irreversible fouling and a shorter membrane life – all issues that ceramic membranes claim not to have. It seems too obvious be me, so there must be some issue with wastewater filtration using ceramic membranes that I am not aware of. I do know the Parker Water & Sanitation District's (Colorado) Metawater ceramic membrane system has had some fouling issues and the feedwater has a wastewater input so perhaps the characteristics of these organics are not favorable.

PolyCera has been a more recent entrant to the market after being spun off by Water Planet in 2017 to sell its membranes developed from a unique material. The main product is an organic polymeric UF membrane with similar properties to inorganic ceramic membranes which allow the membrane to have similar fouling resistance to ceramic membranes as well as being able to tolerate more aggressive cleaning regimes than conventional polymeric membranes. I saw a presentation from PolyCera a few years ago on a produced water treatment application in California where a full-scale system has been installed and this seemed like a very good market for PolyCera’s membrane. The thing is, I haven’t seen anything new presented since then other than a few pilot studies. It may be that PolyCera's membranes have applications in industries that I don't work in.

I do not know the strategies of any of the companies mentioned in this post and have just thrown a few theories out there based on my own experience on why some of these companies may be struggling. I am excited by the innovations out there in the water treatment market and really hope that they can be successfully brought to market when they can offer real benefits to end users.

The opinions expressed in my posts are mine and not those of my employer.

New Developments in the Low Pressure Membrane Market

It has been a while since I have given an update on what is happening in the low pressure membrane market and there have certainly been some interesting developments in the past year. The major topics of interest for me are as follows:

MBRs Replacing MF/UF Systems for Indirect Potable Reuse Applications

While the potable market has been slow for Microfiltration/Ultrafiltration (MF/UF) systems I recent years, water reuse has been a nice new market to fill that void. This market could now dry up with the prospect of Membrane Bioreactors (MBRs) finally getting accepted for cryptosporidium, and giardia log removal credits in water reuse applications. The California Department of Public Health (CDPH) has announced it will provide 2 log removal credits for crypto and giardia based on challenge test conditions from an Australian study which means a separate MF/UF treatment step prior to RO is not needed to obtain the required 10 log removals for pathogens for indirect potable reuse (IPR). My understanding from a few presentations and discussions with experts in this field at the WateReuse Symposium in Austin this week (Sept 9-12) is to receive the removal credits a very specific set of conditions need to be met based on the Australian study (Tier 1 – I will describe in another post when I get a copy of the proceedings). So, it is not a blanket approval for MBR pretreatment, but I also understand that a number of US studies are underway or planned to demonstrate log removals for a broader range of operating conditions.

While CADPH has not yet formally approved log removals for MBRs, I am aware of at least one project that has been awarded in California this year for a future IPR system with an MBR directly feeding RO treatment and others are in the design phase. This is great for the suppliers of MBR systems but not so great for the MF/UF system suppliers. There is still a market for MF/UF systems in the reuse market for potable reuse from existing conventional wastewater treatment plants where additional biological treatment is not required, but for new wastewater treatment plants looking at IPR, the use of MF/UF systems will be rare in the future. My understanding is that to get enough log removal credits for potable reuse with MBRs used in place of MF/UF treatment (which gets 4 credits), removal credits from groundwater injection are also required, so this treatment train could not be used for direct potable reuse – I will clarify that also when I get the proceedings as I am still coming to grips with this new development.

Nanostone doing a 'Scinor' and chasing retrofits
In an attempt to get some reference installations for its ceramic membrane, Nanostone has been seeking opportunities to retrofit its modules at existing MF/UF installations where the ceramic membranes offer some process benefits over the incumbent polymeric membranes. Unlike Scinor which offers polymeric membranes that are exact replicas of a number of MF/UF modules on the market allowing easy replacement, to install the Nanostone modules, modifications of the piping to and from the modules as well as the supporting frames is required. Therefore, there needs to be some significant performance benefits to justify the modification cost. Nanostone has been successful in finding some installations where cold water and/or highly fouling feed water has reduced capacity and increased chemical costs of existing polymeric membranes, where these factors are not a problem for ceramic membranes. An advantage for Nanostone over other ceramic membranes on the market is the cleaning and backwash regimes that have been developed are similar to the polymeric membranes, so existing infrastructure can be used with minimal modifications. While the membrane surface area is around one third of Toray and Dow modules (258 sqft versus 775 and 829 sqft respectively), the ability to have significantly higher flux rates allows similar productivity per module in some cases. For smaller modules such as Pall/Asahi’s (538 sqft) the Nanostone module can provide higher productivity under the right conditions.

Universal Acceptance of Open Platform Systems

The days of Open Platform/Universal MF/UF systems being considered a novel concept are well and truly over. With several years of good performance for a growing number of installations, Open Platform/Universal systems are entering the mainstream MF/UF market. Of the MF/UF system specs I see now, my guess is around 50% of these now request Open Platform/Universal systems. The larger engineering firms have embraced these systems the most where they are more excepting of references from across the country while smaller regional engineers want to see local references – therefore some states have been slower to catch on. I think some engineers have even taken the concept too far wanting systems to accommodate up to 6 different modules, including a wide range of module sizes, which starts to diminish the advantage of a Universal system when you have to size the MF/UF rack for the smallest module and lose the advantage of a more compact system provided by the larger modules on the market.

But I should not complain and be thankful there is wide recognition now that there are other proven, high-quality MF/UF modules and system integrators available other than the proprietary systems provided by the ‘Big Three’ (Pall, GE/Suez, Evoqua).

ACE18 Wrap - Viva Las Vegas!

Las Vegas turned out to be a great venue for ACE18. Attendance numbers were up and while some skeptics doubted people would actually go to the conference events, exhibit hall traffic seemed busy to me. Unfortunately I had a bid during the show so couldn't go to any papers for the first time in 20 years.... so I can't comment on how well these were attended. I read through the technical program on the flight home to see what I had missed and there were some very interesting sessions on membrane technology and water reuse and overall I think a better balance of technical and management sessions.

One criticism of conferences at Vegas is that delegates disappear down the strip and there are less networking opportunities, but I thought the opposite for ACE18. Because the Mandalay Bay and adjoining Delano Hotel are so big, most functions were held there or at the nearby Luxor, so it was easy to walk from the show to your hotel and back to the functions and even go to a more than one. So for me it was one of the best networking ACE's I have been to. My only criticism of the Mandalay Bay Convention Center was you could not get food in the exhibit hall and lines were very long to get lunch in the Mandalay Bay, so the exhibit Hall was dead during lunchtime when you would hope to get some traffic. That needs to be addressed next time.

I heard a few companies didn't exhibit because they thought attendance would be down due to some city's not being allowed to attend. That may have been the case for some city's but I heard attendance was well up on recent years so it does not seem that too many were restricted from coming. I think it is over 20 years since ACE was at Las Vegas but after the success of ACE18 I am sure it will be a lot sooner before ACE returns. Viva Las Vegas!

2018 Membrane Technology Conference and CA WateReuse Conference Wraps

March was a busy month for conferences so I am combining my summary of the 2018 MTC in West Palm Beach and CA Annual WateReuse Conference in Monterey. There were may of the same West Coast engineers at both shows, which is an indication of the high use of membranes in wastewater recycling projects.

AMTA/AWWA Membrane Technology Conference

Attendance was similar to the past few years at just over 1000 delegates. It felt a little down to me based on exhibit hall traffic, but the quality of delegates was very good as usual, with a lot of interesting membrane projects in the works. The technical program was excellent, and I found myself torn between sessions many times when papers I wanted to see were being presented simultaneously.

There were quite a few sessions on potable reuse including studies directed at proving pathogen removal credits for MBRs and Reverse Osmosis for indirect and direct potable reuse of wastewater and the results look pretty conclusive with regulations to follow in the near future.

In terms on new technology, it looks like Metawater has some real competition now on the ceramic membrane front, with Nanostone recently completing some drinking water plant retrofits in the Dakotas. I think this a pretty good strategy for Nanostone where retrofitting will allow them to get some quick references for their ceramic membrane. The current target for the retrofits is cold water filtration applications where the capacity of systems with polymeric membranes is reduced in winter while the flux reduction for ceramic membranes is significantly less.

There were also a number of presentations on the use of Desalitech’s Closed Circuit Desalination (CCD) process for concentrating brine and improving recovery at wastewater reuse and brackish water applications. It looks like there will be some decent sized CCD systems in municipal applications on the West Cost in the near future.

WateReuse California Annual Conference

This was my first time at this show and I was very impressed with the number of delegates, around 600, which is about half of what is at the national WateReuse Symposium. A large percentage of those attending were water utilities, indicative of all the reuse activity in California. Since this was in Monterey, the Monterey One Water reuse demonstration plant and full-scale reuse system under construction were featured, including a tasting of beer made from the demonstration plant, a frequent and popular event at the WateReuse shows. I must say that Monterey One Water has done an excellent job with their demonstration plant that is set up for tours for all sectors of the community. I believe Pure Water San Diego probably had the first long term demonstration plant followed by Monterey and now many more water utilities are following suit to gain public acceptance of direct and indirect potable reuse.

Monterey One Water Demonstration Plant

I did hear in one presentation that the State of California is about to award pathogen log removal credits for MBRs and in anticipation of this, a number of future reuse projects are already removing UF from the Full Advanced Treatment (FAT) train and feeding RO directly from a MBR. Some of these full-scale projects are currently or about to bid. If you ask me, I am OK with MBRs as a barrier for indirect reuse, but I am not ready for MBRs without a subsequent UF filtration step as a pathogen barrier for direct potable reuse.

The organizers of this conference did a great job in planning every detail, including presentations and entertainment at lunches and breakfast (the WateReuse Family Feud was hilarious!) and I can see why the attendance at this show was so good.

Next major show, ACE18 in Vegas baby!

Why do we Sell Water Treatment Equipment?

When I was hectic bidding several projects the week before Christmas while trying to fit in a few out-of-state sales visits before the end of 2017 and barely finding time to get into the holiday spirit I thought to myself, “Why do we sell water treatment equipment”? I talk to a lot of people in sales in my industry at conferences and it seems like we all have a similar hectic life of travelling every other week, frantically catching up when we are in the office and nearly always in that reactive fire-fighting mode.

I think the only other profession that may travel as much as sales people are professional sportspeople. If we got paid as much as sports stars, maybe that would make the travel more worthwhile. But it isn’t just the travel… If you are selling process technology, you have to put in a lot of work educating the engineers and end users on how the technology works, how to design a process incorporating the technology and then helping to pull together specifications. Then after all of this work that may take place over a few years, the engineer lists all your competitors in the bid spec! Then it is just a race to the bottom to see who will bear the lowest margin….

All the sales consultants will tell you to sell on value provided and not the equipment price, but they should look at selling into the municipal capital equipment market where the government entity is required to have a number of bidders and select the lowest priced responsive bidder… In some cases you can get a bid evaluated on lifecycle cost and in some cases the engineer you have helped with the design will let you have input on the competitors listed in the specs, which is great, but if you work in the muni-marketplace, most projects don’t go this way, unless you want to be really selective and as a salesperson in this market, if you do that you may not be in a job too long…

So let me be more specific. "Why do we sell process equipment into the municipal water treatment market when we have to be travelling for most of the time, our life is in a continual frantic state and there is no money to be made"?

Here is my attempt to justify why I stay in this profession:        

• There are a lot of great people in the industry, sales reps, engineers, fellow manufacturers and operators who are a pleasure to work with. Some of these people I have known for almost 20 years and consider good friends.
• I started my career as a consultant and didn’t get a lot of satisfaction designing a small part of a project and not seeing the end result. Granted I was only a junior engineer, but I wanted to work for a manufacturer who makes a product that solves a problem. It is very satisfying to me to visit a water treatment plant where my company has provided a treatment system that is helping the end user to meet a water quality objective. At that point the installing contractor is gone and possibly the engineer is done with the project but our equipment is there treating the water for many years to come.
• I have this competitive instinct in me and I do get a rush from bidding and winning projects (and the opposite from losing them) which probably comes from my track days.

Being a Municipal Salesperson is like being an Amateur Athlete...
I ran track for years and I think selling in our industry is a bit like being an amateur athlete. Why do you do it when the financial gain is minimal compared to the effort you put in? As my dad used to say when I was training 2-3 hours a day, 6-7 days a week, “You can’t eat gold medals” (he thought I should put my efforts into playing Australia Rules football or another sport where I could get paid). But if you love running, you get your reward from improving your times, winning a race or two, comradery with fellow athletes (many who are still good friends), getting ranked, making national championships, etc, even if you don’t make it to the highest level and make any money. Over the years I trained with a number of Olympic athletes and got a lot of satisfaction thinking that in some way I helped them achieve their goals.

In sales we are proud of the projects we win, the size of the plants sold, the number of installations using our products, the introduction of a new technology to solve a new problem and we value the friendships made. The personal financial gain (or company’s financial gain for that matter) may not be great, but there is a lot of personal satisfaction from playing a part in the improvement in the infrastructure for a community.

So after all of that rambling, I think I have justified to myself why I have been selling water treatment equipment in the municipal market for over 20 years…heck, if I could be an amateur track athlete for almost 20 years, this is a piece of cake!

Sippin' the I Pee A

Arizona Pure Water Brew Challenge puts some fun into Water Reuse

Over 25 craft brewers from around Arizona competed in the Arizona Pure Water Brew Challenge for the honor of making the best beer from purified wastewater at the 17^th Annual WateReuse Symposium in Phoenix AZ on September 12. Most of the approx. 480 conference delegates enthusiastically sampled beers and voted for their favorites.  This event was the climax of a 10-month project to build a trailer with high-tech treatment processes and then tour the state treating wastewater to drinking water standards and provide this to breweries to make beer for the Arizona Pure Water Brew Challenge. And while the final tasting competition was a fitting finale to the project the journey to the finale was certainly the highlight.

 The Arizona Pure Water Brew Challenge was conceived by a team led by Pima County as an entrant to the New Arizona Prize: Water Innovation Challenge with the goal of helping change public perception of using reclaimed water to help solve Arizona’s future water needs. The idea was to build a mobile potable reuse treatment facility that would travel through Arizona cities and towns to wastewater treatment facilities where the wastewater would be treated and given to local breweries who would then compete to make the best tasting beer from reclaimed wastewater.

The Water Innovation Challenge was conceived by the Arizona Community Foundation in partnership with Republic Media and Morrison Institute for Public Policy who host philanthropic prize competitions to attract innovative ideas. Pima County’s Southwest Water Campus team was recognized for developing the most innovative and inventive market-based, technological or entrepreneurial solution to enhancing the sustainability of its water future. The Southwest Water Campus team consisted of Pima County Regional Wastewater Reclamation Department, Tucson Water, Town of Marana, University of Arizona, CH2M, Carollo Engineers, Clean Water Services and WaterReuse. In addition to the $250,000 grand prize, the team also received $50,000 in technical assistance from the WaterNowAlliance to advance the implementation of the project which included an extensive marketing and social media campaign.

The AZ Pure Water Brew Challenge Trailer Touring Arizona

The treatment in the trailer consisted of Ultrafiltration, Reverse Osmosis, UV/Advanced Oxidation, GAC and Chlorination. The actual cost of the trailer was well above $250K, probably around $500K, and could only have happened through generous donations and at-cost contributions from equipment vendors and engineering firms. The schedule was also very challenging requiring the trailer to be designed, built and permitted by the State (remember this was making a product to be consumed by the public) in about 5 months, essentially building and permitting a drinking water facility, while allowing time to tour the local wastewater facilities to treat water so that breweries could brew their beers in time for the Brew Challenge on September 12. Having had a little involvement in the provision of the membrane equipment, I know it took an amazing team effort between vendors, the engineering firms and Pima County’s team to pull this off.

The trailer was not only created to produce purified water for the beer challenge, but was also used as a PR tool to educate the public on the safety and benefits of wastewater reuse. Great attention to detail was put into the layout of the trailer and the educational signage and videos for schools, local residents, public officials and the media who would tour the facility when it was stationed at wastewater facilities and beer tasting events. This helped the Project get a lot of exposure in local newspapers and TV reports.

Launch of the Trailer at the AZ Water Conference in May 2017

After the Brew Challenge the trailer even made a trip to Colorado to CH2M’s Englewood Headquarters for a Reusefest where CH2M clients could taste beer from three local breweries made from recycled water from the trailer, as well as one CH2M employee brewer who came up with the clever name ‘I Pee A’.

Reusefest at CH2M, Englewood, CO

The Arizona Pure Water Brew Challenge was definitely a huge success in helping the public in Arizona understand how reclaimed water can be used to meet future water needs and the Award sponsors, the winning team led by Pima County and all the volunteers who contributed in some way should be congratulated for making this fun project happen.

Most photos from http://www.azpurewaterbrew.org/.

2017 IWA International Conference on Water Reuse and Reclamation Recap

I am not trying to turn this into a conference review blog but I just happen to have been at quite a few conferences this summer. The most recent was the 11th IWA International Conference on Water Reclamation and Reuse held at Long Beach, CA July 23-27. The attendance seemed pretty good considering a lot of local forums for Water Reuse this year, with the pre-show registration list showing 540 attendees, 420 of these from the United States. I was impressed with the number and quality of attendees from the US which shows that despite recent rains on the West Coast, water reuse still has a lot of interest. Although I did hear from one engineer from Northern CA that some of the reuse projects in that region have gone from urgent to a slower schedule.

The technical presentations were very good and I really liked the 20 minute limit which kept the sessions moving and interesting. Each session had a 15-20 minute question period at the end if there was no time left after a specific presentation. My only criticism of the format was some moderators let speakers overrun by 5 minutes because there was the 15-20 minute questions session at the end to make up that time, but if you wanted to jump across to another parallel session, you missed a good part of that presentation.

Horses for Courses for Technology Selection

Without counting papers, it seemed like the majority of current research is on advanced oxidation and biofiltration treatment while the case studies for full-scale reuse projects were mostly around low and high pressure membrane processes. I don’t know if this means that we will see more AOP and biofiltration projects implemented on the full scale in the future at the expense of membrane projects or if there is just more research money for AOP/biofiltration where membranes are seen as a more mature technology with less areas left to research. I suspect a bit of both.

While I mostly went to the membrane related presentations, skimming the abstracts (I was very impressed with the Conference App that allowed you to easily review abstracts) there is certainly a horses for courses approach, with focus on AOP/biofiltration focused mostly on inland areas where disposal of membrane concentrates is difficult while membrane solutions are predominantly on the coasts with access to outfalls for waste disposal.

If you went to the conference to see the exhibits, you would have been disappointed. There were only 20 or so exhibitors and no booths really popped with anything new. Even so, the breaks in the exhibit area were very well attended and a great opportunity to mingle and network with attendees. Most people who go to this sort of conference aren’t really there for the exhibits anyway.

Overall I am very glad I attended to get the chance to see a lot of interesting presentations and do some great networking. Next conference is the 2017 Annual WateReuseSymposium in Phoenix AZ, September 10-13. I will be interested to see if the IWA Conference lowers the attendance this year or if there is enough momentum in Water Reuse to allow people to go to both shows.