Market Overview: GCC Targets Spur Greenfield Wastewater Treatment and Reuse Opportunities Keith Hays 14 October 2014 WaterWorld Middle East 2014 GREENFIELD + WATER = BLUEFIELD
About Bluefield Research Bluefield Research is an independent provider of market insight services whose mission is to help clients address, leverage, and exploit the technological, regulatory, and competitive trends in the global water sector that produce new opportunities for growth. Industry Verticals Industrial Water Extractive Water Water-Energy Municipal Water The Water Gap: Supply & Demand GREENFIELD OPPORTUNITIES IN WATER Solutions Desalination Wastewater & Re-use Smart Water Private Water New Build Water Treatment Plants Wastewater Treatment Systems Water Distribution Systems New Business Models Water Reuse Strategies Zero Liquid Discharge Smart Water Solutions Supply Chain Strategies New Private Investment Pubic-Private-Partnerships Private Ownership Financing Strategies Utility Concessions GREENFIELD + WATER = BLUEFIELD 2
Setting the Stage for GCC Wastewater Reuse 1 Policy drivers for reuse in the GCC region 2 Initiatives in place for market growth 3 Players tapping into project opportunities GREENFIELD + WATER = BLUEFIELD 3
GCC Region forms a Nucleus of Wastewater, Reuse Growth Saudi Arabia: By 2025, all cities >5,000 reuse 100% of treated wastewater UAE: Dubai uses 100% of its treated wastewater. Abu Dhabi is aiming for 100% reuse by 2018 (currently 54%). Bahrain: Will invest US$4 billion in wastewater infrastructure 2013-2030. Qatar: Water reuse to increase by 30% by 2020. GREENFIELD + WATER = BLUEFIELD 4 Oman: Muscat will connect 84% of its population to a wastewater network and reuse all treated effluent by 2020 at a total cost of US$ 4.7 billion. A set of concrete initiatives can establish the GCC region as the main driver of global growth for reuse projects.
US$ /m3 GCC Targets Spur Greenfield Wastewater Treatment and Reuse Opportunities Reuse can be a viable, cost competitive alternative to desalination $1.6 $1.4 Supply Comparison, Riyadh: NWC Rates vs. Alternative Sourcing Costs $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 Urban water rate potential increase x5 $1.2 $1.0 $0.8 $0.6 Reuse 1/3 kwh OPEX vs. desal $0.4 $0.4 $0.2 2012 $0.2 $- NWC urban water rates $- Riyadh desalination (Jubail) 2ndary/3ary wwt reuse Source: NWC, Pearce 2009. Comparisons are case-sensitive, however reuse is generally a competitive option vs. desalination considering energy and conveyance costs for standard secondary treatment. GREENFIELD + WATER = BLUEFIELD 5
Reuse Capacity m3/d % Of Target Reached GCC Targets Spur Greenfield Wastewater Treatment and Reuse Opportunities GCC Governments are planning for a massive scale-up of reuse capacity GCC Reuse Targets vs. Existing Capacity 3000000 100% 2500000 77% m3/d need to target operational m3/d % of target reached 90% 80% 2000000 70% 1500000 54% 60% 50% 43% 40% 1000000 29% 30% 500000 20% 10% 0 Source: Bluefield Research Saudi Arabia (2020) Qatar (2020) Oman (2020) UAE, Abu Dhabi (2018) 0% GCC reuse targets represent a US$28.7 billion investment opportunity to add over 4 million m3/d of capacity through 2020 led by Saudi Arabia and Qatar. GREENFIELD + WATER = BLUEFIELD 6
Untreated wastewater (mln m3/yr) % Municipal wastewater untreated GCC Targets Spur Greenfield Wastewater Treatment and Reuse Opportunities Overall, municipal wastewater infrastructure requires significant build-out Untreated Municipal Wastewater Volumes, % Untreated 500 450 400 24 66% 70% 60% 350 300 19 48% 50% 40% 250 200 31% 31% 26% 30% 150 20% 100 50 2 11 10 10% 0 0% Saudi Arabia UAE Kuwait Bahrain Oman Untreated total volume (mln m3) % Untreated of total flows New plant potential Source: FAO Aquastat, Bluefield Research. The GCC region s wastewater market requires at least another 65 municipal wwtps as 30% or more of countries total flow goes untreated. GREENFIELD + WATER = BLUEFIELD 7
Barriers remain to project execution that must be addressed Barrier Wastewater legislation Market Implication A lack of stringent regulations for discharge, both industrial and municipal, reduces demand for treatment investments. UAE is setting new standards for effluent- but further policy evolution is required in most GCC states. Project tendering processes Non-transparent Water reuse economics Project complexity, lack of government guarantees, unclear interface between different state bodies resulting in opaque tendering processes that hamper project flow. Oman is addressing this through a clearer state project manager entity. Water reuse economics are project-specific, and projects are varying widely still in terms of size, application challenging the development of a template model for comparison. In addition, water tariffs are heavily subsidized with few initiatives to internalize cost. A set of key barriers face the region as a whole that must be addressed for steadier project flow. GREENFIELD + WATER = BLUEFIELD 8
Opportunities along the water reuse value chain Design & EPC Design and execute comprehensive water management strategies Technology Integrators Leverage water expertise to provide integrated reuse solutions Asset Owners Water Off-takers Hedge against rising rates, scarcity risk by purchasing reclaimed water or investing in reuse. Commercialization of water reuse creates opportunities for players across the value chain, from EPC firms and technology integrators to water users and asset owners. GREENFIELD + WATER = BLUEFIELD 9
Reuse targets bolster advanced wastewater treatment technologies. GCC Wastewater Reuse Market Players Bahrain Oman Qatar Bluewater Bio, Samsung Engineering ACWA, AECOM, Cadagua, GE, Kubota, United Envirotech, VA Wabag, GE, Suez, Veolia, Larsen & Toubro The move to water reuse applications across the GCC region is elevating opportunities for MBR achieving higher water quality levels. Other activated sludge technologies, such as sequencing batch reactors and moving bed bioreactors adopted for applications with less stringent quality requirements. Saudi Arabia UAE Toray, Wetico, Suido Kiko, Bluewater Bio GE, Siemens, Suez, Besix, Samsung Engineering, GHD, Metito Wastewater reuse expansion requires reliance on local partners for wastewater collection and reclaimed water distribution pipe systems Foreign technology suppliers, paired with local EPC firms, are tapping primarily into MBR opportunities across the region. GREENFIELD + WATER = BLUEFIELD 10
Oman, Haya Water highlight integrated model for greenfield development. Market Drivers: Acute water scarcity and underinvestment in wastewater collection and treatment capacity. Project management: Haya Water s acts as Sultanate s wastewater operations and management firm, streamlining the tendering process Water infrastructure target: 755,000 m3 of reuse capacity by 2020 Investment plans: Haya Water currently has US$2.5 billion of planned wastewater investments to meet reuse targets. Infrastructure planning: Wastewater capacity build-out and reuse are planned in tandem, greenfield. Haya Water has installed 127,000 m3/d of MBR capacity with an additional 110,000 m3/d in planning. Oman s integrated approach to water reuse is resulting in sizeable project commissioning an important planning reference for the region. GREENFIELD + WATER = BLUEFIELD 11
Bluefield Takeaways The GCC region is poised to become a leader in greenfield reuse projects, building off of progress in the UAE. An integrated planning approach is vital to fostering reuse project flow and overcoming market barriers demonstrated by Oman s progress with Haya Water. The GCC scale-up in reuse will generate several sizeable project opportunities we estimate project capex upwards of $10 billion in the next 4-6 years that will go to foreign technology suppliers paired with local construction firms. GREENFIELD + WATER = BLUEFIELD 12
THANK YOU FOR YOUR ATTENTION! Global companies across the value chain are developing strategies to capitalize on greenfield opportunities in water -- new build, new business models, and private investment. Bluefield Research supports a growing roster of companies across key technology segments and industry verticals addressing risks and opportunities in the new water landscape. Companies are turning to Bluefield for in-depth, actionable intelligence into the water sector and the sector's impacts on key industries. The insights draw on primary research from the water, energy, power, mining, agriculture, financial sectors and their respective supply chains. Contact Bluefield Research NORTH AMERICA 34 Farnsworth St // Floor 3 Boston, MA 02210 T +1 617 963 5114 EUROPE C/de Santa Eulàlia 5-9 // 3 a 08012 Barcelona Spain T +34 617 464 999 ebonney@bluefieldresearch.com www.bluefieldresearch.com Bluefield works with key decision-makers at utilities, project development companies, independent water and power providers, EPC companies, technology suppliers, manufacturers, and investment firms, giving them tools to define and execute strategies. 2014 BLUEFIELD RESEARCH, LLC. WaterWorld Middle East 2014 13 WWW.BLUEFIELDRESEARCH.COM GREENFIELD + WATER = BLUEFIELD GREENFIELD + WATER = BLUEFIELD