Is water tech the next frontier for investment?

By Angeli Mehta, PhD 

Water scarcity is a major global challenge, and water-related technologies are becoming increasingly important (Image: Pexels)

What we are doing by ignoring water is dangerous. We have put untold trillions to work on behalf of the kilowatt hour. And we put nothing to work on behalf of the gallon. We need to get better at telling our story; once we do, funds will follow.

Tom Ferguson, founder of Burnt Island Ventures

In 2018, when Cape Town residents stared into the abyss of the taps running dry, there was talk of towing an iceberg from Antarctica to provide much-needed water. But entrepreneurs have come up with less outlandish ideas to help tackle the global crisis of shrinking supplies of freshwater, which deprives more than 2 billion people of access to safe drinking water and threatens the planet’s life-support system.

However, entrepreneurs need both investment capital and supportive regulations to turn ideas into viable solutions. The UN water conference in March in New York attempted to put the water crisis squarely on the map. Investors with US$3tn in assets urged governments to develop policies to deliver water security through targets to incentivise private investment.* “Water use for agricultural, industrial and energy generation activities must be transformed, to reduce demand and ensure that productive activities do not exacerbate water scarcity conditions,” they said.

Addressing water shortages also contributes to net-zero ambitions — piping and treating drinking water and sewage is energy-intensive. In the US, drinking and wastewater systems account for 2% of the country’s energy consumption. In the race to keep average warming to 1.5°C, every tonne of CO2 matters. Though water supplies are already being affected by global warming, an analysis by the Climate Policy Initiative put public and private funding on water at just 3% of climate finance in 2019 and 2020.*

“What we are doing by ignoring water is dangerous. We have put untold trillions to work on behalf of the kilowatt hour. And we put nothing to work on behalf of the gallon,” said Tom Ferguson, founder of Burnt Island Ventures, a specialist investor in early-stage companies in the water sector. “We need to get better at telling our story; once we do, funds will follow.”

There is no shortage of innovation in need of financial backing, whether its drawing water out of the atmosphere, using sunlight to turn seawater into drinking water, using the Internet of Things (IoT) to deliver smart irrigation or to tackle waste.

Township residents queue to fill bottles of water at a borehole tap set up during a drought in South Africa (Image: Reuters)

In Kenya, and other parts of Africa, as much as 50% of the water extracted by utilities is lost to leaks. It is a story that is repeated around the world. Ageing infrastructure and delays in pinpointing leaks mean that as often as three days a week, Nairobi’s taps can run dry, while consumers are expected to pay for water they do not receive.

“Everybody believes that water is a crucial resource, and it is finite. But the investments towards water infrastructure have been overlooked for a long time,” said entrepreneur Brian Bosire, who focuses on applying emergent technologies on Africa’s challenges.

“When you look at countries where climate change has a huge impact on water supplies and water sources, it is crucial to start deploying IoT to monitor water infrastructure, data analytics to predict water consumption and to bring efficiency on how we use water, and use the data that we are gathering on consumption to empower the end consumers on the ways [to] improve water efficiency.”

His company HydroIQ is doing this, in the process cutting the time to identify leaks on the distribution network from up to 6 months to minutes. Of almost 4 billion litres of water being piped through the system where HydroIQ technology is installed, it has saved around a billion being wasted in the past year.

People cool off with water leaking from a broken pipe valve during hot weather in Kolkata, India, on 19 Apr 2022 (Image: Reuters)

“Our platform brings visibility to the entire network,” Bosire said. Consumers can log in to an application to track their use, which has also helped cut consumption. The system is running in other locations in Kenya, and Bosire plans to roll out a first project in South Africa later this year. A pilot is also under way in Guatemala with a cement manufacturer building a smart city. But scale-up is difficult. While water is political and utilities are slow to convince, Bosire added that “investor awareness is one of the biggest challenges”.

Already more than 50% of the planet lives in cities and as more people move into cities, water needs to go further, even as climate change threatens supplies. As a new Blueprint for a Circular Water Smart Society, launched at the UN water week, pointed out, if those living in houses and apartments were able to reuse water for non-drinking purposes, tap water consumption could be reduced.*

“Circularity is where this gets solved,” suggested Ferguson of Burnt Island Ventures. “Using the same molecule, use it in whatever the process is, then clean it and put it back, over and over again. That is the same for homes as it is for semiconductors.”

A worker opens an irrigation gate to let the water flow from an irrigation canal, in Holtville, California, US on 20 Sep 2022 (Image: Reuters)

In the UK, where individuals typically get through 150L of water a day, Kelda showers has designed a power shower system to cut water consumption in half, while a Scottish firm is trying to convince investors its greywater recycling system can make the difference. Flushing toilets with water fit to drink seems a waste of both water and energy resources.

Carolyn Hogg, managing director of Cascade Water Products said that the company’s system collects and disinfects bath and shower water which, in an average household, equates to the water consumed in flushing toilets. Such ‘greywater’ recycling can cut consumption by 30%. “Add in a water meter to raise awareness of use habits, and another 15% could be saved,” she said, adding that the system is self-cleaning and uses less energy in a year than the average household would consume in a day. A future iteration could allow for heat recovery, offering energy savings.

While the technology is ready to scale, investors and policymakers “do not seem to get it”, she said. While the government policy highlighted water efficiency and rainwater harvesting, greywater recycling does not get a look in, yet it could save three times as much as efficiency measures. It can also take pressure off the sewage system at times of heavy rainfall, when the UK dated infrastructure gets overloaded and raw sewage is dumped into rivers and seas. Industrial water could be circular, too. “In many industries, from car to semiconductor manufacturing, water is a facilitating agent needed to run the manufacturing process. But little of it is being consumed, almost all of it is being wasted,” said Greg Newbloom, whose Seattle-based company Membrion, has developed an ion-exchange membrane, made out of silica, a natural material Newbloom. A chemical engineer by training, he added that industrial wastewater has changed over the past 50 years, becoming more complex to filter with existing technologies. “We watch companies that instead of trying to treat water, just truck the wastewater off site, and they have it boiled or add a bunch of chemicals to it to precipitate it out. Driving wastewater around is one of the least sustainable wastewater treatment practices we have, but it is common,” he said.  

People taste recycled wastewater at a water recycling facility in California, US (Image: Reuters)

In industrial pilots, which are moving to commercial adoption, Membrion is said to achieve over 90% water recovery, and commonly as high as 98%, depending on the amount of salt in the wastewater. Even with 90% recovery, which means a company would be sending 10 times less water to an evaporator, means 10 times less energy is consumed.* Hitting 98% delivers a 50-fold improvement in energy savings.* Like the industrial wastewater, Newbloom’s goal is to be able to make the membranes themselves recyclable.

Though there has been no shortage of innovation in membrane technologies, 9 times out of 10 membranes that looked promising in the lab do not scale, added Newbloom. “We had to convince investors that we had a technology that was scalable. However, if we ended up losing in that scale-up process, there was still plenty of room to be successful with the technology.” He said that more needed to join them who are prepared to take the plunge as an ecosystem of investors in water technologies is being created.

*References are available upon request

Source: World Economic Forum (WEF)