Reverse Osmosis
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The market
Emergency point-of-use desalination/filtration is a market that caters predominately to aid organizations and NGOs during times of crises. The 2004 Official Water Assistance figures from the World Water Council stipulate a figure of 4.5 billion dollars with the basic drinking water supply and sanitation sector where EPWDF would be placed receiving 750 million dollars. Current water assistance trends are moving away from large system water supply and sanitation, from 3 billion dollars in 1993 to 1.5 billion dollars by 2002. Conversely, water assistance aid has increased as has aid in general world wide with the countries of the Official Development Assistance (ODA) contributing a total 78.6 Billion dollars in 2004 with the Organization of Economically Developed Countries (OECD) expecting a further increase in 2006. In essence, increasing investment in the water sector is a precondition to achieving the UNs Millennium Development Goals (MDG). It would cost an estimated extra US$16 billion each year to reach the Millennium Development Goals, agreed by all UN Governments, of halving the proportions of people without access to safe water and sanitation providing further growth opportunities for company and organizations focused on providing ways and means of achieving said goals.
The demand for potable worldwide is tremendous. Since 1950 the world population has doubled but water consumption has increased six-fold, with over 40% of the worlds population living in areas prone to water shortages. On current trends over the next 20 years humans will use 40% more water than they do now. The number of people living in water-stressed countries is projected to climb from 470 million to three billion by 2025. With only 0.008% of the planets water readily available for human consumption and found in lakes, rivers and underground aquifers and 74% locked up in the ice glaciers and the remainder is deep underground or locked in soils as moisture or permafrost, desalination is a promising and lucrative field to satiate the growing demand for potable water. One quarter (25%) of the worlds population lives within 25 km of the coast, making seawater a possible main source of freshwater in the near future. The market volume for desalination grew from 2.5 billion dollars in 2002 to 3.8 billion dollars in 2005 with a growth rate of over 15% per annum. Current projections stipulate the worldwide market to be valued at 30 billion dollars by 2015 with a dramatic increase expected in new technologies and small system applications in Asia and particularly in China.
Reverse osmosis, as a contributing technology to the SmartFilters design is a market that depends on a supply of membranes. The market for “cross-flow membrane equipment and membranes will grow from $6.3 billion worldwide in 2004 to over $8.4 billion in 2007, a new report says. Desalination alone will account for over one third of this growth and revenues in this sector will grow to $1.8 billion in 2007”. This provides evidence that the SmartFilters contributing markets are also experiencing a strong period of growth allowing us to rightly predict that cost saving and technological advances are just around the corner. Further evidence of the potential size of the market for this technology can be observed from recent billion dollar acquisition like Ionics by General Electric and U.S. Filter by Siemens in 2004.
Market Analysis
The emergency point-of-use water desalination/filtration(EPWDF) market is currently wide open. With very few viable technologies currently available in the market place, this particular segment is ripe for development and then market leadership. In the parent segment of point-of-use filtration, high price sensitivity is rampant with vendors increasingly driven to offer better deals at the cost of contracting margins. There are four sectors to residential POU systems being
Counter top (CT)
Under the sink (UTS)
Faucet Mount (FM)
Distiller units (DU)
Taking heed from the residential markets it is possible to surmise that the market for EPWDF could also face the same margin constricting factors that includes a commoditization of filters. Consumers are observed to make their decision based primarily on price with quality being a concern but not an overriding one. Coincidently consumers are becoming more aware of water quality issues leading to an increase in consumer awareness regarding water treatment products. The US residential water treatment market is estimated at 1.37 billion dollars with POE representing the largest slice with 526.3 million dollars. Growth is expected to be stimulated by this ongoing awareness caused by advertising and health scares. Also, the ongoing competition in the different market segments has already resulted in an expansion of the range of product available to consumers in order to cater for the changes in demand.
Technology Trends
“The rate of technological development in this market is relatively low, because of the fact that the majority of technologies are well established. The only exceptions to this rule are when technologies that have been established in the industrial treatment sector are applied to residential