analysis-of-the-desalination-industry-industry
Published

November 2016

Analysis of the Desalination Industry in the GCC Region - Water Consumption, Production by Desalination, Power Consumption, and New Technologies in Water Production & Energy Efficiency, and Trends (2016 - 2021)

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Early efforts at desalination, large-scale water filtration for drinking and other purposes began during the 1960s with Bahrain and Kuwait setting up the first plants, using the MED (multi-distiller effect) technology. During the mid-twentieth century, Kuwait became the first member of GCC (Gulf Cooperation Council) to use MSF (Multi-Stage Flash) distillation technology. The GCC represents a group of wealthy nation states with an increasing demand for freshwater. Desalination plants power both municipalities as well as businesses in the GCC. The contracted capacity of existing desalination plants is anticipated to increase over time. This is despite the fact that over 43% of all contracted plants around the world currently exist in GCC. As of 2013, almost 70% of the total global contracted and online capacity came from the GCC.As of 2015, the desalination market in GCC was worth USD X.X billion. The market size is expected to grow at a CAGR of XX.XX%.

Drivers

The depleting natural precipitation and ground-water levels and increasing population are the major drivers of the sector in the region. A continued effort at increasing diversification of government income from hydrocarbons is another factor that has led to an increase in construction projects, industries, manufacturing plants, etc., leading to more demand for fresh water. Moreover, the government is supporting and encouraging the establishment of desalination plants to meet the nation’s demands.

Restraints and Challenges

The biggest challenge of desalination is the cost. As per a study, the cost of desalinated water per meter cube was USD 1.04, 0.95 and 0.82 for MSF, MED, and RO, assuming a fuel cost of USD 1.5/ GJ. Moreover, energy accounts for approximately three-fourths of the supply cost of desalination. Transportation cost is also added to the overall cost, making desalination a very costly process. Another negative impact of desalination is on the environment with the treatment of brackish water leading to pollution of fresh water resources and soil. Discharge of salt on coastal or marine ecosystems also has a negative impact.

Opportunities

The growing global outcry over climate change, majorly caused by the hype and awareness about the environmental effects of greenhouse gas emissions at the Global Climate Change Summit in Paris in 2015, has opened up large investment avenues in the desalination market in GCC. Many GCC countries intend to make desalination the source of 100% public potable water supply. Moreover, the nations are inviting more and more foreign investments in the region to keep up with the domestic needs that are continuously on the rise due to increase in the number of construction projects, manufacturing industries, etc.

Key Developments

  • Saudi Arabia will make the world’s largest solar powered plant, capable of treating 60,000 cubic meters a day.
  • There is a focus on renewable energy alternatives for desalination plants. Dubai’s clean energy company Masdar is taking steps to remedy this by commissioning four international companies for a pilot project on the border between Dubai and Abu Dhabi. These companies include Abengoa, Degremont, Sidem, and Trevi. The resulting four small-scale plants are near-completion. This project, to be successful, had to demonstrate its ability to create electricity under 1-kilowatt hour per cubic meter
  • Two new plants are being planned in Barka (capacity: 281,000 m3/day) and Ghubra (capacity: 250,000 m3/day). Seven consortiums made up of leading water utility companies have bid on these projects, according to the governing authority – OPWP (Oman Power and Water Procurement Company). The bid is being overseen by a wholly government-owned company, Nama Group (a subsidiary of The Electrical Holding Company). These new IWPs are scheduled to begin operating in 2018. This OPWP is being advised by Fichtner (Technical Advisers), Project Financial Solutions Limited (Financial Advisers), and DLA Piper (Legal Advisers).
  • In Qatar, there is a perceptible shift in terms of technology used. The thermal desalination process has proved to be expensive in the long run because of increasing demand and the massive amounts of hydrocarbons required to produce water. Thus, reverse osmosis, embraced because of its lower cost, and more effective filtration, is progressively being implemented in the new plants
  • Kuwait is focusing on research efforts to update the desalination plants in the country, with Kuwaiti research winning USD 5.5 million together with researchers from MIT for a next-generation desalination plant.

About the Market

PESTLE Analysis (Overview): Macro market factors pertinent to this region

Market Definition: Main as well as associated/ancillary components constituting the market

Key Findings of the Study: Top headlines about market trends & numbers

Market Dynamics:

  • Drivers: What are the key factors driving growth in the market?
  • Restraints: Most relevant threats and restraints that hinder the growth of the market?
  • Opportunities: Sectors of high return or quick turnaround on investment?
  • Market Concentration: Porter’s 5 Forces Analysis quantified by a comprehensive list of parameters

Chain Analysis:

Competition:

  • Market Share Analysis: Top players in the market (by value and volume)
  • Company Profiles: Pertinent details about leading, high growth, and innovation-motivated stakeholders with contact, operations, product/service offerings, financials, and strategies & insights
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