Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/749211
10 Interview December 2016 Water. desalination + reuse plants, and in others putting in a plant and operating and maintaining it. Starting from its base in Saint Thomas and Saint Croix, Seven Seas Water ventured further to win customers in the Turks and Caicos Islands, Sint Maarten (Dutch Saint Martin), Curacao, and eventually Trinidad and Tobago, and more recently Tortola in the British Virgin Islands. "We started in the US Virgin Islands and proactively went around to different islands trying to identify areas that were having water issues," says Brown. In Saint Martin, it discovered a seawater reverse osmosis plant that was owned and operated by Veolia, but "it was rather an old plant and struggling to keep up with demand", says Brown. "And so we worked out a deal with the government that we would take over the plant, and refurbish and expand it." The plant was upgraded from producing less than 10,000 m3/d to more than 17,000 m3/d, and has more recently expanded again to a capacity of 23,000 m3/d. "That's one where we saw an opportunity to take over an existing facility which we purchased and then fixed up," says Brown. The next big step was prompted by a developing water crisis in Saint Croix, which was turning off the public water supplies at 7pm each evening and turning them back on again at 7am, rationing water, because the existing water production facility it owned was ageing and its production volume declining. Seven Seas Water made a proposal to the US Virgin Islands Water and Power Authority to bring in emergency containers and install 6,000 m3/d of capacity to solve the water shortage. "Eventually they accepted our proposal. We brought in our containers, and we solved the water crisis; and a"er watching us operate our containers for many months, the Water and Power Authority decided that it would be better for the island if they abandoned their old thermal technology and replaced it with seawater RO. It would be cheaper, even if they were buying the water from a third party. So they went out and bid for somebody to come in and take over all the water production in the US Virgin Islands. We won that bid, in 2012, and now we provide all of the drinking water in the US Virgin Islands, in Saint Thomas, Saint Croix, and Saint John," says Brown. AquaVenture's experience in the US Virgin Islands, where its selling price was equal to about 60 per cent of the water authority's internal cost to run its distillers, helped to crystallise its strategy in the desalination market. "We always recognised that seawater RO was going to be cheaper than distillation, and so absolutely when we find someone that's still using a distiller, we're right on it," says Brown. "In our model, we use our own capital to build the plant, we use our own employees to run the plant, and so in the case of the US Virgin Islands, they didn't have to put up any capital, and they ended up lowering their water cost by 40 per cent or 50 per cent." Now, because the number of thermal plants le" in operation is dwindling, the company keeps its eyes open for opportunities to improve older seawater RO plants, or ones that may have been poorly maintained. In Saint Martin, for example it took over a 15-year-old RO plant. "We replaced the positive displacement pumps with multi-stage pumps, which aren't quite as energy efficient, but they're much more reliable, and installed ERI-PX energy recovery devices, isobaric energy recovery, because that's really the most efficient thing you can get," says Brown. Also, some hollow fibre membranes were replaced with spiral wound membranes. The way that AquaVenture sees its business, both Seven Seas Water and Quench, is as a portfolio of water production assets. "Whether that's water coolers or desalination plants, they both have the same model, which is that we put a water production asset into a customer's site, and we produce water for them, and they pay us a monthly fee. If it's a cooler, they pay maybe $50 a month in a service fee, and if it's a desalination plant, we're typically measuring the volume of water that we produce and sending an invoice," explains Brown. In the case of desalination plants, some may be developed organically by Seven Seas Water, and others are existing assets that it acquires. Historically, the mix of organic and acquired growth has been about half and half. "We look at both opportunities. We actually earn about the same in both cases. On the acquisition front, we look for opportunities where we can improve the operating performance of the plant and produce more water, which improves the financial performance of the plant," says Brown. In November, AquaVenture finalised the acquisition of Aguas de Bayova, a supplier of seawater and desalinated water to the operator of Bayovar phosphate mine, in North Western Peru. The $46 million deal represents just such an opportunity to improve efficiency of the existing operation, and covers all rights and obligations under a "We are now at more than $100 million revenue." "Whether it's water coolers or desalination plants, they both have the same model, which is that we put a water production asset into a customer's site, and we produce water for them, and they pay us a monthly fee. It's nice, recurring revenue." Doug Brown, AquaVenture CEO