New Frontiers in Energy and Water
Brent Giles
Research Director
Lux Executive Summit Asia
October 21, 2015
Agenda
Energy and water are both traditional industries with large
players that are typically slow to adopt new technologies
Environmental and technological disruptions have both
industries confused and reacting to rapid change
Both industries face fundamental shakeups that will
permanently alter their landscapes
2
Agenda: disruptions in energy
3
Volatility and climate change drive the movement
toward next generation energy
Major disruptions in oil prices have become common, as this graph showing spikes in the standard
deviation in oil price shows. Volatile energy prices force energy-intensive industries to operate
conservatively and slow growth.
http://link.springer.com/article/10.1007%2Fs11708-014-0303-0
4
Technologies like fraccing diversify sources and
stabilize prices
Hydrofraccing in North America has twice been the victim of its own success: first after it drove
down the price of natural gas in 2008, and, after drillers began focusing on liquids, it eventually
contributed to a sharp drop in oil prices in 2014. Nevertheless, the industry continues to operate
and will remain a vital component in the energy mix in the Americas and beyond.
5
Advances in traditional oil and gas: drilling and
monitoring
While oil and gas technology has traditionally focused on finding new resources, it is now
increasingly applied to decreasing costs and increasing efficiency in drilling and production. A large
number of startups seeking to automate key operations and improve process monitoring are
working in the space.
6
Hydrogen economy?
7
Hydrogen economy: a moon shot
8
Electric vehicles become an important part of the
mix by 2025
Lux projects that falling battery prices will make electric vehicles a significant portion of the fleet by
2025, though they won’t yet outcompete traditional vehicles in number.
9
Biofuels can change the game
Cellulostic materials remain promising: steam explosion and dilute acid
techniques lead the way
10
Biofuels can change the game
Has diversified from palm oil to
waste oils to produce renewable
diesel
Cellulostic materials to
renewable diesel and jet fuels
11
Gas hydrates resources surround every continent, if
they can be accessed
Gas hydrates confirmed
Gas hydrates expected
Adapted from USGS
12
Japan
Korea
India
China
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
140
2016
2015
Total production, Bm3
Projected hydrate production
200
180
160
2013 Japanese gas consumption
120
100
80
60
40
20
0
Rest of world
13
Agenda: disruptions in the water space
14
Water is poised for a shakeup
Weapons of
mass
destruction
Water crises
The current industry faces accelerating
change in what is traditionally a
conservative marketplace
Impact
Water is a $600 billion industry that
enjoys good profitability
Likelihood
15
It’s not just drought: extreme storm events are
increasing as well
Change in frequency of extreme storm events, 1948 to 2011
New England
Extreme
storms now
occur 85%
more
frequently
16
Distributed stormwater treatment
Treating large volumes of stormwater in
centralized facilities is expensive and
hazardous, risking release of raw sewage
Distributed treatment, combined with
advances like permeable surfaces and
rainwater capture, provide a way forward.
17
The Energy Water nexus: drinking water and
wastewater converge
Wastewater treatment has always been energy intensive, with advances such as anaerobic
digestion reducing the cost somewhat
Producing drinking water from seawater is far more energy intensive than direct reuse of
filtered wastewater
500%
Energy
consumption
Sludge production
450%
Cost of desalination $/m3
2.3
Desalination cost trends
1.8
400%
Minimum footprint
350%
Number of staff
300%
1.3
Operating cost
250%
0.8
200%
0.3
-0.2
150%
1972 1982
1992 2002
2012
Capex
Electricity
Maintenance
100%
50%
0%
Activated
sludge
BioGill
AquaCell Baswood
Sabre
Aquarius
18
5
Monitoring and control are
the future for infrastructure
A 100-year-old pipe may fail in only one
short section. Repairing it economically
depends on pinpointing the leak.
Technical Value
Worldwide, one third of drinking water is
lost due to faulty infrastructure
Current
winners
Future winners
Computer
Pressure
mgmt/asset
maintenance
Automatedawareness
inspection
Lidar
Smart meters
Pig inspection
3
Eddy-current
EM probe
RFTC
Acoustic CCTV
Thermal
Ultrasound
Chemical
detection
Tracer gas
“Trenchless” repairs are now common.
Finding the area in greatest need of repair
is key.
Incumbent
Long-shot
1
1
3
Maturity
5
5
Current
winners
Future winners
Technical Value
SIPP, dw
SIPP, ww
Pipebursting
CIPP, ww
CIPP, dw
3
Sliplining
Pipe
Clamp repair replacement
Robotic local
repair
Incumbent
Long-shot
1
1
3
Maturity
5
19
New agricultural demands for water: supporting the
rapidly growing aquaculture sector
Demand for seafood is growing at 10% per
year, but wild capture has been flat since
1989
Aquaculture is growing at 8.3% annually
The fastest growing portions are
sophisticated recirculating farms that require
constant monitoring and aggressive water
treatment
20
If better desalination membranes aren’t the answer,
what good are next-generation membranes?
Increasing membrane flux by 300% would only improve seawater desalination plant performance
by 10%. Still, some next generation membranes will find important uses replacing thermal and
other energy- and water-intensive traditional processes in industry.
Antibiotics
Biomolecular fishing
“Porins of multidrug resistant bacteria are
often impermeable to antibiotics and could
thus be used to remove them from
wastewater.”
“…the cost of the ligand is the main
impediment to the widespread application of
immuno-ultrafiltration or affinity
ultrafiltration. Aptamers could be one of the
keys to breaking this powerful catch-22.”
Sugars separation
Replacing affinity
chromatography
“Lectins may be able to separate sugars such
as known plant-based sweeteners and
compounds with important pharmacological
activity.”
“The packing density of hollow fiber
membranes rivals the specific surface area of
chromatographic beads. The bonds can be
broken without the use of chemicals simply by
back-flushing.”
Quotes adapted from J Chem Technol Biotechnol 89 (2014) 354-371.
21
Lux Competitive Benchmark: looking at large water
companies
Technology is still applied unevenly in water, even by major companies in the space.
22
Lux Competitive Benchmark: Water innovation
often lags behind other industries
Even major companies in the space often invest relatively little in next generation technologies, and
some are wedded to declining industries such as pulp and paper. High tech solutions can change
the space.
Basic materials
End-user facing services
23
Conclusions
Energy will become increasingly diversified
“Green” energies can expect competition not only from more efficient oil and gas
operators but from other green energies
Water issues present a significant threat to populations and industries
The water space is diverse and increasingly needs new ideas and new technology
Key drivers in water include infrastructure repair and monitoring, fresh water
supply, reduced energy demand for desalination and wastewater treatment, and
support for new industrial processes
These two traditional industries are facing historic shakeups
from technology and environmental pressures
24
Thank you
Brent Giles
Research Director
michael.holman@luxresearchinc.com
+1 917 484 4878
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