Desalination Industry Screams For Cost Cutting Innovation: Lockheed And BioLargo Hold Key Technologies

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  BioResearch Alert 

  
  

  
  

  Mar 2, 2015 2:03 PM | about stocks: AWK, BLGO, DOW, GE, LMT, VEOEY

  
  
  (Link Here) Shrinking supplies of groundwater caused by natural disasters, drought, inadequate sanitation, and industrial pollution are forcing the world to look to the oceans and inland brackish sources for life-sustaining water. Every day, over 17,000 desalination plants process seawater to supply 21 billion gallons of salt-free water to over 300 million people. Unfortunately, as large as these numbers sound, they represent less than 1% of global consumption and fail to address the unmet needs of billions more.
  
  Reverse osmosis is the predominant method used to desalinate water but its high cost remains a major barrier to widespread adoption. Keenly aware of the problem, the desalination industry is pressing hard for innovative new technologies that will drive costs down dramatically and compete for greater market share. The big question is, "which innovations will make the biggest impact . . . and in the shortest time?"
  
  New technologies such as Forward Osmosis, Capacitative Deionization and Electrochemically Mediated Desalination are being explored, but their development is too far out to predict their impact. There are, however, two promising innovations that are positioned to dramatically reduce desalination costs in the near future. There is the Graphene "Perforene" Filter under development by Lockheed Martin Corp. (NYSE:LMT) that could be commercial in 3 to 5 years and the "AOS Filter" developed by BioLargo, Inc. (OTCQB:BLGO) that could be commercially available in less than 2 years.
  
  Cost of Desalination Versus Conventional Groundwater
  Data from the UC Davis Center for Watershed Sciences lists costs for desalination water at between $500 and $2,500 per acre-foot compared with $300 to $1,300 per acre-foot for the treatment and reuse of municipal water. A more recent study by the Pacific Institute finds that the cost to produce water from a desalination plant is even higher and subject to significant variability, with recent estimates for plants proposed in California ranging from $1,900 to more than $3,000 per acre-foot.
  
  Over 60% of desalination plants employ reverse osmosis technology that is growing faster than the older and less efficient thermal technologies. Reverse osmosis requires far greater amounts of energy than pumping and filtering conventional groundwater because it uses large amounts of electrical energy to power pumps that have to force saltwater at high pressures through microscopic sized holes in a semipermeable membrane to produce salt free water. It also requires very expensive filters that require frequent replacement.
  
  Which Costs Can Be Cut?
  Capital costs to build a new Salt Water Reverse Osmosis plant, SWRO, are high and can run over a billion dollars for a large facility. An example is the new plant currently under construction in Carlsbad, California. It's difficult to cut the capital expenditures for a new facility, but one really big capital cost that stands out from the pack is financing. Since plants are typically financed and amortized over 25 years, capital repayment, finance fees and interest expense are very large items. Lower finance fees, lower interest rates, and longer amortized loans would lower monthly capital expenses over the life of the plant and that would result in lower costs, however, that is still not enough and a closer look reveals that operating expenses hold the key.
  
  Veera Gnaneswar Gude, Oregon Institute of Technology, writes in his published paper on Energy Consumption and Recovery In Reverse Osmosis, "Energy consumption accounts for 75% of the total operating costs for an SWRO system.
  
  The following chart presented by Nikolay Voutchkov, PE, BCEE, President, Water Globe Consulting supports the claim of high energy operating costs and illustrates that at 55%, energy costs are the single largest operating expense over everything else. Clearly, anything that will reduce the cost of energy will be a major contributor to making desalination more affordable.
  
  Energy And Biofilm Fouling Are The Major Cost Drivers
  A brand new reverse osmosis filter with no biofilm on its surface requires a large amount of energy to power the pumps that force the saltwater through the microscopic holes in the permeable membrane. With the passage of time, living organisms that are present in the saltwater that flows through the filters accumulate on the membrane surface and gradually form colonies of bacteria called biofilm. This biofilm clogs the filter and greatly increases energy requirements to push the water through the filter.
  
  Hiroko Kasama, Lead Consultant at Global Water Intelligence believes biofouling is one of the most significant challenges in seawater reverse osmosis desalination plants. Hans-Curt Flemming estimated the cost of biofouling in a membrane application at Water Factory #21 in Orange County, California to be 30% of total operating expenses. Flemming also found that biofouling reduces membrane life from 3 years to 1 year, so over the life of the plant the cost of membrane replacement will be increased by 3. Biofouling in desalination is estimated to cost 15 billion US$ yearly worldwide.
  
  Biofilm disrupters
  Current technology uses chemicals, pre-filters and sometimes ultra-violet light to pretreat the saltwater by killing off some of the living organisms before it enters the reverse osmosis filter. Experience from SWRO plant operators today is that pretreatment is costly and only marginally reduces the amount of living organisms that can accumulate on the membrane surface. Biofouling remains the biggest problem in SWRO plants.
  
  What if there was a filter that was inexpensive to build and that had very low energy requirements that could effectively and rapidly disrupt or inhibit biofilm formation on the reverse osmosis filters? Such a filter could reduce operating costs to the extent that it reduced energy requirements and at the same time, it could lower expensive reverse osmosis filter replacement costs because they would last much longer. Additionally, the need for pre-treatment would be reduced resulting in lower operating costs. It would also reduce the down time that combined with pretreatment can be between 5% and 15% of operating costs and it could reduce capital costs for the pre-treatment infrastructure.
  
  BioLargo's AOS Filter Cost-Effectively Disrupts Biofilm Fouling
  

  

  Early AOS Filter

  BioLargo's AOS filter uses iodine in combination with an electro-chemical reaction on proven filtration materials to disinfect and decontaminate water in seconds versus hours and uses only 1/20th of the energy required by the closest competing technologies. Performance results of the AOS Filter have been validated by researchers at the University of Alberta that is gearing up for pilot studies to commercialize the filter for the food processing industry and the oil sands industry in Canada.
  
  Professor Lynn McMullen evaluated test results and commented, "At the foundation of the AOS Filter is its efficiency in generating a highly oxidative state. Extremely high levels of performance [disinfection] were achieved during testing and we are excited to expand the work with BioLargo to other applications targeting food safety concerns." The tests demonstrated unprecedented effectiveness in destroying highly concentrated contaminants in sample water, including Listeria and Salmonella. Test results at the University of Alberta demonstrated that the AOS Filter killed 10,000,000 salmonella cells in 2 minutes compared to the industry standard chlorine dioxide that killed 100,000 cells in 60 minutes. That is 100 times more effective and 30 times faster than the industry standard methodology. And the energy requirements are negligible.
  
  The AOS Filter generates such a highly oxidative state that no living organism can survive as it passes through the AOS Filter. This means that if the AOS Filter is placed immediately at the input of a reverse osmosis filter and delivers clean water that it will greatly reduce the growth of biofilm on the reverse osmosis filter's membrane surfaces. In theory, the AOS Filter could also be built directly into the reverse osmosis membrane filter cartridges with the same result of disrupting the buildup of biofilms. Since energy costs are the highest operating costs, the AOS Filter would result in meaningful energy savings and lower filter replacement costs because the filter membranes will experience far less biofilm accumulation and filter life will be extended.
  
  Since the AOS Filter can increase filter life, it should cause the big filter manufacturers such as Dow (NYSE:DOW) and GE (NYSE:GE) to consider how they can profit from this opportunity by increasing market share with a superior cost saving product for its customers. Savings from energy, pre-treatment and filter replacement would be very attractive to the actual SWRO plant owners such as Veolia (OTCPK:VEOEY) and American Water Works (NYSE:AWK) and large private water companies like Degremont.
  
  The AOS Filter may also be an outstanding opportunity RO filter manufacturers looking for the competitive edge to conquer the RO filter market. In this case, the early adopter could capture the competitive advantage.
  
  BioLargo's business model is to license its technology and while no dates for commercial availability have been publicized, development of the AOS Filter appears close as the company prepares for its first commercial trials and is actively courting industry partnerships. The AOS Filter is a simple and inexpensive device that is undergoing refinement and design enhancements at the University of Alberta with financial assistance from both the federal and provincial governments. Once word gets out about the AOS Filter, BioLargo is expected to become a focus of the water industry for strategic alliances and licensing. The AOS Filter's extremely high oxidation potential makes it an important tool for any segment of the water industry, including the reverse osmosis market.
  
  Current Reverse Osmosis Filters Have High Energy Requirements
  Even without biofilm clogging reverse osmosis filters require large amounts of energy to force the saltwater through the nanometer-sized holes in the membranes. What if there was a filter where the membrane was so thin that less energy would be required to push the saltwater through a shorter distance determined by membrane thickness? Energy costs could be reduced proportionately to the reduction of the force required to push the saltwater through a thinner membrane.
  
  Lockheed's Graphene "Perforene" Filter
  Lockheed Martin's Perforene membrane features holes one billionth of a meter or less in a graphene sheet that trap sodium, chlorine and other ions from seawater
  
  The Perforene graphene filter allows saltwater to pass through an extremely thin membrane at relatively high speeds with very little energy. Graphene is 500 times thinner than any filters available today. The graphene filters, being much thinner, yet very strong, can sustain a much higher flow and use much less energy. Computer models indicate that the Graphene Perforene filter can use up to 100 times less energy than current filters.
  
  Lockheed is still refining the process of determining production methods to make the nano-sized holes in the graphene. It is not yet known when the filters will be commercially available but it may still be a few years out. Like BioLargo, Lockheed has expressed a desire to partner with a large water industry company.
  
  Greater Cost Efficiency In The Shortest Time
  The Graphene Perforene Filter works well in theory and in computer models but still has a great deal of development work to be done. It may be 5 years away from commercialization, whereas the AOS Filter is already built and in testing and pilot studies at the University of Alberta for a commercial unit. The current challenges with the Graphene Filter are the expected high cost to manufacture the one-atom thick graphene sheets and developing the procedures to make the nano-sized holes in the graphene. Unlike the Graphene Filter, the AOS Filter is inexpensive because it uses the existing technology of exfoliated carbon that is heated and blown up like a popcorn kernel that results in one tiny gram of carbon yielding a surface area the size of an entire football filed. One gram of carbon easily fits into one little teaspoon. A football field is 57,600 square feet.
  
  The Graphene Filter may have a greater impact on reducing energy costs, but the AOS Filter can also dramatically lower energy costs and appears to be years ahead and available far sooner. The AOS Filter can soon be put to work disrupting biofilm on RO filters and saving energy in current SWRO plants and can later be adapted to protect the Graphene Filters from biofouling. Once the Graphene Perforene Filter is available, the AOS Filter can save even more energy and costly filter replacements; it can save with fewer down times to maintain or replace filters; and it can save with less pre-treatment.
  
  By using BioLargo's AOS Filter in combination with Lockheed's Perforene Graphene Filter, desalinated water costs could be slashed to a price that could make drinkable water abundant across the globe. Since the Graphene Perforene Filter appears to be a several years behind the AOS Filter, the AOS Filter could first be used with current reverse osmosis filters and could still dramatically lower the cost of desalination. Combined, two technologies like these could have an enormous positive impact on increasing drinkable water to a world in need in the very near future.
  
  BioLargo is a microcap company that is rich in valuable technology and like most microcaps is frequently seeking capital to drive them forward. BioLargo is considered a high-risk investment with a high-reward potential while Lockheed is a financially well-healed big cap considered a low-risk, low-return investment. Success of the Graphene Perforene Filter will constitute a small fraction of Lockheed's business and consequently should have little impact on the value of their shares whereas the AOS Filter could be a huge part of BioLargo's future and as such is expected to have a very large impact on share value if they are successful.
  
  One thing is clear . . . any company that can solve the energy and the biofilm problems associated with desalination will have a big financial future.
  
  
  
  

  Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
  
  The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
  
  

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