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Do new water technologies stand a chance?

With stingy, risk-averse customers, it's tough to commercialize new water purification technologies. Start-ups are focusing on a niche to get a foothold.

BOSTON--It's a business with extremely risk-averse customers that have little money spend. On the plus side, it's vital to life and a strained natural resource.

Water purification and treatment techniques continue to attract bright ideas from researchers and entrepreneurs, but getting beyond a nifty prototype is challenge they all face, said a panel here at the TechConnect World conference on clean tech and nanotechnology.

A prototype of an electrochemical desasalination system being developed by GE researchers. Martin LaMonica/CNET

Many of the municipal water treatment and distribution systems in the U.S. are in desperate need of repair. Other large potential customers for more energy-efficient or effective water treatment facilities are corporations, such as chip manufacturers or bottlers, and power plant operators. In developing countries, water quality and availability are pressing health and social problems.

Yet even with the big global trends pointing to limits on water, new technologies are very difficult to commercialize because consumers expect to pay a low price and because of the nature of the business. Municipalities and businesses that buy water-treatment equipment tend to work with a handful of large incumbent providers, making it difficult for new methods to take root.

"We have been pretty good at coming up with new processes, but I think we are at the point where we really need to take a big step forward. We need new materials--new nanomaterials and fibers," said Finn Nielsen, the president of Veolia Water Systems North America. "Unfortunately, we are in a market that is very difficult. Customers are risk-averse, they want guarantees, they want demonstrations on their water, not water similar to it."

Without advances in water treatment, prices are poised to skyrocket, said Nielsen. There are start-ups with new promising technologies, but the only way they will get to market is to partner with a larger company. "Don't try to do it by yourself--it's not going to happen," he said.

Veolia created an "innovation accelerator" program within the company in which it will evaluate and respond to invitations to partner with water technology start-ups within several weeks. It's designed to shortcut the slow decision making of big companies and create a route to market.

One result is a deal between Veolia and El Segundo, Calif.-based company NanoH20, which has developed a more efficient water purification method. Rather than invest money, Veolia has committed to building a full-scale pilot plant to demonstrate the effectiveness of the technology.

"If we had bought the company, we would have probably killed it because we would not have had the manufacturing volume needed to bring the cost down," Nielsen said.

Better membranes for big spenders
In addition to partnering, finding customers willing to pay more for water is another way to go beyond the lab and into real-world use. A prime candidate is the military and corporations, such as power producers, drillers, and other businesses that rely on water for their operations, panelists said.

The U.S. military spends more than $5 a gallon to bring water to operations when purification and transport are figured in, according to Olgica Bakajin, the founder and CEO of start-up Porifera. A year of purifying and transporting water to Iraq costs about $400 million a year, with 40 percent of trucks dedicated to water, she added.

A portable desalination system developed by NanoH20 being tested by the Navy. NanoH20

Porfiera was founded by licensing materials from the Lawrence Livermore National Laboratory, which significantly lowers the amount of energy used for water purification compared to traditional forward osmosis membranes, Bakajin said. It's planning on developing a prototype of a portable purification system this year.

The company's commercialization strategy is to get funding from government sources--it raised $12 million in total from the Departments of Energy and Defense--and partnered with them as potential customers.

"The simple solution is to go where water is expensive, where people are willing to pay a lot for it," she said. "Government funding focuses us and gives us access to people who have advanced technologies, which we hope will help us put together a very efficient system."

Related links
• On World Water Day, a look at water-energy tech
• IBM plunges into the 'smart grid for water'
• Is it time to talk about 'peak water'?

Oasys Water is another start-up that's going after big wallets to finds its niche. It has designed a system that can operate using the waste heat from an industrial process, such as power generation, to operate its purification system, explained CEO Aaron Mandell. It's designed around a working fluid that "squeezes" water from a source through a membrane.

It can work with different sources of heat, such as natural gas or liquid fuels, but most importantly, Mandell projects that it can lower the equipment cost by 50 percent compared to traditional reverse-osmosis systems.

The company's biggest challenge is getting its product to market in a time frame that acceptable to the "short attention span" of its venture capital investors, he said. That's why the company is going after a small set of specialized customers, such as industrial users and power plant operators.

"The reason why we are excited to be doing something in the water space is because not much has changed in so long," Mandell said. "But water availability is constraining global growth."