The long term quick fix
, October 5th, 2010
Rental provider RSS is branching out into water treatment. Brian Grigg, general manager at the newly created water division, explains the company’s growth strategy.
For companies geared towards growth, one thing quickly leads to the next. Rental Solutions & Services, RSS in short, started business in the region by renting out generators and temporary cooling installations, and soon saw the potential for providing rented desalination plants.
“Many of our power clients said they had a need for temporary water facilities,” says Brian Grigg, general manager at RSS Water, perhaps unsurprisingly: “The water business is very buoyant in the MENA region.”
RSS is a subsidiary of International Tubular Services (ITS), a company with a background in supplying the petrochemical industry, and thus no stranger to the region.
ITS decided to expand its portfolio by creating RSS Water, a new division set up to rent out containerised membrane-based
desalination and wastewater treatment plants.
RSS Water became operational this month. “We have taken a building block approach, in as much as we can take one or a number of containers, and actually design the plants to tailor it to customer requirements,” explains Grigg. “This could be for anything from a thousand to 100,000 people.”
The installations can desalinate both seawater and brackish water. Prospective clients include developers needing to provide water to labour camps, oil and gas operators, who are attracted to temporary solutions due to the temporary nature of their projects, as well as communities and residential complexes not attached to the water distribution infrastructure.
Unlike construction sites and oil and gas projects, communities tend to be around for a while. And indeed, in terms of the length of the time a RSS plant might be put to use by a specific customer, the rental tag might be misleading.
Rental periods will range from six months to 10 years, according to Griggs, but the company also offers a built own operate and transfer (BOOT) scheme, allowing the customer to purchase the plants at the end of the rental period.
The advantage of this approach is that customers have smaller upfront costs. “The big opportunity for clients in a rental system is that they can spread their costs,” says Grigg. “You’re not paying for the capex up front, you’re paying for it over a number of years. In fact, at the end of the longer rentals, they will obtain the plant for basically nothing.”
Grigg is aware that he is entering a very competitive market. Reverse osmosis applications (RO), which use membranes rather than thermal-based methods to desalinate, are operated widely in the region.
“In this region, it’s a very competitive environment for reverse osmosis. You have to remember that 40 percent of the world’s RO systems are in use in the UAE and Saudi Arabia. So clearly that has been the focus for a lot of companies.”
But it is not only the traditional markets that are experiencing strong growth, says Griggs. He sees demand is increasingly also coming from Oman, Qatar, Bahrain, Kuwait and North Africa.
There are several drivers to this growth. Dwindling water supplies, due to a changing climate, is one. Growing population centres outside of water catchment areas is another.
“To a certain extent, there has been a shift of population away from the major municipal water areas, such as capital cities, and the growth of new population centres throughout those regions,” asserts Grigg. In addition, water consumption per capita is on the rise, as populations in developing countries slowly adopt more spendthrift ways.
Importantly, the cost of RO applications is coming down, making smaller scale desalination a more attractive option. “The cost of a cubic meter is now becoming favourable for decision makers to say that this is the way to go.”
He lists a number of reasons for this. Membrane manufactures are slashing prices in a bid to win market share, while the prospect of Chinese products coming to the market provides producers with further incentive to offer competitive prices. Pressure vessels, once produced almost exclusively in Europe and the US, are now predominantly made in India.
Cheaper production has been enabled by increasing standardisation. “There has been some tandardisation of membranes, of the pressure vessels and of the hardware in particular, and that has meant that people have
looked at ways of producing it cheaper. And lot of it has been subcontracted to Asian countries,” summarises Grigg.
An important aspect of RSS future in the water sector is the treatment of sewage effluent. Municipalities and developers alike are waking up to the possibility of using treated sewage effluent (TSE) for irrigation or other non consumptive purposes. In a region where water is scarce, and especially in areas which are not connected to transmission systems, treated wastewater is a real money saver.
Abu Dhabi is currently developing the capacity to reuse 100 percent of its wastewater for irrigation purposes. The success of such schemes in other parts of the world gives an indication of the potential for TSE use. In Los Angeles, for example, the demand for TSE from local authorities already exceeds supply, points out the general manager.
“TSE is a very important part of our strategy,” says Grigg. “We are talking to a number of clients about taking their otherwise discarded sewage effluent, and running it through a membrane plant for irrigation applications. We are talking to people in Dubai about that right now.”
Five year plan
RSS Water aims to follow up on the success of the power and cooling divisions. But growth is not defined by sales volume alone. The company is keen to expand their portfolio to include larger scale plants, so being able to provide whole communities with potable water.
“As our business grows, so will our capacity to install, operate and maintain large plants. We’re not going in at the deep end and taking on the world’s largest players. But we are developing our capacity to then take that as a package to much larger plants in the future.”
At the moment, the company target interest is for 500 cubic metres to 100,000 cubic meters of desalinated water per day, says the RSS man. But to serve larger communities, containerised plants
need to be superseded by building-based plants.
“When you get to much larger plants it makes good economic sense to build what are called skid-based plants, where you design und build the skids for those specific sites, and you put a number of them in a building,” explains Grigg.
“We will be doing skid plants in two years, but will be doing much larger community plants within five years,” he says. “I see that as a natural progression. If you can do containerised plants very well, then you have the expertise and the infrastructure in house to extend that treatment capacity.”