Session 3B - Paul Short
•
0 likes•163 views
The document discusses opportunities in investing in water technologies and services. It notes that water scarcity is a growing global problem, with 1/3 of the world's population expected to face inadequate drinking water. Water demand is rising faster than population growth while supplies are under threat. This creates opportunities for technologies that recycle and treat water, as well as for water companies whose valuations are expected to rise strongly. The water treatment equipment market is also projected to experience significant growth.
Report
Share
Session 3B - Paul Short
- 1. Investing in Water October 2011 © 2011, Copyright Verge II L.P. Presented by: Paul Short Venture Partner
- 2. Disclaimers The opinions in this presentation are those of Paul Short and do not necessarily reflect those of anyone else, including the Verge Fund. Do your own homework before you invest in anything. If you invest on the basis of this presentation, you are an idiot. October 2011 © 2011, Copyright Verge II L.P.
- 3. Water: The big picture October 2011 © 2011, Copyright Verge II L.P.
- 4. The Word’s Water October 2011 © 2011, Copyright Verge II L.P. 0.76% of all water is usable
- 5. Macro Trends World-Wide Water Stress Infrastructure needs $300B - $1T in the US US Water use is growing twice as fast as population. 1/3 of the world’s population is expected to have inadequate drinking water in the near future Groundwater is being depleted faster than it is replenished – e.g. the Ogallala has 20-30 years left. 20% of irrigated lands have increased salinity 45% of lakes and streams are polluted October 2011 © 2011, Copyright Verge II L.P.
- 6. Macro Trends Regulation is increasing Water costs are rising 27% US, 45% Australia, 58% Canada, 43% UK Not reflected in prices Climate change is changing the situation – worse in some areas, better in others October 2011 © 2011, Copyright Verge II L.P.
- 7. Energy-Water Nexus Energy use expected to increase 2X in 20 years Water use for Energy: 50-200 gallons per KWh 170-1850 gallons/barrel of oil 4-1700 gallons of water/gallon of ethanol Up to 2,000,000 gallons of water for a natural gas well. Energy for Water Use: Water treatment and pumping consume 4% of U.S. electricity In California, water consumes 19% of the state's electricity and 31% of its natural gas 50%-80% of desalination costs are for energy October 2011 © 2011, Copyright Verge II L.P.
- 8. How Water is Used October 2011 © 2011, Copyright Verge II L.P.
- 9. Is Water the new oil? October 2011 © 2011, Copyright Verge II L.P.
- 10. Water is Unique OIL Oil has substitutes – Natural gas, solar, etc. Water Water is unique in that it has no substitute for the vast majority of uses October 2011 © 2011, Copyright Verge II L.P.
- 11. Water Is Forever OIL When a gallon of oil is consumed, it’s gone WATER When a gallon of water is consumed, it’s still there Water is constantly recycled through the evaporation/condensation/rain process October 2011 © 2011, Copyright Verge II L.P.
- 12. Water is Local OIL Oil found in North Dakota DOES mean additional oil supplies in El Paso If you save oil, someone in Africa can get to it WATER A flood in North Dakota DOES NOT mean additional water supplies for El Paso If you save water, Africa sees no benefit October 2011 © 2011, Copyright Verge II L.P.
- 13. Water Use is Not Cyclical OIL Oil demand drops when the economy is bad WATER The demand for water is largely impervious to the economy’s ups and downs. October 2011 © 2011, Copyright Verge II L.P.
- 14. Water is Priced Inefficiently OIL Oil is largely priced by the market Prices vary due to supply and demand THEREFORE: When the price goes up, demand goes down Oil seeks the most economically efficient use WATER There is no market pricing – it is almost completely subsidized Prices are set politically – and low THEREFORE: There is no incentive to conserve Usage is much greater And it is used absurdly – Drinking water in toilets, lawns in El Paso October 2011 © 2011, Copyright Verge II L.P.
- 15. Is Water the New Oil? NO! March 25 2011 © 2011, Copyright Verge II L.P. But there are still huge opportunities
- 16. Implications October 2011 © 2011, Copyright Verge II L.P.
- 17. Prices WILL Rise Directly Rates will go up Large usage will be penalized Indirectly Regulation will increase Low-flow in households Reduced inflow and effluent in industry Rationing will be more common Taxes will increase October 2011 © 2011, Copyright Verge II L.P.
- 18. Industry Will Take The Brunt Households will be protected Agriculture will see increased discharge regulation, but little direct cost Industry – especially energy – will pay most of the increase Increased Water Rates Rationing Increased Discharge Regulation – fewer contaminants and less volume allowed Increased tax rates October 2011 © 2011, Copyright Verge II L.P.
- 19. Water Recycling Will Increase October 2011 © 2011, Copyright Verge II L.P.
- 20. The Treatment Equipment Market Will Grow October 2011 © 2011, Copyright Verge II L.P. Treatment Equipment Market $M Expected CAGR 2010-2016 Primary Intakes/Screens $2,900 7% Pre-Treatment Equipment $10,900 5% Ultra & micro filtration membranes $700 18% RO & Nanofiltration $600 18% Membrane Bioreactors $100 17% Ion Exchange $300 15% Disinfection $3,000 6% Zero Liquid Discharge $400 26% Sludge Management $7,100 9% Media Filtration $3,700 6% Monitoring control/chemical feed $2,300 7% Specialized Systems $2,600 2% Industrial Treatment Services $2,900 5% Desalination Plants $11,000 9%
- 21. Water Company Valuations Will Be Strong October 2011 © 2011, Copyright Verge II L.P.
- 22. Opportunities for Startups Industrial Solutions Agricultural Solutions Recycling Technologies Membranes Desalination Something new? Non-Polluting Treatment E.G. UV, Ozone Zero Liquid Discharge Ion Exchange Point of Use October 2011 © 2011, Copyright Verge II L.P.
- 23. Thank You Paul Short Venture Partner The Verge Fund [email_address] October 2011 © 2011, Copyright Verge II L.P.