Sustainability Atlas
Adaptation & Resilience·14 min read··...

Interview: the builder's playbook for Water security & desalination — hard-earned lessons

A practitioner conversation: what surprised them, what failed, and what they'd do differently. Focus on attack paths, detection/response, and how to harden real-world systems.

Four billion people face severe water scarcity for at least one month every year, and 25 countries housing one-quarter of the world's population now experience "extremely high" water stress—using over 80% of their annual renewable freshwater supply. Yet global desalination capacity has reached 105 million cubic metres per day across 16,000 plants in 177 countries, with the market projected to grow from $25.7 billion in 2024 to nearly $50 billion by 2032. We spoke with project developers, engineers, and water infrastructure investors to understand what separates successful deployments from costly failures.

The technology for producing freshwater from seawater has matured dramatically. Reverse osmosis now achieves energy consumption as low as 2.9 kWh/m³—a 35% improvement over the past decade. Dubai's Hassyan plant, coming online in 2026, will produce water at $0.306/m³, the lowest tariff globally. But practitioners warn that technology is the easy part. The hard lessons lie in site selection, grid integration, brine management, and financing structures that too often derail otherwise promising projects.

Why It Matters

The water crisis is accelerating faster than infrastructure can respond. By 2050, an additional one billion people will face extremely high water stress, and 700 million could be displaced by water scarcity by 2030 alone. For investors and developers in the UK and broader European markets, desalination represents both an adaptation necessity and a significant commercial opportunity.

The global desalination technologies market is growing at 8.68% CAGR, with the Middle East and Africa commanding 60% of global capacity. But the fastest growth is emerging in water-stressed regions beyond the traditional Gulf markets: India, North Africa, Southeast Asia, and increasingly the Mediterranean basin, which expanded desalination capacity by 447% over the past decade.

For infrastructure investors, the asset class offers attractive characteristics: long-term offtake agreements (typically 20-25 years), essential service provision, and technology that has matured beyond early-stage risk. However, practitioners emphasise that the sector's apparent stability masks significant execution complexity that has destroyed value in numerous projects.

Key Concepts

On Energy Economics and Grid Integration

"Every desalination project lives or dies on its energy cost structure. The water is free—the ocean is right there. What you're really building is an energy conversion facility that happens to produce freshwater," explains a senior project director who has developed plants across the Middle East and North Africa.

Reverse osmosis dominates with approximately 70% of global capacity, requiring 3-4 kWh per cubic metre of freshwater produced. Thermal processes (multi-effect distillation, multi-stage flash) still account for 25% of capacity but demand 5-15 kWh/m³. The energy intensity means that electricity cost variations of even $0.01/kWh can swing project economics from viable to uneconomic.

"We learned this the hard way in a Gulf project where the host government restructured power tariffs mid-construction. Our financial model assumed $0.03/kWh; the new tariff came in at $0.045. That 50% increase in energy cost required complete renegotiation of the water purchase agreement. Six months of delays and significant legal costs," recalls a development finance specialist.

The solution, practitioners consistently emphasise, is renewable integration from project inception. IDE Technologies' Sorek 2 plant in Israel—the world's largest seawater desalination facility at 670,000 m³/day—achieves approximately 10% energy reduction through direct steam-drive pumps and carbon capture integration. Veolia's Hassyan project in Dubai will be the world's largest solar-powered desalination plant, serving two million people while achieving record-low energy consumption.

On Brine Management and Environmental Compliance

"Brine discharge is where projects get killed before they start. It's not a technical problem—we know how to manage concentrated seawater. It's a permitting and stakeholder problem that developers consistently underestimate," notes an environmental engineer who has consulted on Mediterranean desalination projects.

For every litre of freshwater produced, desalination creates 1.5 litres of brine with salinity roughly twice that of seawater. Improper discharge damages marine ecosystems, particularly in enclosed or semi-enclosed seas. The Mediterranean, already subject to increasing salinity stress from reduced river inflows, faces particular sensitivity.

Successful projects invest heavily in diffuser systems that achieve rapid dilution, environmental monitoring programmes, and pre-construction stakeholder engagement. IDE Technologies' Sorek 2 earned the International Desalination and Reuse Association's Sustainability Award for achieving the lowest carbon footprint in the industry through integrated environmental design.

"The projects that fail on permitting are always the ones that treat environmental compliance as a box-ticking exercise rather than a design constraint," observes a water policy specialist. "The successful developers start with the discharge solution and work backwards to plant design."

On Financing Structures and Offtake Risk

Desalination projects typically require $200-500 million in capital for municipal-scale facilities. The financing structures that have emerged—build-own-operate-transfer (BOOT), build-operate-transfer (BOT), and independent water producer (IWP) models—place different risks on different parties.

"The single biggest lesson from my career is: never underestimate sovereign credit risk on long-term offtake agreements. We had a 25-year take-or-pay contract with a state water authority. The project was technically flawless, financially sound, producing water at specification. Then the government changed, the water authority was restructured, and suddenly our counterparty no longer existed in its original form," shares a project finance veteran.

ACWA Power's dominant position in Gulf desalination—winning two-thirds of all GCC projects in 2024 with 1.3 million m³/day of new capacity—reflects their deep understanding of sovereign risk mitigation. Their acquisition of Kuwaiti and Bahraini holdings from Engie for $700 million demonstrates confidence in regional offtake creditworthiness that less experienced developers cannot replicate.

What's Working

IDE Technologies' Sorek 2: Steam-Driven Innovation

Israel's largest desalination plant began operations in 2025, producing 670,000 m³/day—enough for 200 million cubic metres annually. The facility introduced the world's first steam-driven seawater reverse osmosis system, eliminating the traditional electric motor-pump configuration that dominates the industry.

Direct steam-drive pumps achieve approximately 10% energy reduction compared to equivalent conventional facilities. The project earned shortlisting for the 2025 Global Water Award (Desalination Plant of the Year) and demonstrates that mature technology categories can still yield meaningful efficiency improvements through system-level innovation.

Veolia-ACWA Power Hassyan Partnership

In May 2024, Veolia won a $320 million contract for water technology deployment at Dubai's Hassyan plant—the world's most energy-efficient desalination facility. The project achieves 2.9 kWh/m³ energy consumption (exceptional for large-scale RO), produces 818,000 m³/day, and will be entirely solar-powered.

The partnership demonstrates how established players can combine technology leadership (Veolia) with regional development expertise and sovereign relationships (ACWA Power) to win and execute mega-projects. The plant will serve two million people and come online in 2026-2027.

Algeria's Systematic Capacity Build-Out

Algeria is on track to reach 3.7 million m³/day of desalination capacity by end of 2024—40% of national water demand—with targets of 5.6 million m³/day by 2030. The systematic approach combines multiple medium-scale plants rather than single mega-projects, distributing risk and enabling parallel construction timelines.

"Algeria demonstrates what happens when a government commits to desalination as core infrastructure rather than emergency response. The programmatic approach reduces per-project development costs and builds domestic expertise," notes a multilateral development bank water specialist.

What's Not Working

Grid Infrastructure Gaps

Multiple projects have stalled or underperformed because grid connections could not deliver the power reliability that reverse osmosis membranes require. RO systems are sensitive to power quality—voltage fluctuations and frequency instability damage membranes and reduce their operational lifespan.

"We commissioned a plant in a developing market where the grid was supposed to be 'adequate.' Within six months, we'd replaced membranes worth $2 million due to power quality issues. The cost of installing our own power conditioning equipment after the fact exceeded what it would have cost to integrate it from day one," recalls an operations director.

Undercapitalised Brine Solutions

Projects that defer brine management solutions to operational phases consistently face problems. Zero liquid discharge (ZLD) systems that convert brine into useful chemicals exist—Saudi startup Qalzam specialises in this approach—but the capital costs are substantial.

"The temptation is always to assume you'll solve brine later, once cash flow is established. But retrofitting ZLD is vastly more expensive than integrating it into original design. And regulatory tolerance for 'we'll figure it out' is declining globally," warns an environmental compliance specialist.

Subsidy Dependence Without Transition Planning

Water pricing in many markets does not reflect true production costs. When desalinated water costs $0.50-1.50/m³ to produce but is sold at $0.10-0.30/m³, the gap requires perpetual government subsidy. Projects designed without credible subsidy transition pathways face revenue risk when fiscal conditions change.

"We've seen projects go from profitable to insolvent when subsidy regimes were reformed. The developers who survive build tariff escalation mechanisms into their offtake agreements from the start—even if it means accepting lower initial returns," observes a development finance specialist.

Key Players

Established Leaders

  • Veolia Water Technologies — Global leader in water treatment, ranked #1 in GWI desalination supplier rankings. Won 50% of recent GCC independent water projects totalling 1.8 million m³/day in 2024. Achieved 35% reduction in RO energy consumption over past decade.

  • IDE Technologies — Israeli company operating the world's largest seawater RO plants. Sorek 2 (670,000 m³/day) introduced steam-driven SWRO technology. Expanding into India with Mumbai (200 MLD) and Tamil Nadu contracts secured in 2024-2025.

  • ACWA Power — Saudi developer with 8.35 million m³/day portfolio. Won two-thirds of all GCC desalination projects in 2024. Acquired $700M in Kuwait and Bahrain assets from Engie.

  • SUEZ — French multinational with significant desalination presence across Mediterranean and Middle East. Integrated water cycle management from treatment to distribution.

Emerging Startups

  • Flocean (Norway) — $22.5M Series A (2025) for subsea desalination at 400-600m depth using natural ocean pressure. Claims 50% energy reduction, 7x lower capex. Xylem as strategic investor; commercial plant launching 2026.

  • OceanWell (California, USA) — Deep-sea desalination technology at 400m depth. Kubota invested November 2024. Leverages natural pressure for RO filtration.

  • Oneka Technologies (Canada) — Wave-powered autonomous floating desalination. Zero emissions, grid-independent, requires no land. Proven technology with multiple pilot deployments.

  • Desolenator — Solar-powered desalination combining sustainable energy with modular engineering for remote and underserved communities.

Key Investors & Funders

  • Xylem — Strategic investments in next-generation desalination (Flocean Series A).

  • Kubota Corporation — Japanese industrial investing in deep-sea desalination technology (OceanWell).

  • European Investment Bank — Major funder of Mediterranean and African desalination projects through climate adaptation lending.

  • Islamic Development Bank — Significant desalination finance across Middle East, North Africa, and Southeast Asia.

  • World Bank Group — Provides blended finance for water infrastructure in developing markets, including desalination technical assistance.

Action Checklist

  1. Conduct comprehensive energy cost sensitivity analysis: Model project economics across ±50% electricity price ranges. Identify break-even tariffs and map against historical energy price volatility in target markets.

  2. Design brine management from project inception: Integrate diffuser systems, environmental monitoring, and potential ZLD pathways into initial engineering. Budget 15-20% contingency for environmental compliance.

  3. Stress-test offtake counterparty creditworthiness: Evaluate sovereign credit ratings, water authority financial health, and political transition risk. Structure contracts with escalation mechanisms tied to verifiable indices.

  4. Specify grid power quality requirements: Include power conditioning equipment in original specifications. Budget for backup generation or battery storage in markets with unreliable grids.

  5. Engage stakeholders before site selection: Conduct pre-development community consultation and environmental baseline studies. Opposition after site commitment creates costly delays.

  6. Evaluate renewable integration economics: Solar and wind co-location can hedge energy cost risk. Model hybrid configurations against grid-only and captive power alternatives.

  7. Build regulatory relationship capital: Engage water and environmental regulators early. Demonstrated compliance track record in one jurisdiction creates credibility for expansion.

  8. Monitor technology cost trajectories: Track membrane pricing, energy recovery device efficiency, and emerging alternatives (subsea desalination, wave power). Position for technology transitions rather than lock-in.

FAQ

Q: What is the realistic cost range for desalinated water in 2025, and how does this compare to conventional freshwater sources? A: Large-scale seawater reverse osmosis plants now achieve water costs of $0.50-1.50/m³, with record-low tariffs like Dubai's Hassyan at $0.306/m³. This compares to conventional surface water treatment at $0.10-0.30/m³ and groundwater at $0.05-0.15/m³. However, in water-scarce regions where conventional sources are depleted or require long-distance conveyance, desalination becomes cost-competitive or essential regardless of per-unit economics. The key comparison is marginal cost of additional supply, not average cost of existing sources.

Q: How should investors evaluate technology risk between established RO and emerging alternatives like subsea desalination? A: Established reverse osmosis with modern energy recovery devices represents proven technology with well-understood performance curves. Energy consumption of 2.9-4 kWh/m³ is achievable at scale with major suppliers. Emerging alternatives like Flocean's subsea approach (claiming 50% energy reduction) offer potentially transformative economics but carry first-of-kind project risk. For core portfolio allocation, established technology with strong engineering partners (Veolia, IDE) minimises execution risk. For venture allocation, subsea and wave-powered systems offer asymmetric upside if technical claims prove out at commercial scale.

Q: What are the critical success factors for desalination projects in the UK and European context specifically? A: European projects face distinct challenges compared to Gulf markets: higher energy costs, more stringent environmental permitting, and less established regulatory frameworks for desalination-specific offtake agreements. Critical success factors include: (1) renewable integration to manage energy cost and carbon compliance; (2) demonstrated Mediterranean discharge precedent for environmental approval; (3) water utility partnerships rather than merchant models; (4) recognition that EU Water Framework Directive implications for coastal discharge require early regulatory engagement. The Mediterranean's 447% capacity expansion over the past decade provides directly applicable precedent for southern European and potentially UK coastal projects.

Q: How does desalination integrate with broader water security strategies including demand management and water reuse? A: Desalination should be positioned as the supply-side anchor of integrated water resource management, not a standalone solution. Singapore's "Four National Taps" approach—catchment water, imported water, desalination (NEWater), and water reuse—demonstrates best practice. Desalination provides climate-independent baseload supply, while demand management (pricing, efficiency standards) and water reuse (treated wastewater for industrial and non-potable uses) reduce the volume of expensive desalinated water required. Projects that integrate with water reuse infrastructure often achieve better overall system economics than standalone desalination maximisation.

Q: What is the typical project development timeline and what are the main delay risks? A: Large-scale desalination projects typically require 4-6 years from initial feasibility to commercial operation: 12-18 months for feasibility and permitting, 6-12 months for financing, and 24-36 months for construction and commissioning. Main delay risks include: environmental permit challenges (particularly brine discharge), grid connection delays, land acquisition complications, financing close complications (especially for first-of-kind structures in new markets), and membrane supply chain disruptions. Projects that underestimate permitting timelines by 12+ months are common, and this delay alone can significantly impact project returns through extended development cost capitalisation.

Sources

The water security challenge represents both an existential risk and a generational infrastructure opportunity. Desalination capacity will need to expand dramatically to meet the needs of the additional one billion people facing extreme water stress by 2050. The technology has matured, the financing structures are proven, and the offtake demand is essentially unlimited. What separates successful projects from failures is execution discipline: rigorous energy economics, integrated environmental design, robust counterparty structures, and stakeholder management that anticipates opposition before it materialises. For investors prepared to apply these lessons, the $50 billion desalination market offers attractive risk-adjusted returns alongside meaningful climate adaptation impact.

Topics

watersecuritynature-based solutionspublic healthflood risktraceabilitydrought

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