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

Trend analysis: Water security & desalination — where the value pools are (and who captures them)

Signals to watch, value pools, and how the landscape may shift over the next 12–24 months. Focus on attack paths, detection/response, and how to harden real-world systems.

By 2025, the global desalination market crossed $20 billion in annual value, with reverse osmosis technology capturing nearly 79% of new installations and energy consumption dropping to record lows of 1.794 kWh/m³ at cutting-edge facilities like the DESALRO 2.0 plant in the Canary Islands. Meanwhile, 1.8 billion people now face absolute water scarcity, and the International Water Management Institute reports that 1.2 billion lack access to clean drinking water entirely. These converging forces—technological acceleration and escalating climate-driven demand—are reshaping where value accumulates in water infrastructure and who is positioned to capture it.

The water security landscape is experiencing a fundamental reordering. Established utilities and engineering conglomerates that dominated the thermal desalination era are now competing against venture-backed startups deploying deep-sea reverse osmosis, AI-optimized membrane systems, and modular solar-powered units. Investment in water technology reached $768 million in 2024, nearly double the 2018–2022 average, yet water tech still represents less than 2% of total climate technology investment—a significant gap given that urban water demand is projected to rise 80% by 2050.

Why It Matters

Water security sits at the intersection of climate adaptation, industrial competitiveness, and geopolitical stability. Unlike energy transitions that can proceed incrementally, water crises manifest as acute shocks: agricultural collapse, industrial shutdowns, and mass displacement. The Middle East and North Africa region, which already hosts 49–53% of global desalination capacity, illustrates both the opportunity and the vulnerability. Nations like Saudi Arabia, the UAE, Morocco, and Egypt are committing billions to expand capacity, with Morocco targeting 1.4 billion m³/year by 2030 and Egypt commissioning the world's largest reverse osmosis station in 2024.

The economics have shifted decisively in favor of membrane technology over thermal methods. Reverse osmosis now delivers production costs below $0.50/m³ in regions with long-term offtake agreements, while energy consumption has fallen 85% since 1970. This cost trajectory unlocks previously uneconomical applications: brackish water treatment for agriculture, industrial zero-liquid discharge systems, and decentralized units for climate-vulnerable communities.

For investors and operators, the value pools are concentrating in three areas: (1) technology providers commanding premium margins on advanced membranes and energy recovery devices; (2) project developers securing 25-year sovereign-backed concessions; and (3) emerging startups capturing niche segments like subsea desalination, wave-powered systems, and AI-driven operations management. Understanding this landscape is essential for capital allocation, strategic partnerships, and policy design.

Key Concepts

Reverse Osmosis (RO) Dominance: Membrane-based reverse osmosis has displaced thermal methods (Multi-Stage Flash, Multi-Effect Distillation) as the technology of choice. RO now represents 55–79% of new installations globally, with membrane technology growing at a 10.7% CAGR compared to single-digit growth for thermal systems. The shift is driven by energy efficiency—advanced RO plants operate at under 3 kWh/m³, compared to 10–20 kWh/m³ for thermal processes.

Deep-Sea Reverse Osmosis (DSRO): A new generation of startups is deploying desalination pods at depths of 400–600 meters, using natural hydrostatic pressure to reduce energy consumption by 30–50% compared to surface RO. Companies like Flocean (Norway), OceanWell (California), and Waterise are pioneering this approach, with Flocean launching the world's first commercial subsea plant in Mongstad, Norway in 2026.

Value Chain Segmentation: The desalination value chain spans equipment manufacturing (membranes, pumps, energy recovery devices), engineering-procurement-construction (EPC), operations and maintenance (O&M), and project development/ownership. Each segment has distinct margin profiles and competitive dynamics:

SegmentTypical MarginKey PlayersGrowth Driver
Membranes & Equipment20–35%Toray, DuPont, DowTechnology innovation
EPC Contracts8–15%Acciona, Doosan, FisiaCapacity expansion
O&M Services15–25%Veolia, IDE TechnologiesLong-term contracts
Project Development12–20% IRRACWA Power, EngieInfrastructure finance

Municipal vs. Industrial Applications: Municipal water supply accounts for 78% of current demand, driven by 25-year sovereign-backed concessions that provide revenue stability. However, industrial applications are growing faster at 10.4% CAGR, driven by semiconductor manufacturing, power generation, and oil and gas operations requiring high-purity water.

Brine Management and Zero Liquid Discharge (ZLD): Environmental regulations are increasingly requiring brine disposal solutions. Approximately 27% of R&D budgets across the sector now target zero-liquid discharge technologies that recover minerals and salts from brine streams, creating secondary revenue opportunities from lithium, magnesium, and other extracted materials.

What's Working

Mega-Scale SWRO with Renewable Integration: The Hassyan Desalination Plant in the UAE, commissioned by Veolia for $320 million, exemplifies the current best practice. Operating at 818,000 m³/day capacity with world-leading energy efficiency of 2.9 kWh/m³, the solar-powered facility demonstrates that scale and sustainability can converge. Similarly, IDE Technologies' Sorek 2 Be'er Miriam plant in Israel—the world's largest SWRO facility at 670,000 m³/day—achieves a 30% lower carbon footprint than previous-generation plants, saving 120,000 tons of CO₂ annually through patented steam-driven direct-drive technology.

Long-Term Offtake Agreements: Sovereign-backed 25-year concessions continue to attract infrastructure capital. Saudi Arabia's Marafiq issued a $500 million bond in April 2025 specifically for desalination capacity expansion, demonstrating continued debt market appetite for water assets with predictable cash flows.

AI and IoT Integration: Approximately 21% of new plant launches now incorporate remote monitoring and predictive maintenance systems. Veolia's AI-integrated intelligent RO systems and Acciona's LEAD technology platform are reducing operational costs by 10–15% while extending membrane life cycles through optimized cleaning protocols.

Modular and Mobile Systems: Representing 16% of new installations, modular desalination units are enabling rapid deployment for disaster response, remote communities, and mining operations. IDE Technologies' MAX H₂O Desalter achieves up to 98% water recovery in modular configurations, making it viable for inland brackish water applications.

What's Not Working

Thermal Technology Lock-In: Countries and utilities that invested heavily in Multi-Stage Flash and Multi-Effect Distillation during the 2000s face stranded asset risk as RO economics continue to improve. Retrofitting thermal plants with hybrid membrane systems is technically feasible but capital-intensive, creating transition friction.

Brine Disposal at Scale: Despite R&D investment, most large-scale desalination facilities still discharge concentrated brine to marine environments. Regulatory pressure is increasing, but commercial-scale brine valorization remains technically challenging and economically marginal outside specialty applications like lithium extraction.

Interconnection and Grid Constraints: Desalination plants require reliable power—typically 3–5 MW for a 100,000 m³/day facility. In regions with unstable grids or transmission bottlenecks, power availability can constrain capacity utilization. Renewable integration, while desirable, introduces intermittency challenges that require either storage or grid backup.

Permitting and Environmental Opposition: Large-scale desalination projects face lengthening permitting timelines, particularly in developed markets. California's proposed plants have encountered multi-year delays due to environmental impact assessments and community opposition over brine discharge and energy consumption.

Emerging Market Financing Gaps: While infrastructure finance is available for investment-grade sovereign offtakers, many water-stressed developing nations lack the creditworthiness to secure project financing. Blended finance mechanisms and development bank support remain underdeveloped relative to need.

Key Players

Established Leaders

Veolia (France): The global market leader with 18% of installed desalination capacity worldwide. Veolia operates 1.4 million m³/day across 2,300+ sites in 108 countries and has committed to doubling capacity to 2.8 million m³/day by 2030. The company's Water Technologies segment generates €5 billion in annual turnover, supported by proprietary Barrel™ technology and AI-integrated operations platforms.

IDE Technologies (Israel): The specialist in mega-scale seawater reverse osmosis, IDE has delivered landmark projects including Sorek 2 (670,000 m³/day) and is expanding into India, Chile, and Australia. The company won the IDRA 2024 Award for Lowest Carbon Footprint and the Global Water Innovator Award 2024.

ACWA Power (Saudi Arabia): Operating as a project developer and owner-operator rather than pure technology provider, ACWA Power has become the dominant force in Middle East water infrastructure. The company partners with technology providers like Veolia while securing integrated power-plus-water concessions across the Gulf Cooperation Council region.

Doosan Enerbility (South Korea): A major EPC contractor with expertise spanning thermal and membrane technologies, Doosan has delivered large-scale projects across the Middle East and Asia-Pacific.

Acciona (Spain): Growing its share of the EPC market with hybrid solutions and AI/IoT-enabled operations, Acciona is building the Alkimos plant in Australia (300,000 m³/day) using its proprietary LEAD technology.

Emerging Startups

Flocean (Norway): Having raised $31.5 million across two Series A rounds, Flocean is deploying the world's first commercial subsea desalination plant in Mongstad, Norway in 2026. The company's deep-sea reverse osmosis pods operate at 400–600 meters depth, using natural pressure to achieve 30–50% energy savings.

OceanWell (California, USA): Backed by Kubota's November 2024 investment, OceanWell is targeting the California market with deep-sea desalination technology. The company is positioning for regulatory approval as drought conditions persist across the American West.

Oneka Technologies (Canada): Developing wave-powered floating desalination systems, Oneka offers a zero-grid-connection solution for coastal communities and island nations. The modular buoys can operate independently, producing fresh water using only ocean wave energy.

Source Global (USA): Having raised $130 million from Breakthrough Energy Ventures, Source deploys atmospheric water generation panels—hydropanels—that extract drinking water from air using solar power. While not strictly desalination, the technology addresses water security in arid inland regions.

Desolenator: Operating solar-powered desalination systems optimized for off-grid applications, Desolenator serves humanitarian and commercial markets requiring distributed water production.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates' climate investment vehicle has made 12 water technology investments, including the $130 million round for Source Global. BEV provides patient capital for technologies requiring long development timelines.

Katapult Ocean (Norway): Specializing in scalable ocean impact technologies, Katapult has invested in Flocean and other marine-focused water tech startups.

Xylem Inc.: The water infrastructure giant has become an active corporate investor, participating in Flocean's $22.5 million Series A extension to gain exposure to subsea desalination technology.

African Development Bank and European Bank for Reconstruction and Development: Multilateral development banks are increasingly financing desalination capacity in water-stressed regions. The European Bank extended a €6.3 million loan to Egypt's Ridgewood for Red Sea and Mediterranean plants.

Examples

  1. Sorek 2 Be'er Miriam, Israel (IDE Technologies): Commissioned as the world's largest SWRO plant at 670,000 m³/day capacity, Sorek 2 represents the current state of the art in large-scale desalination. The facility achieves a 30% lower carbon footprint than previous-generation plants through an independent power station with CO₂ capture and recycling, patented steam-driven direct-drive technology reducing energy consumption by 10%, and vertical 16-inch membrane arrays that minimize physical footprint. The plant supplies approximately 20% of Israel's municipal water demand, demonstrating that desalination can achieve national-scale water security.

  2. Hassyan Desalination Plant, UAE (Veolia/DEWA): Awarded to Veolia for $320 million, Hassyan will be the world's most energy-efficient desalination plant at 2.9 kWh/m³ when operational in 2026–27. The 818,000 m³/day facility is entirely solar-powered, integrated with Dubai's renewable energy infrastructure. The project illustrates how Gulf states are pivoting from thermal to membrane technology while aligning with net-zero commitments.

  3. Flocean One, Norway (Flocean): Scheduled for launch in 2026, this pioneering subsea desalination installation will validate deep-sea reverse osmosis at commercial scale. By leveraging natural hydrostatic pressure at 400–600 meters depth, Flocean aims to demonstrate 30–50% energy savings compared to surface plants. Success would unlock a new paradigm for coastal desalination, with planned expansions into the Mediterranean, Red Sea, Maldives, and Jordan.

Sector-Specific KPI Table

KPICurrent BenchmarkBest-in-ClassTarget (2030)
Energy Consumption (kWh/m³)3.0–4.01.794 (DESALRO 2.0)<2.0
Production Cost ($/m³)$0.50–$1.00$0.30 (Saudi megaplants)<$0.40
Water Recovery Rate45–50% (seawater)90% (brackish)60% (seawater)
Membrane Life (years)5–710+ (with AI optimization)8–10
Carbon Intensity (kg CO₂/m³)1.5–2.50.5 (renewable-powered)<0.5
Plant Availability92–95%98%>97%
Brine Valorization Revenue0–5% of opex15–20% (lithium recovery)10–15%

Action Checklist

  • Assess portfolio exposure to water-stressed regions using World Resources Institute Aqueduct data and map desalination capacity gaps
  • Evaluate technology partners across the membrane, EPC, and O&M segments; prioritize companies with demonstrated sub-3 kWh/m³ energy efficiency
  • Structure offtake agreements with sovereign credit enhancement or multilateral guarantees to access infrastructure-grade financing
  • Integrate renewable energy procurement into desalination project design to lock in favorable power purchase agreements and avoid grid dependency
  • Monitor regulatory developments on brine discharge standards; assess zero-liquid discharge requirements for new project permitting
  • Track deep-sea reverse osmosis commercialization timelines—successful validation by Flocean or OceanWell could reset competitive dynamics by 2027
  • Engage with development finance institutions for blended finance structures in emerging markets where commercial credit is unavailable

FAQ

Q: How does desalination compare to other water supply options on a lifecycle cost basis? A: Desalinated seawater typically costs $0.50–$1.00/m³ at plant gate, rising to $1.50–$3.00/m³ including distribution infrastructure. This compares to $0.10–$0.30/m³ for conventional surface water treatment and $0.30–$0.80/m³ for groundwater extraction. However, in water-scarce regions where conventional sources are overexploited or unreliable, desalination offers supply security that justifies the cost premium. Industrial users often pay $3.00–$10.00/m³ for high-purity water, making desalination economically attractive for semiconductor, pharmaceutical, and power generation applications.

Q: What are the main barriers to scaling desalination in developing countries? A: Three constraints dominate: (1) financing availability, as most project finance requires investment-grade sovereign creditworthiness or multilateral guarantees; (2) grid infrastructure, since reliable power at scale is a prerequisite for membrane technology; and (3) technical capacity for operations and maintenance, which typically requires training partnerships with established operators. Modular and renewable-powered systems from companies like Desolenator and Source Global are specifically designed to address these barriers by reducing capital requirements and eliminating grid dependency.

Q: What is the environmental footprint of modern desalination, and how is it being addressed? A: Contemporary reverse osmosis plants consume 2.9–4.0 kWh/m³, translating to 0.5–2.5 kg CO₂/m³ depending on grid carbon intensity. Best-practice plants powered by renewables achieve near-zero operational emissions. The more pressing environmental concern is brine discharge, which increases local salinity and can harm marine ecosystems. Mitigation approaches include dilution with cooling water from co-located power plants, diffuser systems for offshore dispersion, and emerging brine valorization technologies that extract valuable minerals while reducing discharge volumes.

Q: How will deep-sea desalination change the competitive landscape? A: If subsea DSRO technology validates commercially—which Flocean and OceanWell expect by 2026–2027—it could reduce energy costs by 30–50% and eliminate the need for large coastal land footprints. This would lower barriers to entry, potentially commoditizing the technology layer while shifting value toward project development and integration. Established players with thermal and surface-RO assets would face accelerated obsolescence, while nimble developers could arbitrage the cost advantage in markets with high conventional desalination costs.

Q: What role will AI and automation play in desalination operations? A: AI-enabled predictive maintenance and process optimization are becoming standard in new installations. Machine learning algorithms analyze sensor data to optimize pressure, temperature, and chemical dosing in real time, extending membrane life by 20–40% and reducing unplanned downtime. Remote monitoring enables centralized operations centers to manage distributed plant fleets, reducing on-site staffing requirements by 30–50%. Veolia, Acciona, and IDE Technologies are all investing in proprietary AI platforms as a source of competitive differentiation.

Sources

Topics

watersecurityflood risksupply chain riskunit economicsearly warningwildfire

Related Articles