Top Five Takeaways: U.S. Municipal Wastewater & Reuse

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FOCUS REPORT US Municipal Wastewater & Reuse: Market Trends, Opportuni2es, & Forecasts, 2015-‐2025 July 2015

US Municipal Wastewater and Reuse: Market Trends, OpportuniAes, and Forecasts 2015 – 2025

ADVANCED WATER TREATMENT & DESALINATION

ANALYST PRESENTATION

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!!!!!!US!Municipal!Wastewater!&!Reuse:"Market'Trends,'Opportuni2es,'&'Forecasts,'2015:2025'


FOCUS REPORT

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US Market Attractiveness Drivers

Policy Drivers

Available Funding

Historical Experience

Water Scarcity

Market Attractiveness

California High

Florida High

Texas High

Arizona Medium

Colorado Medium

Georgia Medium

Oklahoma Medium

Nevada Low

New Mexico Low

Market Inhibitor Limited Impact Improving Conditions Market Driver

Acute water stress shapes near-term development.

•  California’s extreme drought conditions have sparked a wave of infrastructure investment and planned reuse projects.

•  Texas has undergone a significant shift after recent rainfall, moving it from a near-term to long-term market opportunity, strengthened by a transparent water plan focused on statewide water risks.

•  More than US$1.98 billion of funding for reuse has been made available in California and Texas to address drought.

Policy measures impact long-term outlook.

•  Florida has made wastewater reuse development a state-wide priority since 1989 to mitigate aquifer saltwater intrusion and environmental contamination. Regulators continue to pass reuse initiatives, including the 2013 mandate that the Florida Department of Environmental Protection produce a feasibility study to expand reuse.

•  Arizona’s water management strategy focused on banking water limits its overall opportunity for other applications.

•  Nevada policies are dictated by Colorado River entitlements and capturing credits by returning water back to surface water sources.

Distinct regulatory environments, infrastructure investment, and water environments segment the markets of opportunity.

Source: Bluefield Research

Analysis



FOCUS REPORT

Nine Leading States

Potable vs.

Non-Potable

Reclaimed Water

Applications

Potable Reuse

Regulations

Water Stressed

US States*

US Global Footprint

2015

Mar

ket

Land

scap

e 20

15 –

202

5 M

arke

t U

S O

utlo

ok

Potable vs.

Non-Potable Capacity Additions

Capital Expenditures

The US Municipal Wastewater Landscape, 2015-2025 The US$9.6 billion outlook for US municipal reuse is built on a series of critical factors already in place in 2015, including more than 247 projects in the development pipeline.

Treatment Systems

46% Pipe

Networks 48%

Other 6%

US9.6 Billion

Florida 55%

California 27%

Texas 6%

Other States 12%

8.9 Million m3/d

Non-Potable 73%

Potable 27%

8.9 Million m3/d

Rest of World 62%

US 38%

9 States 93%

41 States 7%

Irrigation 66%

Industry 16%

Potable 15%

No Regulations 39 States

Limited Stress 70.4%

IPR Regulations 11 States

Moderate to Exceptional Drought

29.6%

Indirect Potable Reuse 99%

Note: Water Stress was measure in May 2015 Source: NOAA, Bluefield Research

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FOCUS REPORT

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State-by-State Capacity Forecasts, 2015-2025

0

200

400

600

800

1,000

1,200

1,400

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

M3 /

d (t

hous

ands

)

Rest of the US

New Mexico

Oklahoma

Georgia

Arizona

Nevada

Colorado

Texas

California

Florida

•  Bolstered by Miami- Dade wastewater infrastructure

projects through 2025 Florida will add 4.9 million m3/d of capacity. Florida Power and Light’s (FPL) Turkey Point Nuclear Power Plant offtake from the Miami-Dade South District wastewater plant will account for 340,700 m3/d of capacity by 2021.

•  California will represents 27% of total additions that will increase if drought conditions persist, but the real impact of San Diego Pure Water plant will be after the forecast period when the remaining 219,600 m3/d is expected by 2035.

•  California’s ramp up in 2025 is driven by several large scale projects set to come online including the 216,000 m3/d Hyperion MBR project.

•  The near-term Texas forecast has been pushed back to account for the 2015 rains, but political and industrial momentum will enable momentum more than 560,000 m3/d of additions through 2025.

•  Outside of the leading states, the remainder will add 1.0 million m3/d, led by Colorado’s 400,000 m3/d.

Analysis

Florida and California represent 82%, or 7.3 million m3/d, of total forecasted capacity additions through 2025, building on their significant share of current capacity to date.

Forecasted Wastewater Reuse Capacity Additions by State


ADVANCED WATER TREATMENT & DESALINATION INSIGHT SERVICE GREENFIELD + WATER = BLUEFIELD

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FOCUS&REPORT&%US&Municipal&Wastewater&&&Reuse:""Market'Trends,'Opportuni2es,'&'Forecasts,'2015:2025'%June%2015%%%'

US Municipal Wastewater and Reuse Report Published July 2015

US Municipal Wastewater & Reuse: Market Trends, Opportunities and Forecasts, 2015-2025 Publication Date: July 2015 This Focus Report highlights the following:

•  A 2015–2025 forecast of municipal wastewater reuse in the US by key state, capital investment, and technology adoption totaling $11.0B of CAPEX

•  Bottom-up assessment of the 247 projects in the pipeline by state and status

•  In-depth analysis of state and federal regulatory environments influencing the deployment of wastewater reuse

•  More than 40 profiles and analysis of 9 key states and 32 water districts.

•  Industrial users of reclaimed water and trends for greater adoption

Bluefield’s 140-page report is designed to support companies addressing wastewater reuse in the U.S. with in-depth analysis, detailed project data, and ten year forecasts with a transparent methodology.




Key Report Takeaways

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1.  Municipal wastewater reuse to increase 61% by 2025, requiring US$11.0 billion of capital expenditures.

2.  94% of reuse projects expected to take place in nine states, headlined by Florida and California.

3.  More than 247 reuse projects in various stages of planning in the US.

4.  Potable reuse, the process of treating wastewater to drinking water currently makes up 15% of total capacity and is expected to increase to 19% of total water reuse by 2025.

5.  More than 94% of California's project pipeline is located in seven counties.




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Municipal Wastewater & Reuse Landscape


Potable 15%

Industrial 16%

Irrigation 69%

•  Reclaimed water is expected to grow 61% by 2025.

•  Potable reuse, almost exclusively indirect, has steadily gained momentum to reach 15% of the total flows through membrane technology advancements. The first direct potable reuse projects in the US only came online in 2013 with more projects now in the queue.

•  Risk to power plants and the energy sector have drawn the lion’s share of reclaimed water for industry.

•  Irrigation for agriculture and landscaping, represent 69% of total flows, are expected to maintain a majority share of reclaimed water use.

Bluefield’s bottom-up analysis details reclaimed water sources and applications from 2015 to 2025.

8.3 million m3/d

2014 Municipal Wastewater Reuse Volumes Analysis





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1.  Municipal wastewater reuse to increase 61% by 2025, requiring US $11.0 billion of capital expenditures.








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Reused Wastewater Flows in the US by State, 2014

Sunbelt states– from southern California to Florida– dominate the US municipal wastewater reuse landscape, built on surging populations and economic growth in recent decades.


•  Four states – Florida, California, Texas, Arizona – make up 82% of wastewater reuse in the US.

•  Florida, the market leader in the US for wastewater reuse, currently reuses 2.72 million m3/d of reclaimed water and has the most mature reuse program that was initiated more than 30 years ago.

•  As California moves toward its fifth year of drought, a host of mandates, infrastructure investment, and growing project pipeline are expected to boost its current 31% share of market.

•  Arizona is unique, and less of a growth opportunity, in that it has focused on groundwater banking of reclaimed water and supplying the Palo Verde nuclear power plant.

Reused Wastewater Flows in the US by State, 2014

0

0.5

1

1.5

2

2.5

3

m3/

d (m

illio

n)

Analysis





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8

Miami-Dade Capital Improvement Plan

Miami-Dade Reuse Activity

0

250

500

750

1,000

1,250

1,500

US$

mill

ion

General Obligation Bond (GOB) Water and Wastewater

Water

Wastewater

7,412

Miami-Dade County Water and Sewer Department (MDWSD) a central focus for water solutions providers.


•  Miami-Dade County’s compliance with the Ocean

Outfall Legislation represents the single largest water reuse initiative in the country.

•  Miami Dade is expected to invest US$5.1 billion in wastewater infrastructure.

•  US$3.3 billion of investments planned for expanding the reuse systems in order to comply with Ocean Outfall Legislation.

•  More than 32 companies have targeted the market, highlighting the scale of the opportunity.

Analysis





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Forecasted Capacity Additions


0

200

400

600

800

1,000

1,200

1,400

1,600

m3/

d (th

ousa

nds)

Potable

Non Potable

•  Potable reuse projects, both direct and indirect,

are expected to account for 2.5 million m3/d of the total 10.1 million m3/d of capacity additions between 2015 and 2025.

•  The growth in potable reuse is largely driven by several large-scale projects in planning, including the 56,780 m3/d Pure Water San Diego Project to recharge the San Vicente Reservoir expected online in 2023.

•  In the near term, smaller potable reuse projects are expected to come online in response to scarcity in California and localized water stress in Texas.

Analysis

Still in its infancy in the US, potable reuse is expected to scale in second half of the forecast period to reaching 25% of added capacity in 2025.

Forecasted Potable Reuse Capacity Additions





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5.  More than 94% of California's project pipeline is located in seven counties




California’s 2.3 million m3/d project pipeline is dominated by Los Angeles County, where urban water use, population growth, and drought combine for the greatest demand.

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SoCal Represents Market Epicenter

San Diego .378

Riverside .227

San Bernardino .174

Stanislaus .075

Santa Clara .113

Fresno .037

San Francisco .022

Orange .022

Sacramento .018

Monterrey 15.1

Yolo .011

Contra Costa .0113

Marin <.01

Merced <.01

Napa <.01

Ventura <.01

Los Angeles 1.222

•  Geographically, more than 94% of California’s

project pipeline is located in seven counties.

•  Seven counties, led by Los Angeles, have more than 37,000 m3/d in planned capacity additions.

•  Reinforcing the trend toward urban reuse, the large majority of activity is in the more populated coastal counties and greater metropolitan areas of Los Angeles, San Francisco, and San Diego.

•  Eight projects greater than 45,000 m3/d are planned for Los Angeles County, headlined by the Joint Water Pollution Control plant and the Hyperion MBR project which are system upgrades.

Analysis Circle size represents planned capacity additions, million m3/d

Planned Reuse Projects in California by County





ADVANCED WATER TREATMENT & DESALINATION INSIGHT SERVICE

CLIENT FOCUS: This Insight Service is designed for companies involved in the supply, purchase or integration of water and wastewater treatment technologies, including:

•  Municipal and water utilities tracking new players and technologies •  Business development and strategy executives at manufacturers and

integrators of water and wastewater treatment systems, components •  EPC and water project developers seeking new supply relationships or

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RESEARCH COVERAGE: a 12-month cycle of data- and analytics-driven research provided in multiple formats to support client strategies, covering:

•  Desalination market trends including new projects, emerging brackish water applications, and cost drivers

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scenarios

Insight Service Description

WATER SOLUTIONS COVERED:

Business Models

Cost Drivers

M&A Activity

Regulatory Activity

Market Share

MARKET SEGMENTS COVERED:

Industrial Water Municipal Water •  Power Gen •  Oil & Gas •  Mining •  Chemicals •  Food & Beverage Water Reuse

Water Treatment

Wastewater Treatment Desalination

Agriculture

SELECT LIST OF COMPANIES COVERED:

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© 2015 BLUEFIELD RESEARCH, LLC.

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