Insight from Christopher Gasson: ‘Ten and a bit things I want to learn in Abu Dhabi’
I have been immersed in the organisation of the Global Water Summit this week. We have confirmations from 100 speakers so far, and we are making the final push for our target of 130. It is a big deal to put together, and I do it primarily because I hate not knowing things about this market. Here are some of the questions about the global water business that I want answers to:
- Where is the money in water moving? This is the question that everyone wants to know the answer to. The global economy is at a strange inflection point, with negative interest rates, cheap oil, and a commodities glut. Everyone still needs water, and delivering it and managing it is an increasing challenge, which means that overall, water remains one of the few sure bet growth markets. The information that is missing is the location of that growth. I am confident that two days of networking with the leading executives in the global water industry will deliver something close to an answer.
- Where will the wall of money coming out of China go? The value of Chinese water companies remains completely out of sync with the rest of the world, despite eight months of bear market sentiment. Combine this with slowing growth at home and the prospect of a weaker renminbi, and it becomes clear that Chinese companies are likely to be the major buyers in the global water market over the next three or four years. We have fixed up a session at the summit which brings together five of the most successful Chinese water businesses to explain their international strategy. I will listen to every word they have to say.
- Are PIPPs the next big thing for water? PIPP stands for Public Industry Private Partnerships. No, I hadn’t heard that term used before I read it in this month’s GWI (see page 9). The idea has been around for a bit, however. What it refers to is the growing opportunity for private developers to sign contracts with public wastewater utilities to treat wastewater to process water quality and sell it to industrial clients. It is a model which seems to deliver a fantastic triple bottom line, and industrial water users across the world are suddenly waking up to the opportunity it represents. We have put together a session on this subject, and I want to figure out how this model can be scaled up as quickly as possible.
- How can we take advantage of Iran opening up? With the rest of the Middle East region either engulfed in political instability or reeling from $40 oil, Iran is potentially the biggest potential opportunity in the global water market today. It faces genuine scarcity and decades of underinvestment in its water infrastructure. At the same time, money and politics remain a worry. I want to get a better feel for how this market is going to evolve. We have arranged for a delegation of key players in the Iranian water market to attend the summit to give us some insight.
- Does renewable energy change desal? There is growing interest on the client side in renewable energy for desalination. Whether this is a big deal for the desal industry depends on a simple question: can the desalination process be run more effectively by photons or electrons? If electrons beat photons every time, then renewable energy doesn’t mean much for desal technology, as the most energy-efficient desal plants already rely on electrons. If, however, there are some instances where photons can be a more efficient energy source than electrons, then a whole field of technology – direct solar thermal desalination – opens up. We have brought together technologies on both sides of the photon-electron divide to settle the question.
- How can we make the most of demand for private finance? It has been out of fashion for 15 years, but suddenly everyone seems to want private finance in water again. The problem is that there is a big difference between thinking that it would be nice if the private sector were to pay for your water infrastructure, and actually putting together a viable project that private companies will invest in. There are two specific problems I want to address in Abu Dhabi: a) how do we deal with currency risk when everyone seems to want dollars again? and b) how do we reduce the time and money wasted developing projects which are repeated, delayed or cancelled?
- What do utilities really want from innovation? Women’s magazines have made millions on the coverline “What do men really want?” The same cognitive dissonance exists in the water industry. The companies developing new technologies seem to have no real understanding of how their activities fit with what their clients want from innovation. With the support of the Global Water Leaders Group, we have brought together utility CEOs from around the world to talk about their needs. It is going to be a fascinating session.
- Where is the action in the oil and gas industry? On the day before the Global Water Summit, we are organising a workshop for the Produced Water Society, which brings together oil and gas companies from around the Middle East to talk about water with some international experts. With Aramco ramping up production to squeeze US producers offline, the Gulf is the centre of the opportunity for water companies doing business in oil and gas. I want to know how regional producers and downstream refiners are spending their money at the moment.
- Are we on the verge of a breakthrough for urban water services in low-income countries? The Global Water Summit will again be hosting the World Economic Forum’s Global Agenda Council on water, and we will be presenting some of the ideas coming out of that on the second day of the event. I think that we are potentially on the verge of something that could make the difference. I want to hear your feedback on it.
- Where is the business in climate change adaptation? Although we are supposed to have solved global warming at the Paris summit last year, the reality is that mitigation is giving way to adaptation, and that means water infrastructure to cope with the growing frequency of droughts and floods. The key question for me is how this plays with the politicians. Do they actually intend to spend money to protect their countries from climate change, or is it just a talking point that might win votes? We have a ministerial-level panel on the second day, which I hope sheds some light on the thinking.
The bit – What is really happening? I never quite believe everything people tell me on the record. Big companies pretend that everything is wonderful even when they are losing money hand over fist, and nobody wants to own up to the reality, but it all comes out late at night in the bar. The big city concession cancelled when the water minister found out that his wife was having an affair with the contractor’s country manager; the US private equity investor who discovered that the CEO of its European subsidiary did a regular run to Switzerland with a suitcase full of cash to keep its Russian clients sweet; the desal company which destroyed an entire membrane train within six hours of switching on the pumps; the company which raised $40 milllion for a technology its executives knew could never work. At the very least, attending the Global Water Summit is a basic piece of due diligence.
Taken from Global Water Intelligence Briefing — 10th March 2016