Wastewater recovery is expected to speed up during the 14th Five-Year Plan period –key steps to take for entering the wastewater recovery market
For many countries, such as Israel, Singapore, and Australia, wastewater recovery is vital to solve the water shortage. China’s water resources per capita are only a quarter of the world’s average level, and China faces the prominent problem of moderate water shortage all year round. However, the market of wastewater recovery is developing slowly.
From 2011 to 2016, the rate of wastewater recovery increased by less than 2%, and the target of the wastewater recovery rate required in the 13th Five-Year Plan has not been fully achieved. Looking at the “14th Five-Year Plan”, under high demands and favorable policies, the development of China’s wastewater recovery market is expected to accelerate, with a compound annual growth rate of 13.68%, and the market size will exceed 60 billion yuan in 2025.
Chenyu Company believes that it is not easy to excel at wastewater recovery business, enterprises focusing on wastewater recovery should take three key steps:
- Targeting project types
- Choose your partners
- Find the suitable business model
Under the high demands and favorable policies, the wastewater recovery market is expected to boom.
Globally, the wastewater recovery industry in countries with water shortages, such as Israel, has developed well, and the rate of wastewater recovery is as high as 90%.
In the same water-deficient countries, the development of China’s wastewater recovery industry is not smooth. Until 2019, the wastewater recovery rate was only 20.93%, and the increase from 2011 to 2016 was even less than 2%. The main reason is that facing water shortage, the Chinese government pays more attention to inter-basin water diversion, and to controlling the water consumption and other methods: In the 1980s, the South-to-North Water Diversion Project was launched, with a planned diversion of 448 billion cubic meters of water through three routes: the east, the central and the west. Water use for agriculture has been kept stable and water use for the industry has been reduced for many years, and water consumption has been kept within 600 billion cubic meters from 2010 to 2019.
Looking at the “14th Five-Year Plan”, under the high demands and favorable policies, China’s wastewater recovery industry will usher in a turning point:
First, when the south-to-north water diversion plan and water use control reach the plateau, the demand for wastewater recovery is released. By 2018, the water transferred from the middle route had exceeded 15.5 billion cubic meters, and the planned amount of water transferred from Beijing to Tianjin has also been exceeded. New solutions have been put on the agenda. In terms of water use control, each subdivision has reached a plateau, and the room left for saving water is very limited in the future. Take agricultural water as an example, its water consumption has remained unchanged in the past ten years, at about 370 billion cubic meters. However, to ensure food security, the comprehensive production capacity of grain needs to be maintained at more than 1.3 trillion kilograms. The corresponding demand for irrigation water should be at least 370 billion cubic meters (BCM) (see picture 1).
Second, lots of practical policies have been introduced. Since 2020, the Chinese government has carried out ” the guiding opinions about promoting wastewater recovery”, the “development plan for urban sewage treatment and wastewater recovery during 14th Five-Year Plan period” and other significant policies. The goals put forth by these policies are more feasible, for example, compare with the 13th Five-Year Plan mentioning water recovery rate in cities of water deficiency and without water deficiency, this Plan focuses more on cities with water deficiency, which is more specific. The supporting system with policies is also better. These policies put forward the supporting system support including laws and regulations, pricing mechanism, financial funds, scientific and technological support, etc., to ensure the development of the wastewater recovery market (see picture 2).
Based on the two factors above, the “14th Five-Year Plan” period sewage resource market is expected to usher in rapid development.
It is estimated that from 2021 to 2025, China’s wastewater recycling market is expected to achieve an annual compound growth of 13.68% and reach an operation scale of more than 60 billion yuan in 2025.
For entering the wastewater recovery market, there are 3 key steps to take.
- Target project types
Wastewater recovery can be divided into ecological water replenishment, industrial reuse, residential miscellaneous use, agricultural irrigation, and others. Different utilizations differ a lot in the aspects of technical difficulty, supporting construction, payment mode, and investment.
Technical difficulty: from agricultural irrigation to ecological water replenishment, water quality requirements are gradually becoming stricter and stricter, and it is agricultural irrigation < residential miscellaneous use < industrial reuse < ecological water replenishment. For agricultural irrigation has the lowest requirements, secondary treatment can meet the requirements. For other utilizations, further in-depth treatment is needed.
Supporting facilities: For residential miscellaneous water and agricultural irrigation water, there must be the construction of storage facilities and distribution pipelines, for example, Israel invested heavily in more than 200 reclaimed water reservoirs, a total capacity of more than 200 million cubic meters, at the same time laid a large number of pipes covering most of the land area of the country.
The industrial reuse water is in a more concentrated area, and there is no need to build water storage facilities, only the point-to-point connection from the recycled water plant to the water point, and the difficulty of pipeline laying is relatively less.
Payment mode: Ecological water replenish is generally a public welfare project, paid by the government, and the funds come from water resource fees, national debt, local debt, etc. The industrial reuse water industry is more market-oriented, users pay by the market price.
Investment levels: technical difficulties of ecological water replenish, and industrial reuse water often needs high investment compared with the other two.
For the newbies, it is suggested to choose the appropriate project type depending on the technical difficulty, supporting construction, payment mode, investment level and give a comprehensive assessment.
- Choose your partners
The enterprises involved in the wastewater recovery industry are mainly traditional water enterprises and technology equipment enterprises.
Chen Yu Company believes that these two types of enterprises can discover more opportunities in cooperation rather than in competition.
Traditional water enterprises tend to have strong government resources and relatively abundant funds, and they can access wastewater recovery projects more easily through the PPP or BOT model. After the construction, they can profit through wastewater recovery plants.
Facing the release of 15 million tons of production capacity per day during the 14th Five-Year Plan period, a new round of partnering is about to start. It may be a shortcut to quickly enter the market through joining the strong force and make cooperation.
- Find the suitable business model
Compared with traditional sewage treatment projects, the models for wastewater recovery projects are more flexible, such as PIPP, Blue Ecological Park, and other innovative models.
Enterprises should follow the latest trend of the industry, straighten out their business model as soon as possible, to be ready for the new round of competition.
In the PPIP model, “the company produces reclaimed water with polluted wastewater, and the government coordinates industrial enterprises to purchase it”. The government can reduce or exempt the payment of sewage treatment fees of the enterprises that purchase reclaimed water, and the industrial enterprises can get cheaper water, and wastewater recovery enterprises can get the sales revenue of reclaimed water, so the company, the government, and the enterprise all benefits.
In the Blue Ecological Park Model, the wastewater recovery company can turn the useful content into products with commercial value and the produced reclaimed water sold to industrial enterprises and turn the other pollutants into fertilizer for sale. The Park can thus achieve zero emissions in wastewater part, and the industrial enterprises can have cheaper water, The wastewater recovery company itself can receive more profit from the products. In all, the model presents an organic combination of ecological, social, and economic benefits.
Source: Chen Yu Company