__________________________________________________________________________________

An Assessment of Enterprise Opportunities in

Environmental Goods and Services

A Report to Forfás and InterTrade Ireland

(Extract of section on water)

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August 2008

1.1. Water Supply and Waste Water Treatment

Products, systems or services for the management of the fresh water environment, provision, treatment, distribution and storage of clean water and wastewater for industrial and domestic users. Examples of environmental goods and services include resource development, demand management, manufacture of wastewater treatment equipment, design, construction, installation and operation of water and wastewater treatment facilities.

1.1.1. Introduction

While approaches to water service provision and regulation differ across the world, all customers want an efficiently run service that seeks to minimise price increases and provide

good levels of customer service. 1 The scale of the sector and its ownership is also an issue. For example, the water industry in England and Wales consists of 23 fully privatised companies, with ten providing both water and sewerage services and 13 providing water only. In contrast, the water industry in Northern Ireland is not privatised but is run managed by one agency, NI Water. Outside the UK, ownership and operation is normally organised in the form of a public utility, either as part of a municipal organisation or a publicly owned company. On average across the developed world, water companies supply between 142,000 and 420,000 properties. However, in England and Wales the figure is much higher with medium sized companies servicing up to 1.7m properties. In Ireland in contrast, local authorities are responsible for water and waste water treatment as the procurer with the private sector as supplier.

1.1.2. Ireland

Water supply and wastewater treatment are two vital components of Ireland’s national infrastructure, essential for human health and well-being. Water is required for many industrial and service activities and is a prerequisite to the efficient functioning of the economy while wastewater treatment is essential for environmental sustainability and to

protect public health. 2 The water supply sector is predominantly divided into the potable water supply required by one-off housing throughout Ireland or RWSS (Regional Water Supply Schemes) approved at a central level via the D/EHLG and Northern Ireland Water (NIW). A similar situation pertains for the collection and treatment of wastewater locally

1 International Comparison of Water and Sewerage Services, 2007 Report, Ofwat UK. This report provides comparisons of the financial performance of water and sewage companies.2

Overview of the Main Infrastructure Issues for Enterprise, Forfas, 2007.

(on-site treatment or in group schemes) or collectively (in municipal wastewater treatment plants). There are approximately 2,700 industrial wastewater treatment plants in Ireland (700 IPPC licensed activities by EPA and 2,000 licensed by Local Authorities under the Water Pollution Act). The local authorities may provide this service themselves or procure this from the private sector. €3.7 billion was invested in new and upgraded water services infrastructure under NDP 2000-2006. Some €4.7 billion, an increase of 27%, has been

provided under NDP 2007-2013.3

There have been 500,000 new house completions in Ireland since 1999. Wastewater treatment capacity has been put in place since 2000 to treat a population equivalent of 3.1 million. This has resulted in a reduction in the pollutant load discharged into rivers, lakes and seas from our cities and towns by 45,000 tonnes per annum. During the same period, water treatment capacity has also been increased (by an amount sufficient to meet the needs of a population equivalent of 666,000 people) and now becomes the main focus for the current

NDP. 4

1.1.3. Northern Ireland

The water industry in Northern Ireland has been the subject of a major (recent) review.5

In Northern Ireland, the Investment Strategy for Northern Ireland has set out the investment

in the water and waste water sector to the year 2017/18, and these are set out below: 6

Table 4.12: Waste and waste water infrastructure investment in Northern Ireland2008 – 2011

£m2011/2012 – 2017/18

£mTotal£m

Water & Waste Water 646.5 (£391.9 add) £717 (£780 add) £2.5 bn

1.1.4. The Water and Waste Water Treatment Sector

The sector falls into three categories:

3 http://historical-debates.oireachtas.ie/D/0635/D.0635.200704050437.html4 The Provision and Quality of Drinking Water in Ireland, 2007. The EPA’s first report on the provision and quality of drinking water in Ireland sets out the issues for the sector, including the need for greater enforcement activity.5

Independent Water review Panel, Strand One Report: Costs and Funding, October 2007.6 Investment Strategy for Northern Ireland. Northern Ireland Executive, 2007.

- Mechanical/electrical/civil contractors- Consultants/engineers/architects- Local authorities/private industry

There are approximately 270 companies involved in the water and wastewater sector in

Ireland. 7 8 In addition, local authorities are active players in this sector. The market in Ireland has previously been estimated (for 2004) as €622m (€445m for wastewater

treatment and €177m for water supply). 9 The Water Services Investment Programme (WSIP) 2007-2009 is made up of 955 projects that have an overall capital value of €5.8

billion.10 Some 30 of the 158 agglomerations (greater than 500 population equivalent) requiring secondary treatment by the 31 December 2005 did not have the required level of

treatment in place by the end of 2005.11 There are presently at least 64 supplies that have inadequate treatment (i.e. supplies which originate from surface water and have no treatment other than chlorination) and need to be upgraded or replaced. In total, the EPA has identified 339 supplies that require profiling to ensure that the supply is providing clean

and wholesome drinking water.12

The single house and cluster market for wastewater treatment plants is worth €80m per annum, with unsewered on-site wastewater treatment systems accounting for €52m of the total. Bord na Mona Environmental, EPS Bison, BNM, Envirocare, and Klargester are the main players having a 50% market share. The remaining 50% of the market is shared by some 30 companies. While there has been a slump in the housing market this market is constant. Increasing concerns about the performance of existing treatment systems indicate there will be a market for retrofitting of superior technology. There has been increased business in the commercial sector due to increased regulation of leisure centres, nursing homes, hotels and schools.The water treatment market (local authorities) includes clarification, filtration and

7 The only published statistics relate to NACE 41 which covers the Collection, Purification and Distribution of

water. Figures from the CSO Census of Industrial Production indicate that in 2006, the number of local units was 64, there were 2,449 persons engaged in the sector and the gross output of the sector was valued at €168 million.8 KOMPASS lists 245 companies involved in water products and services provision (excluding local authorities). 26 companies are listed as being providers of effluent services.9

DG ENVIR Environment Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU Final report, August 2006.10 http://www.environ.ie/en/Environment/Water/WaterServices/WaterServicesInvestmentProgramme 11

EPA, Urban Waste Water Discharges in Ireland, A report for the Years 2004 and 2005.12 EPA Report, The Provision and Quality of Drinking Water in Ireland - A Report for the Years 2006-2007.

disinfection equipment. The wastewater treatment market includes pre-treatment, primary, secondary, tertiary (advanced) and sludge treatment equipment. This equipment treatment market is estimated to be worth €170m (2000, with an annual growth rate of 6.8% over 2005. Double digit growth is forecast over the next five years, reaching a size of some €307m

by 2013.13

The key activities of the water supply sector and of the wastewater treatment sector have previously been identified as follows: 6

Water supply Waste water treatment

Water catch systems and collection Waste water collectionWater purification Sewage and refuse disposal(Water desalinization) SanitationWater transport & distribution ConstructionConstruction ServicesServices

Investment is focused on delivering traditional solutions, particularly in the wastewater sector. Current issues of microbiological contamination (Chryptosporidium and E. Coli) in some water supplies is focusing attention in the water sector to look at new technologies such as membrane filtration and UV treatment, where conventional solutions have not worked. There are currently only two membrane filtration plants on a large scale in Ireland, a temporary plant in Ennis where there are continuing water quality issues and an ultrafiltration plant in Lough Nagharaman, Co. Monaghan where the Donaghmoyne Group Water Scheme supplies the needs of 1,700 domestic, commercial, industrial and agricultural customers.

Observed recent trends include:

Decreasing price for water and waste water equipment Consolidation of water and wastewater equipment companies with multinationals

acquiring Irish companies Few green field projects, with expansion and improvement of current facilities the main

priority Tangible shift towards small and medium agglomerations as well as rural communities

Increasing population and the service land initiative providing new opportunities. 14

Research & Development

13 Report by Frost and Sullivan, 2007.14 Op cit Frost and Sullivan.

EPA funded research in environmental technologies and cleaner production has supported work in novel wastewater treatment technologies at NUI Galway including:

High-Rate Anaerobic Digestion as a Core Technology for Sustainable Treatment of Municipal and Low-Strength Industrial Wastewaters

Nitrogen Removal from Slaughterhouse Wastewater by Means of Simultaneous Nitrification and Denitrification (SND) in Modified Sequencing Batch Biofilm Reactor Systems (SBBR)

1.1.5. Key Players

Construction is the most significant activity for both wastewater treatment and water supply. Key companies in the sector include:

Design, Build Operate, DBO CompaniesCeltic Anglian.Response EngineeringVeolia WaterEPSTreatment Systems Ltd.Earth Tech

Treatment Plant Manufacturing and Design & Treatment TechnologiesBord na Mona EnvironmentalEPS Pumping & Treatment Systems Ltd.Treatment Systems Ltd.Butler Manufacturing Services Ltd.BiocycleWestfalia SeparatorNoritSolids TechnologyWhitewaterCarl StuartWater TechnologyGilroy GroupBalmoral TanksFM EnvironmentalJohn Molloy Engineering Klargester EnvironmentalEnvirocareBowen Water TechnologyElga Process WaterWilliams

Chemicals and Technical Solution SuppliersAcorn WaterEnvaChemiflocNalcoBetzAshlandCrossmillEuthenicsLennox Laboratory SuppliesAlkem Chemicals

ConsultanciesMott McDonald PettitFehily TimoneyWhite Young Green

ControlHoneywellSiemensGE

MechanicalABS PumpsHall Pyke EngineeringFay Environmental

RPSNicholas O’DwyerTJ O’Connor

ABBWaste Water ControlsAmagruss Sensors

Puro TechEPSGerry McCluskey Eng.

Globally the French companies Veolia and Suez and the German energy conglomerate RWE

dominate. Other global players include Bechtel, BiWater plc and Saur. 15

1.1.6. Drivers

The EU Water Framework Directive (WFD) is a key driver as it requires the quality of all waters to be protected and improvements to be made, where necessary, to achieve at least ‘‘good status’’ by 2015. Major legislative revisions have been provided for in the Water Services Act 2007 which incorporates a comprehensive review, update and consolidation of all existing water services legislation, and facilitates the establishment of a comprehensive supervisory regime to ensure compliance with specified performance standards. In summary, the Act includes provision to:

Consolidate water services law into a single modern code, for ease of access and application,

Introduce a licensing system to regulate the operations of group water services schemes,

Amend the Environmental Protection Act 1992 to assign responsibility for supervision of sanitary authority water supplies to the Agency.

Strengthen administrative arrangements for planning the delivery of water services at national and local level, and

Place duties of care on users of water services in relation to water conservation, protection of collection and distribution networks, and prevention of risk to public health and the environment.

More stringent requirements in relation to discharges to waters under the EU Dangerous Substances Directives will also impact on all sectors whose actions influence water quality. Ireland’s compliance with the EU Urban Wastewater Treatment Directive improved from 25% to 90% during the NDP 2000-2006 implementation period. This was mainly as a consequence of providing secondary treatment for the larger town and cities (population equivalent> 15,000). Ireland is fortunate in that we are on a small island with our major conurbations on the coast. As a consequence there has not been a requirement to go beyond secondary treatment save for those plants discharging to sensitive areas and inland waterways.

15 http://www.citizen.org/cmep/water/general/majorwater/

Once implemented, the Directive on environmental quality standards for surface waters will require the preparation of river basin management plans, and the subsequent implementation of the agreed measures. The EPA is expected to introduce stringent measures to give effect to this Directive. The Directive on Priority Substances, a daughter Directive to the WFD, will increase the compliance burden; and by definition generate new business opportunities. Listed heavy metals and organic chemicals must be monitored and removed, where necessary, to comply with limit values.

The key pieces of legislation in Northern Ireland are the implementing regulations for the EU Urban Wastewater Directive and the EU Water Framework Directive. The Regulations require a new, strategic planning process to be established for the purposes of managing, protecting and improving the quality of water resources. The Department must carry out the analytical and preparatory work required by regulations and prepare proposals for environmental objectives and a programme of measures for the river basin district and the part of each international river basin district falling within Northern Ireland (Regulation 11). Those objectives will translate the generic environmental objectives of the Directive into specific objectives which take account of the particular situation in each district.

Drinking water regulations continue to influence water treatment options. There are currently no limits for the chryptosporidium parameter in Ireland while limits have applied in Northern Ireland for a number of years.

Infrastructure and technology procurement is another key driver. The current national investment programmes in Ireland and Northern Ireland present a unique opportunity to drive sustainable procurement and maximise the options for local technology suppliers (“technology forcing”) to provide these systems. In the absence of such a decision, traditional systems, lacking innovation, delivering conventional standards are likely to be installed with Irish companies acting as agents for overseas technologies. This is a window of opportunity to provide demonstration sites and develop a knowledge economy – a window that is narrow in time.

There is near universal metering across Europe, the USA and Australia. High meter penetration influences the approach that companies may take to certain activities. Water metering and unit charges have created an opportunity for greywater recovery for use in non-potable applications such as toilet flushing in schools. Harvesting, treatment and distribution/storage of greywater are the main markets. Such systems benefit consumers by avoiding charges for local authority supplied water and benefit local authorities by reducing supply demands, which in turn avoid collateral leakage losses, treatment chemicals and energy requirements for purification and distribution.

Climate change may lead to future water shortages. Dublin City is already suffering supply

shortages and is looking at diverting water from the Shannon or desalination as possible options. Either option will require a major energy commitment either for pumping long distances or heat energy for distillation or pumping energy for membrane systems.

As already pointed out, the location of Ireland’s major conurbations on the coast has facilitated the discharge of treated effluent to sea, relying on the assimilative capacity of the receiving waters. However, concerns about emissions of micro-organisms and micropollutants may increase in inland locations. This concern is likely to be addressed in mainland European locations first, driving the development of technology leading to higher effluent standards. Ireland may continue to use traditional technology, awaiting a revised Directive, or attempt to pro-actively anticipate this trend.

1.1.7. Weaknesses

Problems with Design, Build and Operate Process: There is concern that specialist water companies are not maintaining or growing technical competence due to pricing pressures from the tendering process in DBO plants which is turning what was a service led business into a commodities one. Feedback from a number of companies is that they cannot compete with non-specialist suppliers for municipal contracts in the supply of treatment chemicals. This has been described as an “unfortunate dumbing down” of services and quality of technical investigation work provided, due to specialist services being offered by new entrants into the market at cut-price rates. The poor quality of work provided by these "new entrants" has often reflected the low prices. Unfortunately the low quality of work has often been accepted by the client, as the over-riding consideration is the price rather the quality of the longer-term service. Experienced staff are required to provide the advice and direction which the industry requires.

Engineering consultants have also identified the “commodification” of engineering services. DBO is being promoted by political drivers rather than the needs of the industry. Design has moved to the DBO contractors, stifling innovation in design and the implementation of new technologies. The DBO providers offer a completely different viewpoint, however, claiming that DBO has “raised the bar” in providing unique solutions for each site with innovative designs that operate as efficiently as possible with minimum power, chemicals and labour requirements.

Monitoring and enforcement: Failure by water suppliers to continuously monitor basic parameters such as chlorine (indicator of the effectiveness of disinfection and removal of E. coli) and turbidity (indicator of effectiveness of the treatment barrier to Cryptosporidium) puts populations served by those water supplies at risk. Water suppliers should avail of the contingency fund provided by the Department of Environment, Heritage and Local Government (Circular L7/07) for the installation of such equipment where funding has not already been provided for this purpose. Local authorities need the powers and resources to

regulate the installation and on-going performance of water supply and wastewater treatment systems. In the absence of such enforcement, health risks will continue and there is little incentive to adopt better quality systems and management practices.

Non-Domestic Water Metering: Charges for water services differ between local authorities, depending on the cost of their water and wastewater infrastructure programmes, the cost of operating their treatment plants and the cost of administering the metering/billing elements of their programmes. Water services metering for non-domestic users was to be introduced by all local authorities by the end of 2006 but a number are still outstanding. Fingal County Council, (as the lead authority on behalf of the four Dublin Local Authorities), awarded the €40m contract with Gerry McCloskey Engineering Ltd, to supply and install an estimated 42,000 automatic reading water meters on non-domestic connections across the Dublin region. Installing meters on the non-domestic water connections is in accordance with the Government’s National Water Pricing Policy Framework to comply with the Water Services Act. Until the scheme is fully operational, leak detection is difficult and the economic instrument of paying by use is absent.

Research & Development: There has been relatively little investment in water-related applied research with the notable exception of limited EPA funding. One of the seven principal thematic areas under the Environmental Protection Agency (EPA) programme for Science, Technology, Research and Innovation for the Environment (STRIVE) is Water Quality and the Aquatic Environment.

1.1.8. Case Studies

EPS (Electrical & Pump Services)

EPS employs over 300 staff between branches in Mallow, Co Cork, Ballyhaunis in Co. Mayo, Mountrath in Co. Laois and Naas in Co. Kildare. The company also has subsidiary companies EPS Environmental in Cookstown in Co. Tyrone , JF Andrews in Enniskillen in Co. Fermanagh and AH Cullen in Naas Co. Kildare. At the time of founding in 1969 the main thrust of investment in the water and wastewater industry was the provision of group water schemes. EPS's growth from the mid to late 1970s was rapid. In the 1980s EPS moved into the provision of regional water and wastewater schemes which provided a new platform to launch the company into collaborations with major consultancy firms, and on the path to significant local authority contracts. Throughout the 1990s EPS grew with contracts for everything from industrial wastewater treatment facilities in dairy, chemical and food industry installations to the acquisition of Aquapure in the UK, which opened up markets in Cyprus, Bahrain, Libya, Saudi Arabia, Scotland and Wales.

The year 2000 brought EPS into the country's first consortium for a D.B.O. (design, build and operate) NDP project for Cork's Main Drainage. Four additional partners came on board, three international expert groups and Hegarty's of Cork. The consortium pre-qualified, tendered and won

the contract for the largest greenfield-site wastewater treatment plant ever constructed in the British Isles. The project treats the wastewater generated by a population of some 380,000 people.

EPS now also has operations in Drogheda, Dundalk and Limerick. A new division of the company, EPS Bison, was established in 2002, tapping directly into the potential of Ireland's housing boom; particularly the rural housing boom and the specific requirements of these rural 'one-off' dwellings where septic tanks have been traditional.

The Programme for Government, has flagged the introduction of grant aid for the upgrading of all septic tanks aged 15 years and over. This marks an opportunity for EPS since it already supplies a product called the Aquamax, specifically designed for retrofitting existing and defective septic tanks. EU Directives have been the primary driver because a high proportion of Ireland's drinking water is currently considered to be under potential threat. EPS is the first and only Irish contractor appointed to the Scottish water investment delivery programme.

EPS and New Technologies:Twelve membrane bioreactor (MBR) plants installed across Ireland by November 2007.Two ultrafiltration water treatment plants installed.Four thermohilic aerobic digesters for sludge treatment producing class A biosolids.Numerous anaerobic digesters with complete CHP units attached.Sludge dryer producing pelletised by-product for re-use.Installation of STED pilot project in Co. Tipperary.Installation of vacuum sewer system, Co. Tipperary.

New Membrane Bio-reactor Halves the Size of Wastewater Treatment Plants

Standard wastewater treatment today has four stages (see below). Thanks to a new technology, one step in the treatment can be avoided. Usually, the biological reactor consists of bacterial biota either suspended in the liquid or fixed on a substrate. An alternative technology named membrane bioreactor combines biota suspended in the liquid and a filtration membrane, thus providing clarification, aeration and filtration.

Researchers from Granada University in Spain have tested a membrane bioreactor using

ultrafiltration membranes. 16

This solution has been tested and validated in a wastewater treatment plant which processes wastewater from the dairy industry. Such wastewater is highly polluted and rich in organic matter.

Compared to standard plants, the size of the biological reactor could be reduced by 40% to 60%. The quantity of sludge resulting from the treatment was also reduced. Secondary decanting was completely eliminated. According to the authors, construction of the plant would be less expensive than that of conventional plants (but see below). Moreover, researchers foresee that the primary

16 EU ETAP Programme http://www.ec.europa.eu

decanting stage may also be suppressed in the future.

One of the main advantages of this new wastewater treatment process is that a larger flow of water is treated in a smaller purifier, which reduces the size of the plant. This is especially relevant when available space is scarce, for example in growing urban areas.

Brightwater Engineering, now part of FLI but formerly owned by Bord na Mona, have installed a membrane bioreactor wastewater treatment plant in Half Way, Co. Cork. This plant illustrates the advantage of having a small footprint, with the additional potential advantage of producing an effluent of higher discharge standard, but arguably at a higher capital and operating cost than traditional plants.

Vacuum sewers and Septic Tank Effluent Drainage Systems in Tipperary

Some €4m has been allocated to pilot test new types of wastewater collection and treatment systems in seven villages in Tipperary. “Vacuum sewers and Septic Tank Effluent Drainage Systems (commonly called STEDS) have proved to be a cost effective alternative to conventional gravity and pumped sewerage systems in other countries and I want them tried here”, according to Dick Roche, former Minister of Environment, Heritage and Local Government. The STEDS system retains existing domestic septic tanks on-site but collects the effluent and transfers it through a small diameter PVC

pipe for treatment at a central location17. It is designed to solve some of the more common problems with septic tanks, including ponding and run-off of effluent with resulting odours and the risk to local watercourses and groundwaters.

17 http://www.environ.ie/en/Environment/Water/WaterServices/News/MainBody,16121,en.htm

Supercritical Fluids International

Supercritical Fluids International, a start-up Irish company has recently received investment from key venture capitalists. The company has purchased the intellectual property rights and pilot plant for supercritical water oxidation technology from Swedish company, Chematur Engineering. The aim of the Irish company is to develop, demonstrate and commercialise this technology which destroys wastewater sludge with a potential energy surplus. It resolves concerns about residual pathogens and organic micropollutants, reducing the volume of sludge which may, in turn, undergo iron and phosphorus recovery. The carbon-dioxide formed may be considered renewable is that the carbon is of biogenic origin and since the oxidation occurs in water there is no need to use energy to concentrate or dry the sludge for processing. Overall, the process becomes a net energy producer under suitable conditions and may also be used as a technique to process industrial and commercial organic waste to energy.

1.1.9. Barriers

The Irish market is small and leads to Irish companies acting as agents for technologies developed elsewhere. In water treatment the much larger markets in Germany, UK and the USA are ahead of the Irish market in terms of available technology.

Companies involved in supply of consumables to municipal water and wastewater treatment plants see the tendering approach to procurement as a bureaucratic one and prefer to concentrate on the commercial/industrial market where the decision-making process is quicker and less price sensitive.

Ecogen Energy and Environmental TechnologiesEcogen is an SME based in Northern Ireland, serving a client base throughout the island of Ireland. Ecogen sells two main types of non-chemical water treatment:

Ionic Water Sterilisation Magnetic Water Conditioning

The ionic water sterilisation system replaces the need to use chlorine or ozone based water treatment, reducing costs, environmental impacts (materials and energy use) and health safety risks associated with the handling and storage of chlorine or ozone. The company has installed water treatment systems in hospitals, hotels and the food and drink industry. The use of the technology is claimed to reduce the carbon footprint of water treatment relative to traditional technologies.

Investing in traditional technology is a conservative approach that will not develop indigenous expertise or anticipate future quality standards. A very high proportion of planned investment will go into construction costs rather than into knowledge services.

Abstraction of groundwater or surface water without charge offsets the economic driver of water charges, but may be argued as valid since any treatment is directly undertaken by the abstractor.

High standards must be specified, monitored and enforced. Such an on-going requirement will favour more reliable systems with a valuable service element. Because of the dispersed occurrence of effluent treatment in Ireland, it falls to the Local Authorities to regulate many small installations. The Local Authorities lack the capabilities to do this, resulting in the health threats already experienced and not providing the incentive for users to invest in higher quality systems and services. Stricter regulation and enforcement, to include performance monitoring and maintenance review is needed.

Small scale goods and consultancy service providers are being squeezed out of the market by the tendering process for major contracts. Arguably this is delivering better value for money in the short term and these providers are unlikely to have significant growth potential, but their demise will reduce the overall national technological competency, increasing reliance on external providers and restricting the potential for the emergence of new business. Irish companies may be confined to agents for overseas technologies, lacking the expertise to enhance a knowledge based economy.

1.1.10. Opportunities

The challenges - therefore the business opportunities - facing Ireland in water and wastewater treatment include:

Completing outstanding infrastructure projects under the Urban Wastewater Directive; Inadequate water supply (Dublin Region) and impact of global warming; meeting water quality regulations; protecting human health (chryptosporidium and E. coli outbreaks in water supplies) infrastructure deficit in water supply and wastewater treatment; meeting increased demand from users; water leakage; differential water pricing in local authorities; Diffuse pollution from agricultural sources, municipal wastewater treatment plant

discharges and septic tanks; and Implementing the Water Framework Directive’s water quality objectives.

The market opportunities created by the implementation of the Urban Wastewater

Directive are nearing maturity with some niches remaining to be filled such as sludge treatment and disposal. Wastewater treatment plants effect a reduction in oxidation demand by biological processes. The ensuing micro-organisms must be periodically “wasted” (removed), in combination with inorganic materials and other non-degraded substances. The traditional approach to dealing with this “sludge” has been land filling or land spreading. Some 121,750 tonnes of dried sludge was produced nationally by wastewater treatment plants in the period 2004-2005. Some 76% of this went to agriculture and 17% went to landfill. Adoption of the Landfill Directive will prohibit the latter and there are concerns about the former. Sludge may contain pathogenic micro-organisms, toxic heavy metals and micropollutants such as endocrine disruptors. Anaerobic treatment or composting may address some of the microbiological issues but concerns may remain, requiring careful management and monitoring of landspreading. Incineration or the emerging technology of supercritical water oxidation will provide more certain destruction.

Intensive agriculture, a spreading of dwellings with an increasing population unmatched by development in services has threatened Ireland’s water quality. Water supplies have been contaminated and eutrophication is a concern is some areas. Privately operated (single dwelling, group schemes) as well as public systems have been found to be inadequate on occasions. Major public investment in the supply of water and wastewater treatment is underway, leading to very large new plant as well smaller, local systems. A number of trends may be identified:

New group schemes are combining smaller entities and replacing others. Higher operating standards are expected.

There is a tendency to adopt the Design, Build and Operate (DBO) model for procurement. Design has shifted from engineering consultants acting alone for clients to DBO contractors that provide the full service.

Domestic sales of water treatment units (UV, ion exchange, membrane filters) are claimed to be increasing, as well as bottled water sales, as a result of either poor quality or perception of poor water quality. This demonstrates increasing public concern.

A range of new technologies for water treatment (e.g. Ionic Water Sterilisation) are available and these are increasingly being adopted for use in the commercial sector, particularly hotels.

The market for water supply and wastewater treatment systems covers a wide scale, from one-off housing to cities. There are opportunities to provide integrated packaged systems across this scale. Such systems can be constructed from supplied components and integrated in a design, build and operate service, remotely monitored and serviced as required. They can be engineered to provide high quality potable water or effluent as relevant, with a small footprint that will address likely future requirements.

The European Commission estimates 40% of water is wasted across the EU. Opportunities

lie in leak detection and repair and water use reduction through metering and monitoring. Demand side management services will become more attractive as metering and associated charging is introduced. This will present opportunities for consultancy services, with follow-on sale of more efficient water using devices.

Many of the existing Group Water Schemes have been operated on a voluntary basis. Clearly, the provision of operating and maintenance services is a future demand.

Remote sensing and control of small water and wastewater treatment plants is consistent with the previous point. In-situ sensing, telemetry and automation of validated systems will grow.

Grant aid for the upgrading of all septic tanks aged 15 years and over was promised in the Programme for Government. Ireland's Domestic Effluent Treatment Association (DETA), an all-island association whose members include Biocycle, Bord na Mona, Balmoral Tanks, EPS, FM Environmental, John Molloy Engineering, Klargester Environmental and Envirocare should be well placed to provide wastewater treatment systems with the required levels of treatment and durability for single dwellings.

On-going contamination of water supplies by cryptosporidium and e-coli will present opportunities to provide retrofit final purification equipment.

Provision of individual household water purification treatment units is another growth market created by contaminated water supplies. In principle, wastewater can be purified to a quality that allows it to be reused. In the extreme, it can be recovered to potable quality and better. The availability of water in Ireland is such that this is an unlikely approach for human potable supply, but the industrial application of such “closed water cycles” is reasonable where there is a requirement for a substantial quantity of water at less that potable quality. Application of water unit charges and increases in these charges has induced some companies to examine such an integrated approach. The feasibility of this will be driven by an economic balance of the capital and running cost of water recovery versus the purchase and disposal cost of local authority supplied water.

The EPA water quality research programme is focused in two main areas of research: eutrophication from agriculture and forestry; and water quality. The former topic has four main aspects, sources and pathways of nutrient losses, seasonal variation of phosphorus losses from soil and field management and nitrate leaching from soils. In addition to these large-scale projects there are a number of medium scale projects on topics such as ecological assessment of lakes, endocrine disruption in fish and impacts on ground water

with a particular concern regarding eutrophication from agricultural sources. 18 In addition,

18 http://www.epa.ie/EnvironmentalResearch/ProjectSearch/WaterQuality/

the ERTDI Programme 2000 – 2006 has funded a suite of projects specifically to address the research requirements for the Water Framework Directive in Ireland. The total funding awarded was of the order of €2 million. One of particular interest is being conducted by NUI Galway, “Treatment and Monitoring of Nutrients, Odour and Sludge at a Small-town Demonstration Wastewater Treatment System”. This will examine new technologies, control, monitoring and developing operational and design guidelines for small-scale wastewater treatment systems, including tertiary treatment. EI should encourage the commercialisation of this research.

A programme of new and innovative technologies funded by the Marine Institute and the EPA is to provide instant alerts on pollution incidents, falling water quality levels and poisonous plankton blooms in bays, rivers and lakes directly to computer screens in the country. New approaches to monitoring are being developed at a number of research institutes across the country. These include advanced remote sensor and monitoring technology that can be applied to the EU Water Framework Directive. The three projects being funded under the first phase of this strategic programme are:

SmartCoast: aimed at developing novel sensors to continuously provide water quality data via wireless links to a web-enabled interface, thereby enhancing the ability of monitoring and regulatory bodies to achieve compliance with the WFD.

The Cytometry project aims to develop a miniaturised multi-channel system capable of detecting and counting bacteria and viruses in water. At present, this technique is limited to laboratory use. The new system will use cell counting coupled with suitable immunological (antibody) markers and fluorescence markers.

The Optical Sensing project aims to deliver a new highly efficient and innovative monitoring system based on optical oxygen sensing (and respirometry). The new biosensor method will provide primary screening of marine samples thus allowing identification of contaminated, suspicious and life-threatening samples.

Since these technologies can be applied not only in Ireland, but also across the world, this offers an opportunity for Irish researchers and businesses to play a significant role in what could be a highly lucrative market, estimated to be worth some €550 million in Western Europe alone.

Demand side management, through improved efficiency by using non-potable water for appropriate uses, e.g. rainwater or recycled wastewater, low water use devices domestically and industrial efficiency will require consultancy services.

Analytical services to confirm on-going quality is another growth area. In addition to off-site laboratories there is scope for development and application of local sensors with remote monitoring.

Energy efficiency in the operation of systems will require more efficient equipment e.g. pumps, blowers, diffusers; more efficient use of equipment e.g. variable speed drives, management systems, instrumentation and automation; and local energy generation e.g. biogas fuelled systems, solar or wind powered – even if only for instrumentation.

The following would appear to be specific areas with future growth potential:

Integrated, packaged, compact plants for water supply, wastewater treatment. Such plants should achieve high quality outputs, requiring the use of “non-conventional” (in Irish terms) technologies: membrane filtration, membrane bioreactors, sequencing batch reactors, UV disinfection, ozonation exceeding existing Irish standards, anticipating future concerns about micro-biological and micro-pollutant contamination.

Technologies and processes which reduce the Greenhouse Gas Emissions (GHGs) or Carbon Footprint associated with water or waste water treatment.

Instrumentation and automation of such plant to support remote monitoring, operation and management.

Operate contracts for municipal treatment plants provides opportunity for private sector (some DBO companies now operating to ISO 9001/ISO 14001 and include the DoEHLG PMS system).

In-situ sensing of relevant parameters and laboratory quality assurance services. Energy efficient equipment, e.g. diffusers and local energy generation e.g. solar powered systems

for instrumentation. Waste to energy plants e.g. anaerobic digestion, supercritical water oxidation. All of the above are applicable across a wide range of application sizes, from single dwellings to

conurbations.

Due to the nature of our island status tertiary treatment technology has had limited implementation in Ireland. However, there is opportunity in European and other markets where nutrient and microbial removal are more pressing.

As many member states continue to have poor water quality, EI should target those countries that clearly needed additional investment where Irish companies have the

requisite technologies or expert services. 19 Water and waste water projects are generously co-financed by the EU Cohesion and European Regional Development Funds.

1.1.11. Conclusions

The market is very competitive at present. The majority of opportunities over the next three

19 The European Commission reports on a regular basis about the implementation of the WFD, COM (20070 128 final, 22 March 2007. See also SEC (2007) 362 dated 22 March 2007.

years relate to extension into biological secondary treatment and addition of sludge treatment. Opportunities in the water segment are limited in numbers with signs of an

acceptance and demand for advanced solutions such as membranes. 20 New sources/supplies are required for Dublin, currently the subject of a joint RPS/Veolia study. Upgrades may be required to existing infrastructure including treatment and supply systems.

The National Development Plan and Investment Strategy for Northern Ireland provide an opportunity to “force” improved technologies, by the creation of a market for goods and services using green procurement.

Setting high standards for water quality and enforcing these standards will stretch providers to innovate. Existing and new infrastructure may be considered as pilot and demonstration sites for better technologies. Since the Local Authorities are often the operators of this infrastructure, they should be engaged to support this development. With the government as their primary funding source, there is a clear lever to guide them.

A small number of Irish companies already exist which can assemble integrated package plants in this sector. Research funding should encourage the development of more sophisticated plants, in particular the introduction of improved automation, sensing and logging and technologies which will surpass existing Irish quality standards.

In common with other EGS sub-sectors, the water and waste water treatment sector is not networked to take advantage of market intelligence, legislative change, and emerging technologies and current and planned R&D effort. Building the capability of the sector to take advantage of significant future investment in infrastructure on the island and in some export markets in Europe should be a priority.

The imminent large scale Irish investment in the water sector should be seen as a proving ground for Irish companies and a stepping stone to export markets.

If Ireland had a single water and waste water authority, it is likely that this would generate significant economies of scale, for example in terms of bundling projects to attract more global investors. Typically, they would form JVs with local partners. A single authority might also attach more priority than is the case at present to the introduction of a wider range of treatment equipment and technologies. Presently international investors are tendering for DBO projects in the €20-30m bracket in Ireland. Large-scale projects underway in NI are the Alpha and Omega projects.

20 Op cit Frost and Sullivan.