Reverse osmosis gains ground on 'flash' process



There are two primary methods to remove salt from water on a large scale: flash distillation and reverse osmosis. The multi-stage flash distillation process, sometimes shortened to "flash", was the first to gain widespread acceptance. It was initially used in the 1950s, but it wasn't until the 1980s that the process became commercialised on the scale needed in the Middle East. Most GCC countries, including the UAE, Saudi Arabia and Kuwait, are highly dependent on flash desalination facilities to supply water to their urban areas.

In the flash process, seawater is heated to between 90°C and 110°C by condensing steam onto a bank of metal tubes carrying the water. The heated brine next flows into a vessel inside which the air pressure has been reduced. The transition to lower pressure immediately causes the water to boil, almost exploding or "flashing" into steam. The steam is converted to fresh water by condensing it on the tubes of heat exchangers running through the vessel, and the water is collected for use.

The remaining brine, once it has stopped boiling, is transferred to another vessel, in which the ambient pressure is even lower, and the process is repeated. There can be many such distillation stages, each yielding more steam to be condensed into fresh water. The heat exchangers at each stage warm the seawater flowing into the plant, reducing the amount of fuel needed to heat the brine fed into the first distillation vessel.

The second process, reverse osmosis, was commercialised in the 1970s, but initially had higher costs than flash distillation. With engineering improvements, it started to become cost competitive in the 1990s. Reverse osmosis uses a membrane to separate water from dissolved salts. No heating is required, but energy is needed to power a pump used to pressurise the seawater fed into the plant. As the salt water squeezes against the membrane, some water molecules are pushed through minute pores, with a diameter roughly 100,000 times smaller than a human hair. This creates a stream of fresh water on the far side of the membrane. The salt content of the residual brine increases, so some of the super-salty brine is continuously removed and replaced with incoming seawater.

The process is simple in principle, but the devil is in the details: no membrane is so perfect that it rejects the passage of all salts. Membranes also tend to wear out quickly. Still, significant improvements have been made to the process in the past 10 years, such as creating more efficient membranes, extending the life of membranes, and increasing the energy efficiency of pumps. As a result, state-of-the-art reverse osmosis is beginning to offer significant savings over flash distillation, increasing commercial interest in the technology for seawater desalination and wastewater treatment.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”