Cape Town, South Africa — Current and future water shortages, particularly in coastal areas, are causing concern for South African water authorities. Reduced water supply, coupled with increasing demand will drive an increase in water prices and water suppliers will need to address this with alternative, cost-effective technologies. One potential alternative is desalination.

Frost & Sullivan finds that the South African Desalination Plant Markets earned revenues of $23.1 million in 2006 and estimates this to reach $69.7 million in 2013.

“Water supply shortages, an increasing population and growth in the industrial sector (particularly in mining) are the key factors driving demand for water in South Africa,” notes Frost & Sullivan Research Analyst David Winter. “Municipal water managers, especially in coastal areas, are actively seeking alternative technologies and water sources such as desalination in order to solve the current, as well as anticipated water shortages.”

Realising growth in the South African desalination plant market will require strategic focus on two key market areas – the municipal and industrial sectors. These areas represent almost 90 per cent of the future revenue and growth potential in the market.

Focusing on these two particular sectors alone will not suffice though. Further product and service refinement will be required to capitalise on the growth potential offered in the highly competitive desalination plant market.

There is a common view among water sector end-users that desalination is a high-cost option and companies are struggling to overcome this challenge. While desalination costs have reduced significantly with the advancement of membrane technology, end users in the municipal sector are mostly conservative and prefer to rely on existing technology.

“Municipalities, with their limited budgets and bureaucratic decision-making processes, view desalination as a luxury that can only be afforded by developed countries,” explains Winter. “Owing to the constraints of limited budgets and skills, municipal water managers are unable to upgrade existing facilities and adopt new technologies.”

Companies will need to ensure that end-users are aware of the benefits and the cost-effective nature of reverse osmosis desalination technology. Focusing on customer relationship management, effective dissemination of information and customer training is important for desalination plant providers.

Market participants that are able to meet the above-mentioned challenges will be in a position to capitalise on double-digit growth that is expected as a result of economic and population growth, as well as the impending water shortages.

SOURCE: Frost & Sullivan