Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 02:30 PM

Mr. Colin Sabol

Testimony before
The Senate Energy and Natural Resources Committee
October 20, 2005
Colin Sabol – Chief Marketing Officer, GE Infrastructure
Email:
Colin.Sabol@ge.com       Phone: (215) 942-3151

Introduction
Chairman Domenici, Senator Bingaman and members of the Committee, today it is my honor to share with you GE’s thoughts on both the recently submitted “Energy-Water Efficiency Technology Research, Development, and Transfer Act of 2005” (S 1860) and the “Desalination Water Supply Shortage Prevention Act of 2005” (S 1016). 

Background
By way of background, GE is a global leader in diverse technologies and one of the world’s most recognized brands.  Through our Research and Product Development programs, we consistently provide our customers with advanced technologies to generate power, purify and treat water, reduce emissions, increase energy efficiency, enhance safety and security, and improve health care. 

GE Water & Process Technologies is a leading global provider of water treatment systems and services.   Our treatment systems create safe, affordable “New Water” for millions of people living in water-scarce regions of the world from many sources, including ground water, surface water, sea water and recovered wastewater.  In addition, water is the lifeblood of industry, and our products and services conserve billions of gallons of water annually for our industrial customers.  GE creates this New Water using multiple technologies, including reverse osmosis, electrodialysis, and treatment systems that remove impurities and improve water quality. 

Water Scarcity is Spreading
As population increases and industrial development expands, the stress on water resources will continue to increase.  According to the World Meteorological Organization, the number of people living in regions defined as “stressed” and “high stress” will increase from 4 billion in 1995 to nearly 6 billion in 2025 – an increase of 50% in 30 years. (Figure 1).
 
Figure 1: Global Water Stress
This is a global trend that can also be felt in the US due to shifts in population and impairment of existing water resources.  For example:
• Increasing populations and high demand are depleting freshwater aquifers in the southwest US;
• Groundwater contamination is a growing problem in New England;
• Competition for water access in the Colorado river basin have created far-reaching economic and political tensions in that region;
• Lead and bacteria contamination have affected drinking water supplies in areas, including here in Washington DC.

Paradoxically, many regions of high stress have abundant water supplies nearby.  The problem is one of access to clean, usable water.  There are technology solutions to this problem.  GE and other companies are able to provide technologies to convert seawater, brackish water and recovered water into useful water supplies.  As demand increases, it will become increasingly important to reduce the cost to treat and purify water.

 
Economics of Water Treatment and Desalination
Water treatment costs vary by the amount of salt removal, cost of energy, size of plant, as well as the type of treatment technology.  As shown in Figure 2, different water resources require different treatment technologies, and higher salinities have higher costs.

 
Figure 2: Desalination Costs by Method

 
Desalination costs are dominated by capital investment, energy and maintenance costs. (Figure 3)  Reverse osmosis systems, which utilize membrane technology for water treatment, have the lowest cost of operations, especially in areas with high power cost. 
 
Figure 3: Desalination Cost Breakdown

Technology Advances Have Reduced Cost of Clean Water
GE and others have made great strides in reducing the cost of desalinating seawater using membranes, from over $20/K-gal in 1980 to under $4/K-gal today (Figure 4). 

 
Figure 4: Reduction in Desalination Costs Over Time

While membrane technology advances have resulted in significant cost reductions, energy still accounts for up to 60% of the operating cost (Figure 5).  Further improvements in energy efficiency will deliver sustainable reductions in operating cost.  Along with improvements in energy efficiency, improvements in membrane performance and membrane life through integrated treatment systems can reduce capital cost and life cycle cost.
 
Figure 5: RO Desalination Process Costs

Roadmap for Sustainable Reduction in Clean Water Costs
Membrane-based treatment solutions are essential to creating new water sources such as brackish water aquifers, seawater, and even wastewater.  Membrane based desalination and reuse is a proven solution, but a broader application of these technologies to create meaningful new water sources requires investment to further reduce the energy consumption associated with the operation of membrane systems. 
Significant improvements in clean water cost can be achieved by investing in the development of:
• New membrane and other separation technologies that require less energy than today’s best available technology.
•  New longer life membrane technologies that are resistant to chlorine and other chemicals to reduce maintenance and replacement costs.  
• Advanced membrane systems with increased capacity per capital cost;
• Higher efficiency of energy recovery systems to reduce energy costs;
• Integrated water-treatment, energy-generation systems to increase overall energy and water production efficiency.

GE is already investing in research to develop membranes that have lower energy consumption, improved life, and innovative integrated treatment systems such as the integration of membrane-based desalination and energy generated from wind turbines. 

GE is also evaluating whether to embark upon a number of far-reaching, longer-term water scarcity research programs that could result in disruptive desalination and reuse technologies that would substantially reduce energy consumption, increase throughput, and thus substantially lower the overall cost of New Water.  Such potential programs include nanotechnologies; “smart” membranes (with pores that adjust so that they can perform selective separation); a 10X simplification in pretreatment processes; and advanced remote monitoring and diagnostics.

We are committed to continuing our efforts in these areas, but government support would enable us to accelerate existing programs, and to pursue altogether new research programs.

Comments and Recommendations
We have reviewed the “Desalination Water Supply Shortage Prevention Act of 2005” (S 1016) and the “Energy-Water Efficiency Technology Research, Development, and Transfer Act of 2005” (S 1860), and we would like to share our perspectives on certain aspects of each.

With respect to the “Desalination Water Supply Shortage Prevention Act of 2005” (S 1016), we recognize the value of subsidies as effective means to encourage early adoption and deployment of water treatment solutions that exist today.   And for communities in need, especially given the inflated costs of energy today, short-term assistance with energy subsidies will help those communities more rapidly adopt today’s technologies. 

However, it seems possible that S 1016 could inadvertently drive undesirable outcomes.  For example, it is possible that energy subsidies would encourage certain communities to implement inefficient New Water technologies.  Once such technologies are installed, they could dissuade a community from implementing newer, more efficient technologies.

Consequently, we believe that the long-term, sustainable solution to producing economical sources of New Water lies in developing more advanced, energy-efficient technologies to treat multiple water sources.   And, we believe that the “Energy-Water Efficiency Technology Research, Development, and Transfer Act of 2005” (S 1860) would be an important step towards realizing such new energy-efficient technologies. 

As a practical matter, we believe that substantial incremental funding for research and development would significantly accelerate the development of economical sources of New Water.   We further believe that the S 1860 is focused on the right set of research and development programs.   More specifically, we believe that a broad research and development program aimed at membrane advancements, improved ‘Total System’ energy efficiency, and integrated water-renewable energy systems could lead to a 30% reduction in operating costs and a 25% reduction of capital costs in the next five plus years, with significant reductions achievable in the next one to three years.    Such advances would be consistent with what GE and others in the industry have achieved in the past.  (As Figure 4 showed, the cost of desalinating seawater using membranes has dropped from over $20/K-gal in 1980 to under $4/K-gal today.)

We also believe that it makes sense to begin with a Technology Roadmap.  However, the development of this roadmap could be expedited by building on the Desalination and Water Reuse Technology Roadmap that was published by the US Bureau of Reclamation and Sandia National Labs in 2003.  The new Roadmap should -- in addition to definitively outlining the current state of best available technologies and near-term technological advancements -- take a longer-term view and explore potential breakthrough areas for energy-water efficiency technologies.

In addition, we believe that it is absolutely essential for the Bill to focus more on the process of driving commercialization of funded research proposals.  Based on GE’s own experience developing and commercializing technologically advanced products around the world, we would like to share the following suggestions for enhancing the prospects for successful technology transfer and commercialization:
1) Grant Size:  Private sector grants should be at least $1,000,000 per year.  Such a grant size will encourage “bigger ideas” and draw proposals from a wider base of experienced research and development organizations.
2) Industry Partners:  The Lead Laboratories and the Advisory Panel should select at least one Industry partner to participate in each program.  The Industry partners could participate as advocates, advisors, joint research partners or subcontractors to the principle research entity.  The input of such industrial partners would especially help guide and validate the commercial aspects of the technology programs. 
3) Stage-Gate Development Process:  Administration of the research grants should be separated into phases and aligned with a classic ‘Stage-Gate’ product development process.  GE’s adoption of a ‘Stage-Gate’ product development process, which is based on our leading efforts in Design For Six Sigma practices, has dramatically increased our commercialization success rate .  Funding for each stage of the grant should be absolutely contingent on fully satisfying the requirements of each stage.  This process could be simplified into the following six Stages:

Figure 6:  Stage-Gate Development Process

Thus, for a given government grant, if the research entity fails to meet the requirements of any stage, the administrator would have the ability to terminate the remainder of the grant.

As a leader in the industry, GE looks forward to working with policymakers, users, and the technical community to continue to improve desalination and reuse technologies and increase the availability of economical New Water and energy.  Thank you Mr. Chairman and members of this committee for your time.