January 6, 2012

Boston Business Journal

High-water mark: Cleaning, and drawing energy from, water gains traction

Water innovation has been picking up steam with investors for nearly a decade, but some still refer to the field as the biggest energy problem no one’s heard of — yet.

David Goodtree, a former vice president of marketing at Akamai who’s now working to coalesce a water innovation startup cluster in the Boston area, says water is a $500 billion global industry. Nonetheless, it’s far down on the list of the most popular green technology fields.

“When you say ‘cleantech,’ you think solar, wind, biofuels ...” said Goodtree. “But you know water is kind of the quietly flowing sibling of those other things, and it’s not going away.”

The Water Innovations Alliance estimates that by 2025, more than half the world’s population will live in water-stressed or water-scarce countries. Goodtree says the growing need for clean, drinkable water has caught the attention of venture capitalists in recent years.

Goodtree points to the Cleantech Group’s annual ranking of the top 100 companies, which this year has 12 water-tech companies — more than ever before. The Boston area has 18 water innovation startups, he said.

John Quealy, research analyst with investment banker Canaccord Genuity, said that water technology has been a “Goldilocks investment” — not too hot, not too cold — for investment expectations. Recent advancements in the cost and creation of drinking water around the world, including desalination, along with a focus on reuse and decontamination of water used in resource extraction, have intensified focus on the field.

Resolute Marine Energy Inc., based in Boston’s Post Office Square, was founded on technology that generates power from the energy in ocean waves, said co-founder William Staby. It was only after carefully studying the market that the founders decided to focus that power on the production of fresh water.

“Wave energy is a burgeoning field,” he said. “The question then becomes, where is the nearest term opportunity to apply it? It’s not in electric production, it’s in water production.”

Reverse osmosis — forcing saltwater through a membrane which filters out the salt and impurities — is the standard method used in water purification, but requires huge amounts of energy. Staby says half the cost of desalinating water goes to that process.

Resolute was founded in 2007 with a $400,000 seed round of funding and has since raised close to $1.5 million in grants. The 10-employee company recently finished its first round of trials in the ocean, and “now we’re on the mad dash to commercialize,” with pilot trials planned for 2013, Staby said.

Another player on the local water scene is Oasys Water Inc. in South Boston. The company aims to approach the energy problem in a unique way, using forward (instead of reverse) osmosis, drawing the water through the membrane using a solution of thermolytic salts on the other side. The process requires 90 percent less electricity than desalination through reverse osmosis, said Oasys CEO Aaron Mandell.

“Our goal is to make desalination truly globally affordable,” Mandell said. “Right now, desalination is more of a niche technology.”

Since its founding in 2009, Oasys has received $10.5 million in VC from Flagship Ventures of Cambridge, Advanced Technology Ventures of Waltham and Draper Fisher Jurvetson of California.