A solar-powered desalination plant in California's Central Valley is looking for investors to fund the cleanup of a long-term water pollution problem.
The developer, WaterFX subsidiary HydroRevolution, sees a business opportunity in the Central Valley's brackish water supply. The company estimates the region contains a million acre-feet of recoverable water per year, which can be sold back to farmers and cities. The water would be especially valuable in a drought year like 2015, when most farmers are getting none of their contracted-for deliveries from the federal Central Valley Project.
The company yesterday announced it would sell $10 million worth of shares in a direct public offering to California residents in order to finance an expansion of a solar thermal desalination plant for the Panoche Water and Drainage districts in Firebaugh, Calif.
"They're getting value both in cleaning up the drainage water but also in providing a source of fresh water," said WaterFX co-founder and Chairman Aaron Mandell.
The Panoche Water District, which serves 38,000 acres of farmland in the middle of the Central Valley, has a problem caused by farming its naturally salty, mineral-rich soil. Irrigation flushes the pollutants through the soil, creating a brine that makes the land less productive.
The district has a drainage system to collect the brine, but it sends the water to a tributary of the San Joaquin River, which empties into the Sacramento-San Joaquin River Delta, the state's main water delivery hub, which supplies water to two-thirds of its residents. Panoche is required to stop discharging its drainage water into the San Joaquin River by 2019 to meet salinity and selenium standards, under an agreement with the Bureau of Reclamation and state water quality regulators.
The desalination project could be a key tool in solving the region's decadeslong irrigation problems. To meet the 2019 target, Panoche has already taken 6,000 acres of farmland out of production to serve as a drainage basin for the brine, and has shifted some of that acreage to growing salt-tolerant crops like wheatgrass and pistachios.
"Pretty much what they're doing is providing the service for us that our farmers need," said Betty Lindeman, drain water treatment plant coordinator for the Panoche Drainage District. "They wouldn't be able to farm because they have to be able to drain."
Mandell compared WaterFX to rooftop solar companies that have been galvanizing the traditional electricity business by competing directly with utilities.
"You would call a company like SolarCity and you would just sign a new electricity contract with them," he said. "We want to do a similar thing for water. We can provide you a better, more reliable source of water if you enter into a water contract with us."
Like a solar thermal power plant, the desalination plant works by concentrating solar panels on a volume of liquid -- brackish water, in this case. The water is heated to the point of evaporation, then condensed, and the salt and other minerals are removed as solids.
WaterFX's contract with the Panoche Water District will process 2,200 acre-feet of water per year from a 6,000-acre area, with the option to expand to up to 5,000 acre-feet. The pilot plant produced 20 gallons per minute and cost about $1 million, funded largely through a 2002 state voter-passed water bond that contained $50 million for desalination projects. The expanded plant will have a capacity of 2 million gallons per day, or about 1,400 gallons per minute. It's projected to come online in June 2016.
Mandell is hoping to attract $10 million in investment in order to get loans to cover the remaining $20 million in costs. WaterFX is selling up to 2 million shares at $5 each, with an estimated dividend of 6 percent annually. Accredited investors can buy up to 1,000 shares, while nonaccredited investors are limited to 400 shares.
"It's hard to get traditional financing because we can't point to other solar desalination facilities that have been operating for 10 years," he said. Residents might want to invest because "it's a feel-good project," he said. "People understand the water situation in California; people want to be part of something that's a solution, or a potential solution."
Mandell said solar-powered desalination has several advantages over reverse osmosis, the technology being used in several larger plants under development on the California coast. It separates the water from its contaminants more efficiently, creating usable byproducts like nitrate fertilizers, gypsum construction material and selenium health supplements, he said. It uses 75 percent less electricity per cubic meter of water. And because land in the Central Valley is cheaper, the plant can afford to buy the 60 or so acres it needs to house the solar panels.
The Bureau of Reclamation is working on another pilot desalination plant nearby that is studying reverse osmosis as one of several potential technologies. But the Central Valley's water is so laden with minerals that it can clog the reverse osmosis filters.
"The water we're processing is notoriously difficult to treat," Mandell said. "Reverse osmosis works great for seawater. For this, it doesn't work really well." He estimated his technique would cost about $450 per acre-foot -- half as much as desalinated seawater using reverse osmosis.