Israel’s Sewage-Eating Bacteria Lure GE Cash to Curb Energy Costs

Israel’s water industry is attracting funds from General Electric Co. (GE) and ConocoPhillips as the country develops energy-saving technology to treat sewage, part of a $5 billion program to clean up water supplies by 2016.

Emefcy Ltd., building a fuel cell that uses bacteria to break down waste in water, has raised about $10 million from investors including GE, NRG Energy Inc. (NRG) and ConocoPhillips, its Chief Executive Officer Eytan Levy said in a telephone interview. The process reduces the amount of energy required to treat sewage and generates electricity.

“We’ve seen a significant increase in interest in resource recovery from wastewater that wasn’t there just a few years ago,” Levy said from Caesarea, Israel. The company is targeting sales in Europe and the U.S. and forecasts annual revenue of more than $100 million by 2017, he said.

The bacteria project is a small part of Israel’s effort to alleviate a water shortage without straining limited energy supplies. The country’s dry climate and lack of desalination capacity put it at the forefront of a global increase in water scarcity, which the United Nations says will extend to 30 countries by 2025, a gain of more than 50 percent from 1990.

Israel has doubled its exports of water technology to $1.5 billion following a state-funded program that began in 2006, said Dimitra Christakou, head of water insight services at Bloomberg New Energy Finance in London. The nation has attracted global interest as governments and utilities study how it has invested to cope with the depletion of underground aquifers.

General Electric Funds

In June, Fairfield, Connecticut-based GE opened a research and development center in Haifa, Israel, and invested in Emefcy through Energy Technology Ventures, a joint venture with NRG Energy and ConocoPhillips. (COP)

“It’s important for us to make sure that we’ve got the right technologies,” Steve Kloos, advanced technologies leader at GE Power & Water, said by phone from Minnetonka, Minnesota. “Energy is a big deal in water treatment,” he said, adding that Emefcy’s equipment is different because it generates power while treating the wastewater.

“The more efficient you can be from an energy standpoint, the better the overall economics are going to be,” he said.

Construction of Emefcy’s $1 million fuel-cell production plant on the outskirts of Caesarea will be completed by the end of the year, with first commercial orders ready for shipping by early 2012, Levy said.

Photographer: David Garb/Emefcy Ltd. via Bloomberg

Emefcy Ltd. Chief Executive Officer Eytan Levy. Close

Emefcy Ltd. Chief Executive Officer Eytan Levy.

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Photographer: David Garb/Emefcy Ltd. via Bloomberg

Emefcy Ltd. Chief Executive Officer Eytan Levy.

Energy Costs

Power use makes up as much as 40 percent of operating costs at a typical water-treatment plant, according to the U.S. Environmental Protection Agency. Last year, wastewater treatment accounted for about 30 percent of the world’s spending on water, New Energy Finance data show.

In the Mideast alone, spending on treatment will jump to $17 billion in 2016 from $6.7 billion in 2009, according to Global Water Intelligence. Israel plans to invest more than $5 billion on water and wastewater treatment over the period.

“There is a clear opportunity to modernize the wastewater treatment industry,” said Richard Irving, a founding partner at Pond Venture Partners Ltd., a San Jose, California-based fund that invests in Emefcy. “The driving need is twofold: Water scarcity and the economics of wastewater treatment and energy.”

Israel produces 500 million cubic meters of sewage a year, enough to fill 200,000 Olympic-size swimming pools, according to the environment ministry. Some 75 percent of that is reused for irrigation, New Energy Finance data show.

The country’s Administration for the Development of Sewage Infrastructures invests about 450 million shekels ($128 million) a year on maintenance and upgrades, according to the Ministry of National Infrastructures.

Bubble Treatment

Mapal Green Energy Ltd., based in Nesher, northern Israel, has come up with its own method of treating water while cutting costs. The company has developed a floating aeration system that processes waste by pumping bubbles of air into the water.

Mapal Green has received letters of interest from utilities in the U.K., South Africa and Peru, and is in talks with a Chinese company to form a joint venture, Vice President for Business Development Zeev Fisher said by phone, declining to name the company. Mapal Green plans to raise as much as $8 million “to catch the market,” he said.

Unlike fixed aeration equipment, the floating system sits on the water’s surface, allowing sewage plants to be retrofitted, according to the company, which says its technology can reduce operating costs by as much as 70 percent. It already has 23 plants in Israel, one in Angola and one in Congo.

By 2025, 1.8 billion people around the world will face water scarcity, a situation whereby each person has access to less than 1,000 cubic meters of water a year, according to the UN. Almost half the global population will be living in areas of “high water stress” by 2030, it says.

To contact the reporter on this story: Ben Edwards in London at bedwards35@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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