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Eric Jankel, CEO of Aqualyng, talks about advantages in energy recovery and the power of build-own-operate contracts.

Eric Jankel is CEO of a Norwegian company with an interesting history. Aqualyng is part of the Lyng Group, a company with a background in clever, small-scale engineering.

Founded by Bjorn Lyng, the group holds a patent for a device best-known to the business traveler - the hotel safe with a touch pad locking mechanism - has made custom drill bits for the off shore industry, and developed its own seawater reverse osmosis (RO) desalination system.

Although Aqualyng is Norwegian registered and essentially owned by Norwegian shareholders, Dubai is the effective commercial headquarters of the company, as it pushes its way into the desalination industry.

It has been selling complete plants on a turnkey basis and its competitive advantage comes from a piece of proprietary technology, invented by Bjorn Lyng; an energy recovery device known as a recuperator. The recuperator has allowed Aqualyng to provide a lower overall kWh cost per cubic metre of water over the life of an RO plant.

"Aqualyng AS was founded in 2002," said Jankel. "Since then it has sold 10-12 RO plants with a capacity of between 1 000 m³ per day up to 9 000 m³ per day. We're finishing projects in Oman for Occidental and Shadid Steel, and one in Jeddah for a royal palace, as well as projects in Morocco and Egypt."

The company is now turning the economic power of its energy recovery device toward a build-own-operate business model. This sees Aqualyng develop desalination plants for its customers on the basis of a contract to sell that customer water in the future.

The technology was first developed for a resort-based desalination project on the Canary Islands in the mid 1990s. By 2002 the Lyng group decided it wanted to sell bigger plant on a global basis. The change in the business model came after the addition of a new shareholder.

Bernt Osthus was a Trondheim-based lawyer retained by the Lyng Group, and his proposition was to sell the water, rather than the equipment to make it.

"Osthus bought 10% of Aqualyng and then started to develop this strategy with Bjorn's son Ragnar," said Jankel. "Aqualyng Holdings was formed to do BOO projects on long-term contracts, selling water and using the technology of the recuperator as part of the competitive advantage."

"It's an economic model that is well proven in this region. For the project's structure and finance, we generally like to get an 80:20 debt-to-equity ratio. Basically, it is the strength of the off-take contract and the credit worthiness of the off-taker that secures the debt."

Technology

The technical advantage Aqualyng claims is distilled down to the recuperator, an energy recovery device integrated into the RO plant.

"In seawater RO, it really is very much open technology, with very little proprietary technology," said Jankel.

"On these BOO projects, the key thing for the owner and developer is the so-called life cycle costs - the blending of the capital costs of the project with the operating costs - so we want to optimise these as best we can."

"There are lots of trade offs between the capital and operating costs in seawater desalination. For instance you can select a high-pressure pump that will last three years based on construction, but seawater is highly corrosive, so the selection of a seven-year pump, or a three-year pump, affects how much it costs you to replace the pump over the life cycle.

"There's a lot of engineering know how around the life cycle cost factor: energy is normally the highest single cost. Our energy recovery device gives us an advantage over our competitors, who don't have access to our technology. There are competing energy recovery devices in the market, but we feel ours outperforms those. We are the only BOO seawater RO company that has our own proprietary technology."

The measure of this energy efficiency is in kWh per m3 of water. Even a small energy saving over the 25-30 year life of a project can make a big difference in the competitive pricing of a BOO projects. It is this difference that Aqualyng thinks its technology can make.

"We're in the midst of trying to document what savings our device can offer," said Jankel. "We've had measurements of our device as low as 1.8 kWh/m³, but can't guarantee that. Other manufacturers of energy recovery devices in RO will guarantee 2.4 kWh/m³, although they'll operate better than that. If we could be 10% under that, we would be very happy. It would make a big difference in the cost of the life of the project."

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