Desaltition.39(1981)43-52 SlsevierScientificPubhshingCompany, Amstadns-RintedinTheNetherlands

43

AX ASSESSMJBT OF TRE MARRET POTENTIAL FOR SMALL SOLAR POWERRD DESALINATION PLANTS

JARET J. TURNAGE, RARA Establishment, Ames, Iowa; AEDO A. RUSSEIXY, Technology International, Inc., Ames. Iowa

ARSTIXCT

The introduction of a new technological system to the commercial market is

helped by following established procedures for estimating the potential market

for the product. This paper describes the results of a preliminary market analysis

for the manufacture and sale of small solar poirered desalination (SSPD) systems

in Middle Eastern Countries. Overall results indicate that manufactureand sales

of the SSPD system are promising from both technical and economical standpoints.

Xowever, until prototypes are built, some caution is indicated for financing of

production and for purchasing of equipment. Prototype systems are beicg developed

to demonstrate in actuality the commercial acceptance and economic viability of

the system.

INTRODUCTION

One of the greatest constraints on the pace of development in the Middle Rast

has been the scarcity of water resources. A recent assessment of water and energy

demands in the Middle East and the U.S.A. has shown the need for small desalting

plants to provide potable water for dispersed population centers, military instal-

lations, and resort areas vhere there is a shortage of freshwater and where brackish

water or sea vater is available. In such remote areas, small units are considered

a viable economic option which could significantly reduce the high cost of water

transportation. In addition, small self-sustaining units for water treatment can

help alleviate difficulties in delivery of fossil fuels or other energy sources.

They are also not dependent on the availability of skilled manpower which is

needed to operate and maintain large scale desalination operations.

A small solar powered desalination (SSPD) system has baen developed as a highly

automated, small system to convert brackish or sea water to potable or agricultural

water in small and rural communities. This system, as presently designed, vi11

produce up to approximately 10,000 gallons or.35 cubic meters per day of fresh water.

This should supply all water needs for a community of 10 to 500 people. depending

upon water usage applicatiou.

44 TURNAGE AND HUSSEJXY

STUDY OBJECTIVES

It is necessary to plan strategically for the development and demonstration

of the SSPD prototype system. To do so, an effort has been made to integrate the

general requirements for new product development with the specific nature of the

innovative technology used in the SSPD system and with the specific nature of the

Middle Eastern market.

PLAiiING NEW PRODUCTS

The keys to successful m.3rketing of new products are research (both market

research and psychological or attitude studiesj, the intelligent use of published

data, and solid understancling of the nature of th- products and their applicaticns.

Tne basic steps most companies take when they develop a new product generally follow

a recognized sequence, including:

1. :larket forecast - (provides an estimate of how the market for 1 product is likely to develop)

2. Basic market study - (discovers what are the users' or consumers' needs)

3. Product concept and objectives - (gives functional specifications from information already obtained)

4. Evaluation - (the "can we sell it" stage)

5. Feasibility study - (the "can we do it" stage)

6. Initial consumer reaction tests - (puts the projected design to test by visual description or making mock-up)

7. Prototype - (tests the prototype on test beds and under consumer conditions)

8. Production - (tooling up takes place when all the alterations suggest& by the tests have been made)

Each item cn this list may be viewed as a step along the line of bringing a

product from the idea stage to commercialization. If the new concept fails at

any step in this sequence, it means that the product should be reappraised before

further attempts to proceed. In reality. many of these steps overlap. The SSPD

system is currently being evaluated at the intermediate ranges of this scale,

(Steps 4 & 5) prior to prototype development.

The amount of effort devoted to developing sharply defined measures of market

potential depends on a number of factors, such as:

1. ?\vailabilitv of existi- g market data for the product in question.

2. Degree of precision required or obtainable.

3. Strccture of market in ;ihich the product is to be sold-

4. Nature of the product, especially its relative newness.

Experience planners tend to weigh the cost of obtaining refined estimates

against the possible consequences of taking action on the basis of limited or

unreliable information as to market size. In the case of assessing the market

potential for the SSPD system, reliable market data are relatively unavailable

TURNACE AND HUSSEINY 45

and the .qarket structure is rapidly changing. Thus. the degree of precision in

measuring both the short-- ._erm and long-term potential of SSPD plants is subject

to error and must be balanced by consideration of numerous data sources related

to the nature of the product.

DATA SOURCES

It is good practice to develop and compare measures of market potential based

on information from a number of different sources. Therefore, an attemFt was made

to locate as many sources of information as possible including:

1. Public and commercial sources. such as government publications, trade associations, and trade press.

2. Companys' internally developed sales and market data.

3. Companys' sales personnel and distributors.

6. Prcspective users of the product. other specifying influences and authoritative experts.

In accordance with general guidelines for market research, a literature survey

was performed to evaluate general demand for the SSPD system and to estimate various

economic incentives and constraints for establishing the market. This was supple-

mented by a detailed opinion survey which addressed various features of the pro-

posed SSPD system the results of which are reported here.

OPINION SURVEY FOR SSPD SYSTEM

A survey method was used for screening reactions to the SSP3 system. The

survey entailed development of a description of the SSPD system, summar;zing the

technical features, cost estimates, and perceived advantages of such solar powered

desalination units. The description included a process flow diagram of a prototype

SSPD system. This eight-page description was supplemented by a 17-item opinion

questionnaire to assess general attitudes regarding various aspects of the system

and to elicit comments regarding any specific areas of concern_

Over LOO SSPD description and opinion surveys were distributed at the 81;h Inter-

national Water Technology Exhibition and the 7th International Symposium on Fresh

Water From the Sea (Aquatech '80) which was held in Amsterdam from 23 to 27 September

1980. A concerted attempt was made to distribute questionnaires to representatives

from Middle Raster-n countries at the conference, particularly persons from Saudi

Arabia or doing business in Saudi Arabia.

A follov-up letter was sent to persons from or doing business in the Middle

East approximately one week following the conference.

In addition, approximately 300 similar questionnaires were distributed at

Solar Energy U.S.A. sponsored by the U.S. Department of Energy, Department of

Commerce, and the U.S. Embassies in Zurich, Rome, Athens, and Hadrid.

TURNAGE AND HUSSE3YNY

The resul.ts of the opinion survey which was distributed at the desalination

conference proved to be quite positive in terms of response. It must be recog-

nized, horever, that despite the expertise of the respondents, the results are

not representative of man:- relevant market segments, particularly the ultimate

customer or consumer. In addition, the small rate of returned questionnaires

(approximately 204) leaves a large area for speculation. On the other hand, the

xafulness of the data is not altogether negligible when one considers that those

persons who responded are Zhoioughly familiar with the market for alternative

desalination systems by virtue of their technical and production-oriented know-

ledge and experience.

The following is a presentatcon of the survey results. Respondents were not

required to identify themselves on the questionnaire. Xowever, because many

respondents either returned surveys personally or identified themselves on the

forms, it is known that over 50X of the respondents were natives of the 'fiddle

East.

Respondents were given a list of eight Xiddle Eastern countries and asked to

rank-order the countries in rerm5 of (1) need for SSPD systems and (2) ability

tc purchase such sustems.

By far, the Kingdom of Saudi Grabia was perceived as having the greatest need

for SSPD systems. This is due to a number of factors, the main ones being the

large size cf the country, where remote sources of fresh water supplies are less

available, and the relatively high economic status of the country. Progressively

lower rankings were given to Bahrain, the Arab Emirates, Kuwait, Libya, Jordan.

Egypt, and Yorocco. Other countries specified as having a need for SSPD systems

were KigeriafChad, hlgeria, Sudan, and Iraq. Comments generally stated that any

country with sufficient solar radiation c:ould need systems such as the SSPD to

provide e.,ery community with sufficient potable water.

Saudi -Arabia was also regarded as having the greatest amount of purchasing power

for SSPD units. Progressively lower rankings were given to Kuwait, the Arab

Emirates, Bahrain, Libya. Jordan, llorocco. and Egypt. Other countries identified

as having zhe purchasing power to afford SSPD systems were Nigeria/Chad. Iraq,

and Sudan, although Nigeria/Chad and Sudan were ranked very low.

Respondents were also asked whether SSPDs would be purchased mostly by industries,

military, government municipalities, or individuals. Industries were ranked as

the most likely purchasers of the SSPD units, followed by municipalities, military,

and individuals. There irns not a large range in average rankings, and there was

much variability in individual responses. The fact that different respondents

perceive different market segments to be most likely to purchase SSPD units

demonstrates the breadth of the potential market.

When asked what SSPD units would be used for, different individuals perceived

different potantial user groups. Household uses wore ranked first, followed by

TURNAEE AND HUSSEXNY 47

agricultural uses, construction, utilities, and manufacturing uses, in descending

order. Widely varying responses to this item resuLted in 3 sma3.L spread of average

rankmgs. Tfr5.s demonstrates t&e breadth of the potential market. since 3x3 one user

group was consistently rated as more likely than other groups to use the SSPD system.

The survey asked vbat fraction oE the cost of a home would be appropriate far

construction of a reliable, clean, and convenient water suppLy_ The majorit)- of

respandonrs (33X) titought that 6-10 percent of construction costs for hous5ng vould

be appropriate, Of course, responses were qualified by ubere the hausing would

be constructed, En major utban areas, 2X nay be an appropriate figure, while in

certain isolated areas, a much larger figure would not be unreasonable.

Taable 1 presents a summary of responses to various smttements related to the

SSPD system* including need for such 2 systxm, technica and economic feasibility,

sales patential Ear rhe system, and comparative aspects of the system, 'She state-

TABLE; 1 Summary of Opinions Regarding Small Solar Powered Desalination <SSPD) System

r 1

I Strongly No opinion, Strong1 statement Agree Agree Undecided Disagree ixsagre

is a need for small. /v&m? desalxlng x2* 57 4 7

s in the HidJ3.e

7

n&f solar powered plants re preferred over large entral pbmts For remata 14 71 7 7 rib areas am3 isalated ckees of populat%on

er fqstems are eco- mic3.U.y cxmpetitive 4 I3 58 25

spared co solar

48 TURNAGE XID HDSSRTNY

ments were generally preceded by the words, "I feel that--"; responses were

recorded on a pictorial scale which was indexed by the terms "strongly agree",

"agree", "no opinion or unaecided", "disagree", and "strongly disagree". In

addition, personal comments were sought for each item.

Respondents generally agree that there is a need for SSPD systems in the Middle

East. This is not surprising given the number of scattered arid outposts of

civilization which are not supplied bv central fresh water sources. The main area

of concern centered on *Le questionable reliability and maintainability of the

system. Concern was expressed, for instance, that automated small plants should

be avoided in remote areas unless they contained massive control redundancy.

There was overall agreement regarding the technical soundness of the SSPD

concept, and the inclusion of a drawing of the general system layout in the survey

no doubt enhanced its acceptance. However, there was some concern expressed that

while the concept seems sound, a prototype model should be developed to demonstrate

its actual technical feasibility. This is, of course, the next step in test

marketing a new product for, until the product is shown to work in actual practice.

it is often difficult to market the concept. The respondent pool, which represented

technical experts, found no major hindrances to the concept, however. There was

considerable agreement implied that "technical know-how" is sufficient to put the.

system together from already established comnonents. both desal:nation and solar

in nature.

There was overall agreement with the economical competitiveness of the system.

However, long-term economic viability was stressed in the prologue description co

some response bias may have occurred. Indeed, several respondents indicated that

studies have shown that cheap, simple technologies of probable lower efficiency

(i.e., direct solar evaporator with natural draught air condensers) are preferable-

Others indicated that such systems would only be economically viable if they

could be made reliable. Still others indicated that the SSPD system would only

be economically competitive for isolated areas.

Thus, there is controversy over the economic aspects of the SSPD system as

would be expected. Again, until a prototype system is built, it is difficult to

demonstrate the economic advantages of the system. Even then, costs for first-

production models will necessarily he higher than those which can be produced and

sold in quantities sufficient to lower costs. Prices for units are highly variable

and dependent upon the costs of alternative energy sources, labor and production

costs, and establishing cost-effective marketing outlets.

The majority of persons supported the idea that SSPD components and equipment

could be manufactured in the Middle East. Rapid expansion of private sector

industrialization and governmental support for smell business is in fact increasing

in the Middle East. The manufacture of SSPD equipment necessarily depends upon

the availability of components and raw materials. The availability of desalination

TURNAGEAND HUSSEINY 45

equipment and components is greater at this time than the availability of solar

energy components, although there is a trend toward much greater commercialization

of solar equipment in the Middle East.

The opinion was expressed that it would be more feasible to assemble SSPD systems

from established solar and desalination components obtainable by export at the

early stages of SSPD production. Once the skills were developed by the local labor

supply to essemble SSPD units and to gain thereby relevant "hands-on" experience,

then the potential for on-site manufacture of components to meet the specific

system requirements would become more feasible. Indeed, folloving this particular

developmental sequence, from simple assembly to more complex manufacture of compo-

nents, might also be the most cost-effective production schedule since large cap-

ital investments would not be necessary until after the market was established.

Most persons indicated there was a need for small solar/wind desalting plants

in the Middle East. One of the basic premises of new product development is that

the marketability of the product must relate to consumer needs. Where the need

is not already existent, conversely, one must establish that perceived need by way

of advertising and other techniques for attitude change. In the case of the SSPD.

this latter course does not appear to be extensively warranted.

There was also strong agreement that SSPD systems would be particularly use-

ful in remote arid areas. General support for this usage of SSPDs was also

apparent in interNews and conversations with individuals representative of dif-

ferent nations and different market segments. Overall, it was largely agreed that

the cost of transportation of water to these remote arid outposts of civ!.lization

would justify the construction of SSPD units.

Central power grids and Water systems are not necessarily viewed as economically

competitive compared to small solar systems. Economic competitiveness apparently

depends upon the concentration of users; if this concentration is low, respondents

prefer the SSPD system. For instance, central nystems may be preferred in countries

such as Kuvait, but not in countries such as Saudi Arabia. Thus, SSPD systems

arepemeived m beeconomically competitive only for certain locations or populations.

Table 2 presentsasumma ry cf opinions regarding the perceived market potential

for small and large solar powered desalination plants.

The market potential for small solar powered desalination plants is apparently

best with low cost massproduction capabilities. Bowever. a n-umber of respondents

also see a good market potential for SSPD units with government subsidies and

no-interest long-term loans. The market potential for SSPD systems is more specu-

lative with only specially designed and constructed plants available. This is

due primarily to the greater amount of capital risk involved in the absence of

government subsidies. Hovever. even taking into account this private sector risk

factor, the market potential is still perceived as generally being medium to high.

The operation of certain govemme ntal incentives (e.g., the WBuy Saudi" program)

50 TURNAGE AND WJSSEINY

TABLE 2 Summary of Opinion Regarding Market Potential of Small versus Large

Solar Powered Desalination Plants

Very Very

Item High High Medium Low LOU

4arket potential for small solar covered desalination plants

P. with government subsidy 27 46 19 8

). with no interest long-term

loans 9 50 32

:. with low-cost mass produc-

tion 38 25 38

i. with only specially de- signed and constructed

plants available 13 25 29 17 17

&rket potential for large

;olar desalination plants 7 7 21 36 29

may also decrease the inherent risks of specially designing and constructing SSPD

production plants. With currently expanding R h D work related to systems and

components, lower costs and increasing yields will necessarily be forthcoming in

the near future. Thus, low cost mass production ma: be realized earlier than

anticipated, thereby expanding markets.

A number of comments and questions were raised about the feasibility of large

size solar desalination plants; these were elicited both by the survey and inter-

Iviews with experts. The major concern seemed to be that the diurnal operation

plus the low energy density would increase the capital cost. Concern was expressed

tha: there would be an associated increase in storage facilities plus the possible

requirement for acres of solar collectors. Low market potentials were estimated.

primarily because of lack of experience with large size systems. Therefore, one

vould need to convince the customer of the relative benefits of such a large size

system to a greater extent than for a smaller system. However. once the tech-

nological capability were demonstrated on a small scale, _ opinion setmed to favor

the market potential for large systems as well. The key element apparen:ly consists

of demonstrating the technical and economic merits of the solar povered desalting

system on a small scale so that larger markets will follow.

Respondents to the opinion survey vere asked to indicate agreement or disagree-

ment with various descriptions of the SSPD system. Table 3 summarizes responses

to the descriptions.

TURNAGE AND WSSEINY 51

TABLE 3 Summnry of Descriptive Terms Applied to the Small Solar Pouered Desalination System

Description Strongly ND opinion, Strongly

Agree Agree Undecided Disagree Disagree

Ir nobstrusive

There was general agreement that SSPD systems are clean, thar they embody a

pioneering spirit, and that they depend on a reliable fuel supply. Opinion was

divided regarding maintenance-free aspects of the system, This is probably due

to the fact that the system has yet to be tested in actual oper*zion. Again. be-

cause the system has yet to be demonstrated by a working model. rhere is a general

reluctance to endorse both the economical and inobtrusive aspects of the system

design. These are practical aspects which will need to be addressed as rhe system

progresses from the conceptuai development to actual construction phases of marketing.

Although many respondents were undecided as to wherher SSPD plants could he described

as a gooa investment risk, almost half of the respondents agreed that investment

risks were good.

Table 4 summetizes expressions of interest in the SSPD system. Questions

ranged from assessing interest in simply receiving more informarion to active interest.

in financing production and purchasZng units.

As can be seen from Table 4, respondents were all very interested in receiving

more information about these systems- This interest may be moderated by the fact

Chat only those persons who are initially interested in the SSPD system are likely

to compfete the questionnaire and rerurn it, Specific interesr was expressed i;l

rece%ving informscion related to actual. production and tests already performed on

&he system. Thus, at a minimum, conceptual descriptions of the SSPD system has .

generated interest in i.~s progression from the drawing board to actual. production.

52 TURNAGE AND HUSSEINY

TABLE 4 Interest in the Small Solar Powered Desalination System

V-3 Don't Interested Care

Not at all interested

I La Interest in receiving more infor-

! tion about SSPD systems 100

Interest in participating in

development of the SSPD system

I a. participation in design 85 8 8

b_ participation in production 67 25 8

I c. participation in financing production 36 27 36

I d. buying an SSPD unit or units 36 27 36

CONCLUSIOFS

The results of this preliminary survey indicate that the size of the potential

market for SSPD units is substantial. The rapid technical development of both

desalination and solar energy technologies combined with the established demand

fcr fresh water supplies in areas of Saudi Arabia, Africa, and other parts of

the Middle East suggest that the investment climate and sales climate is ripe

for capitalizing on the market. In addition, there is sufficient individual and

governmental financial capability and consumer interest in purchasing new products

such as the SSPD. The next stage of development is the production phase coupled

with further expansion of market research analysis. Test marketing and total

concept refinement will assure product acceptance.