Energy Recovery Stock

Energy Recovery, Inc. (Energy Recovery) operates as a global leader in energy efficiency technology.

The company designs and manufactures reliable, high-performance solutions that provide cost savings through improved energy efficiency in commercial and industrial processes, with applications across several industries.

Seawater desalination has been the company’s primary market for revenue generation, and brackish water applications are an emerging area of potential growth. These markets range from small, decentralized desalination plants, such as those used in cruise ships and resorts, to large-scale project (‘megaproject’) desalination plants, defined as those which produce over 50 thousand m3/day.

The company works directly with the project bidders, generally large project developers, engineering, procurement, and construction firms (‘EPC’ firm), end-users, and industry consultants, to specify the company’s products prior to the project being awarded, where possible.

The company’s reportable operating segments consist of the Water and Emerging Technologies segments. These segments are based on the industries in which the technology solutions are sold, the type of energy recovery device or other technology sold and the related solution and service or, in the case of emerging technologies, where revenues from new and/or potential devices utilizing the company’s pressure exchanger technology can be brought to market.

Water Treatment Solutions

Pressure Exchangers

The company’s line of pressure exchangers are high efficiency isobaric energy recovery devices made of a ceramic cartridge supported by a highly efficient hydrodynamic and hydrostatic bearing system. Models in this product family are designed for use in a variety of reverse osmosis systems within the water treatment industry, including seawater and brackish desalination, and wastewater treatment.

High Pressure PX Pressure Exchanger

The company’s highly efficient PX Pressure Exchanger family of energy recovery device products delivers unmatched energy savings for water treatment systems. The company offers a variety of sizes defined by the flow and pressure requirements of the system ranging as low as 20 and up to 400 gallons per minute (‘gpm’) (as low as 4.5 and up to 90.8 cubic meters of water per hour (‘m3/h’)) per device at pressures between 400-1200 pounds per square inch (‘psi’) (28-84 kilograms per square centimeter (‘bar’)); however, the company’s customers can design their energy recovery systems to achieve unlimited capacities by installing an array of PXs in parallel.

Small and large desalination projects around the world rely on the company’s range of PXs to achieve optimal operations and maximum energy savings, and the scalability and versatility of the company’s PX can achieve similar success in the emerging wastewater markets the company is targeting.

Ultra PX

The company’s Ultra PX energy recovery device, which addresses key challenges, such as energy intensity and environmental impacts associated with treating wastewater in a variety of water treatment applications. Designed with the pressure exchanger technology that powers the company’s flagship high pressure PX, the Ultra PX, functions similarly to the company’s PX but can withstand higher pressures. The company offers a variety of sizes defined by the flow and pressure requirements of the system ranging as low as 10 and up to 250 gpm (or as low as 2.3 and up to 56.8 m3/h) per device at pressures between 1200-1800 psi (84-126 bar); however, by installing an array of PXs in parallel, the company’s customers can design their energy recovery system to achieve unlimited capacities.

While reverse osmosis adoption in wastewater treatment is growing, the company’s Ultra PX can help accelerate further adoption of reverse osmosis in the growing zero and minimum liquid discharge markets by enhancing RO’s affordability and efficiency compared to thermal treatment options, similar to the impact of the company’s PX in the seawater desalination market.

Low Pressure PX

Products in this family are ideal for municipal and industrial potable water reuse applications that deploy low-pressure RO stages such as municipal wastewater reuse applications. The company offers a variety of sizes defined by the flow and pressure requirements of the system ranging as low as 30 and up to 260 gpm (or as low as 6.8 and up to 59.0 m3/h) per device at pressures between 80-400 psi (6-28 bar); however, by installing an array of PXs in parallel, the company’s customers can design their energy recovery system to achieve unlimited capacities.

Pumps and Turbochargers

The company offers high-pressure centrifugal pumps designed to complement the company’s energy recovery devices for a wide range of RO plant capacities and applications.

Hydraulic turbochargers

The company’s AT and LPT hydraulic turbochargers are high efficiency centrifugal energy recovery devices used in low-pressure brackish and high-pressure seawater desalination systems and wastewater treatment markets. The company’s turbocharger product lines are highly efficient with state-of-the-art engineering in a compact configuration. With custom-designed hydraulics that allow for optimum performance over a wide range of operating conditions, the company’s turbocharger technology offers solutions to capital cost constrained single-stage RO applications, inter-stage boost applications typically found in brackish water desalination and some wastewater treatment systems.

The company’s hydraulic turbochargers deliver substantial savings, operational benefits, and ease of integration into systems.

Pumps

RO requires specialized high-pressure membrane feed and, in pressure exchanger applications, high-pressure circulation pumps. The company manufactures and/or supplies specialized high-pressure feed and circulation pumps for only a portion of the markets served by the company’s energy recovery solutions. The company’s high-pressure feed pumps are designed to pressurize the membrane feed flow and overcome the osmotic pressure requirements of the feed water resulting in the production of desalinated water. The company’s high-pressure circulation pumps are designed to circulate and control the high-pressure flow through the company’s PX and to compensate for small pressure losses across the membranes, PX and associated process piping in many desalination and wastewater applications.

Sales and Marketing

The company’s strategically located direct sales force offers its products through capital sale to the company’s customers around the world. The company maintains a sales and service footprint in strategic territories, such as in the U.S., China, India, Latin America, Spain, Saudi Arabia and the United Arab Emirates, allowing rapid response to the company’s customers’ needs. The company’s team is consisted of individuals with many years of desalination and wastewater treatment industry expertise. In addition, the company leverages its industry and market intelligence to develop new solutions and services that can be adopted by the company’s growing customer base.

Project Channels

The company separates its Water segment sales into three distinct channels that are related to financial, other commercial, and technical aspects of the projects. The company identifies these sales channels as megaproject (‘MPD’), original equipment manufacturers (‘OEM’) and aftermarket (‘AM’).

Megaproject

MPD customers are major firms that develop, design, build, own and/or operate large-scale desalination plants with capacities greater than 13.2 million gallons/day (50 thousand m3/day). A majority of the company’s water treatment revenue comes from this channel. The company’s MPD customers have the required desalination expertise to engineer, undertake procurement for, construct, and sometimes own and operate, large-scale desalination plants. The company works with its MPD customers to specify and optimize its PX solutions for their plant designs.

Original Equipment Manufacturer

OEM customers are companies that supply equipment, packaged systems, and various operating and maintenance solutions for small- to medium-sized desalination and wastewater plants utilized by commercial and industrial entities, and national, state, and local municipalities worldwide. The company sells to its OEM customers a broad set of its products, including the company’s PX, hydraulic turbochargers, high-pressure pumps, circulation booster pumps, and associated services. As it relates to desalination and wastewater OEM projects, these projects comprise plants processing up to 13.2 million gallons/day (50 thousand m3/day), such as those located in hotels and resorts, power plants, cruise ships, agricultural sectors, local and other municipal sites, and industrial facilities. In addition, these OEM customers purchase the company’s solutions for mobile, decentralized ‘quick water’ or emergency water solutions. The company sells not only its PX, but also the company’s hydraulic turbochargers, which offer a lower cost alternative to the company’s PX. Early stage revenue from these projects are dependent on the size of system or retrofit of the company’s customers’ projects.

Aftermarket

Aftermarket customers are desalination or wastewater plant owners and/or operators who can utilize the company’s technology to upgrade or keep their plant running optimally, and usually have the company’s solutions installed and in operation. The company provides spare parts, repair services, field services and various commissioning activities. The company leverages its industry expertise in supporting its existing installed base to ensure that the company’s energy recovery solutions are being operated effectively and efficiently in order to maximize plant availability and overall profitability of the facility operations, as required by the company’s industry partners and customers.

Seasonality

The company often experiences substantial fluctuations in desalination or wastewater revenue from quarter-to-quarter and from year-to-year primarily due to the timing and execution of the company’s MPD shipments, which vary from year to year.

Emerging Technologies

The company is leveraging its pressure exchanger technology platform to develop new product applications and diversify into new industries. The company continues to push the limits of what the company’s pressure exchanger technology can do, which will unlock new commercial opportunities in the future.

CO2

The company’s PX G1300, which uses proven pressure exchanger technology to improve CO2-based refrigeration system performance, can contribute to solving this challenge and help make CO2-based refrigeration economically viable in a broader range of climates. When integrated into new or existing systems, the PX G1300 can reduce compressor workload to increase cooling capacity, system stability, and energy efficiency.

PX G1300

The company’s refrigeration-focused product leverages its existing ceramics, material science, and manufacturing expertise. The PX G1300 can reduce the energy consumption and operating costs of CO2-based refrigeration systems in a broad range of operating conditions. The company sees this as potentially a significant accelerator for the adoption of CO2-based refrigeration system globally as the company’s PX G1300 could eventually alter the standard refrigeration system architecture by reducing costs for end users, such as grocery stores.

The company designed the PX G1300 to be integrated into new or existing CO2-based refrigeration systems. The PX G1300 can integrate with any existing rack controller and is easy to operate and maintain. The simplicity of installation and the ease of operations could encourage adoption of this new technology.

Sales and Marketing

There is a significant potential market for the PX G1300 in a variety of channels, such as supermarket chains and cold storage facilities. The build of these commercial and industrial refrigeration systems is large enough and demands enough flow of CO2 refrigerant to warrant the use of the company’s device, which implies any system 80 kilowatt in size or greater.

In understanding the market for the PX G1300, the company has identified three major value propositions:

Energy Savings and Emissions Reduction. The PX G1300 recycles the high-pressure energy of a CO2 system by compressing a portion of the gas flow for ‘free.’ This ‘free’ compression provided by the PX G1300 allows the main electrical refrigeration compressor to work less to keep the refrigeration system at the same temperature. In this way, the company’s PX G1300 contributes to lower energy consumption and lower costs by reducing the amount of cycles the main compressor operates, and thereby lower emissions in a CO2 refrigeration system.

Increased Cooling Capacity. The PX G1300 can add compression capacity to a transcritical CO2-based refrigeration system to safeguard against high discharge pressure failures, which occur during heatwaves when refrigeration systems are under stress.

Initial Capital Investment. When designed into a new CO2-based refrigeration system, the PX G1300 may offset some initial capital investment due to the extra compression capacity it provides, allowing for the reduction or removal of other components.

Channels and Customers

CO2 sales are reported under the company’s OEM sales channel. This includes direct sales to commercial or industrial customers, such as supermarket chains, cold storage facilities, and other industrial users. Also, included are sales to intermediaries, such as refrigeration system installers or refrigeration OEMs, to whom the company sells the PX G1300 and associated services for inclusion in these customers’ entire new packaged or retrofit of existing systems.

The commercial refrigeration market ecosystem has multiple players who integrate the components to build a system. These players include supermarkets, which are the end users of the systems; contractors and installers that assist with the installation and maintenance of the systems; refrigeration OEMs; and design consultants that assist in designing and specifying the systems for end users and in providing the component specifications to the refrigeration OEMs.

The company initially sold the PX G1300 to a variety of customers, such as directly to an end user supermarket chain and OEMs. Once the PX G1300 is more established, the company’s sales process will evolve primarily to sell through OEMs, who in turn build and install refrigeration systems at sites maintained by end users.

Intellectual Property

The company has a robust intellectual property (‘IP’) portfolio consisting of the U.S. and international issued patents, as well as pending patent applications.

The company has registered the following trademarks with the United States Patent and Trademark office: ‘ERI,’ ‘PX,’ ‘PX Pressure Exchanger,’ ‘Pressure Exchanger,’ ‘Ultra PX,’ ‘PX PowerTrain,’ ‘PX G1300,’ and the Energy Recovery logo. The company has also applied for and received registrations in international trademark offices.

History

Energy Recovery, Inc. was founded in 1992. The company was incorporated in Delaware in 1992.