Bankrolling the 10 Breakthrough Technologies: Megascale Desalination

The world’s largest seawater desalination plant, now operating on the Israeli coast, is a study in government financing of innovative technologies over the course of more than half a century, starting with the funding of basic research and ending with a public-private partnership to build a vast new facility.

The project was ordered by the state of Israel, its construction financed with $500 million in bank loans issued to a private consortium. Revenue from fresh-water sales to the state will both repay those loans and provide built-in profits for the consortium.

The underlying technologies at work in the project are also the result of government support, though in this case it was government-­funded academic research on desalination membrane materials that was centered in California in the 1950s and 1960s.

The plant, 10 miles south of Tel Aviv, is called Sorek Desalination. In operation since late 2013, it now provides 20 percent of the water consumed by Israeli households, or 150 million cubic meters per year.

To finance an operation that big, a consortium led by a private company, IDE Technologies, promised to sell the water to the state at 58.5 cents per cubic meter of output—a price that can fluctuate with energy costs and local inflation. That’s one of the lowest prices ever for such a plant.

About 20 percent of the cost was borne by the consortium, with the rest coming from low-cost loans made by two Israeli banks and the European Investment Bank, an arm of the European Union. After their initial investment is recouped from sales over the plant’s first few years of operation, the consortium will earn profits on the investment, a structure meant to keep the plant operating optimally for decades. After 25 years, the sprawling facility will be owned by the state of Israel.

At the heart of the Sorek plant are polymer membranes inside tubes. When seawater is passed through the tubes and placed under pressure, fresh water is forced through the membranes, and saltier water is held back. Development of the membranes was funded by U.S. and California agencies starting in the early 1950s, a time of significant population growth and concerns over the supply of fresh water. The U.S. Department of the Interior created the Office of Saline Water in 1952 to fund desalination research projects; California’s government did the same, establishing research labs at state universities.

In the early 1960s, private companies largely took over the work; Dow Chemical and DuPont, among others, began R&D projects in desalination. From there, decades of incremental advances in materials and system designs made such plants more and more economical, culminating in Sorek and its low-priced water, which happens to use one of Dow’s membranes.

Without government funding of the early fundamental materials research, the technical challenges of effective desalination might never have been solved. The public-private financing structure of the Sorek project underscores how government support continues to be essential in scaling up this technology so that water can flow to millions of Israelis at a reasonable price.