SPX Corp. (NYSE: SPW) said Tuesday it installed its first water-recovery system in a New Mexico power plant.
The company claims its Air2Air system will recover some of the water evaporated in the San Juan Generating Station's cooling towers, reducing the plant's annual water consumption by up to 20 percent.
The majority of power plants in the United States are cooled by water evaporation, and the cooling systems are the largest consumers of water in those plants, said Tom Dendy, director of global marketing and development at SPX Thermal Equipment & Services.
A typical 500-megawatt U.S. coal plant uses about 30,000 tons of water each day, and the Air2Air technology could reclaim up to 10,000 tons of that water, according to the company's press release.
Water management and purification technologies have seen a small spike of activity after lying dormant for years (see Water Investment Picks Up).
Air2Air isn't SPX's first foray into water conservation.
The company already makes cooling systems for new power plants that eliminate water for cooling all together, using air instead.
But older systems can't be redesigned with air-cooling systems because of the expense, Dendy said. The Air2Air system is targeted at those older plants.
While the cost of the Air2Air system varies widely, he said retrofitting older plants with the water-recovery system is less costly than switching to air-cooling systems.
The New Mexico installation cost roughly $1 million, and SPX received a grant of up to $600,000 from the National Energy Technology Laboratory to defray part of that cost. The company says it won't make money from this first field test project, but expects its next installation will turn a profit.
"The first one we do of every unit we sell; we intend to make money," Dendy said, adding that the company only has to install a few systems before it recoups its research and development investment as well.
Not every power plant using evaporative cooling, however, is likely to make the switch.
Even in a time of drought, many companies have long-term water rights and -- in some cases -- are paying 50-year-old water prices, Dendy said.
"It's difficult because water is one of the commodities where the price is not in line with its value," he said.
That means the payback time from buying a water-recovery system takes too long to justify the purchase, in many cases, and that could keep the market small.
In some areas, such as in Northern California, in some Southern states and in Taiwan, water prices are growing, pushing payback times up to eight to 10 years, he said.
But for now, much of Air2Air's market is being driven by political pressure, Dendy said.
Companies that want to expand but can't afford additional water rights, or that have expiring water rights, are potential customers, for instance.
And in cases in which the water level is going down and power plants don't have any other sources of water, the system could extend water reserves by 20 or 30 percent, he said.
"For example, you can have rights to water from the Colorado River, but there's no water in the Colorado River," he said. "So there you're talking about a payback in a matter of weeks."
Dendy didn't have specific numbers about the potential market that fits into the categories he described, but he said it is "in the dozens."
"We're still out investigating that and still continuing to improve the design so we can continue to drive the cost down," he said. "But every time I go out, there's someone else looking to deal with this. (Water usage) is becoming a big political deal for a lot of these utilities, and every year I'm seeing more of them with concerns they have to address."
The question is whether those concerns are enough to make utilities break out their wallets for technologies such as SPX's.