From drought and water shortage to surplus: California and Israel Story Gilad Cohen | March 2017

March 2016 Source: US Drought Monitor - California focused on surface water sources & snowpack

August 2016 Source: US Drought Monitor - California focused on surface water sources & snowpack

March 2017 Source: US Drought Monitor - California focused on surface water sources & snowpack

If you want it to rain … Get the desal guy to move over … Lesson Learned If you want it to rain … Get the desal guy to move over …

IDE Technologies Technology leaders in desalination, industrial water treatment and waste water reuse Project Delivery models: P3, EPC, D/B, etc. 30 Years of operation and project delivery in North America Designed and operate the largest desalination facility in the Western Hemisphere (Carlsbad Desalination Plant) Headquartered in Israel, fully owned subsidiaries in USA, Australia, China, India, and Chile

IDE Technologies – Market and Peer Recognition GWI Award 2006 Desalination plant of the year (Ashkelon, Israel) GWI Award 2009 Thermal Desalination Plant of the year (Reliance Jamnagar Refinery, India) GWI Award 2011 Desalination company of the year Israel Cleantech Expo Award 2011 Company of the year GWI Award 2012 Water Deal of the Year (Sorek, Israel) GWI Award 2014 Distinction Award Desalination Company of the Year MIT 2015 Sorek - Top 10 Breakthrough Technologies GWI Award 2016 Desalination Plant of the Year (Carlsbad, US) GWI Award 2013 Desalination Deal of the Year (Carlsbad, US) GWI Award 2014 Desalination Plant of the Year (Sorek, Israel)

Snapshot of Israel and its Water 6560 Square miles 6 hours drive north to south 2 - 3 hours west to east with desert conditions in the south, and snow-capped mountains in the north. 

Snapshot of Israel and its Water 60% of Israel is desert – the rest is semi-arid Since 1948 the population has grown tenfold Annual rainfall has dropped by more than half Despite the above, in October 2013 …… The Israeli Government declared water independence from weather

Making the Dream a Reality “If our science and technology people will devote their best research and receive for this purpose all the assistance from the state, it will not be beyond them to find a cheap process for desalinating seawater. Irrigating the desert with purified seawater might seem to many today a delusion, but Israel should be the last state to be afraid of ‘delusions’ that could change the primal order by force of the power of vision, science and pioneering capability.” Prime Minister David Ben Gurion, 1956 “If we could produce fresh water from salt water at a low cost, that would indeed be a great service humanity, and would dwarf an other scientific accomplishment” President John F. Kennedy, 1962

The Plan: 0 to 100 in just over a Decade The water resources of the State are public property; they are subject to the control of the State and are destined for the requirements of its inhabitants and for development of the country Conservation Campaign – “Israel is Drying Up” Promoting installation of water conservation technologies and leakage control Water pricing - rates are categorized by the different uses: domestic, consumption and services, industry and agriculture, differing from one another Water reuse – for agriculture and potable use Desalination – 600M m3 in 2015

85% Recycled Water: Number of Quality Levels

Water supply sources in National System [million m3/ year] 2016 Forecast

Mega –Sized Seawater Desalination in PPP Model Confidential Mega –Sized Seawater Desalination in PPP Model 1999 Government decision to build large scale seawater desalination facilities Supplying water from the Sea of Galilee within 7 days Supplying desalinated water within 3 hours Hadera (127 Mm3/year) P3 - BOT P3 - BOO Palmachim (45 Mm3/year) P3 - BOT Sorek (150 Mm3/year) Ashdod (100 Mm3/year) P3 - BOT Ashkelon (118 Mm3/year) 14

Behind the Scenes … Changing the Paradigm New water sources are not the devil Reuse including D/I Potable Seawater Desalination There is a cost for not having water New water is not necessarily “expensive” New water production costs money … but reaching grid parity Recognizing local government limitation of capacity and capabilities: Forming partnership with the private sector Open up for new business models: DB, DBO, PPP Open up for technology advancements …

What is a Public-Private Partnership (PPP) A funding model for a public infrastructure project – various models including DB, O&M, DBFO, BOO, BOOT, and more  Public partner - represented by the government at local, state and/or national level. Private partner - privately-owned business, public corporation or consortium of businesses with a specific area of expertise Water project - the Developer designs, finances, constructs, maintains/supervises and sells the water to the water company/off-taker over the project term. The Off-Taker purchases the water over the project term under a Take-or-Pay commitment An Agreement defines the relations, the rights and the obligations of the parties. The risk allocation between the parties should allow each party to handle risks that it can address better The Off-Taker should be a bankable entity and the concession agreements should be binding and well-defined to enable the financing of the project

IDE Mega Size Plants In Israel: PPP Model Confidential 12/10/2017 22:57 IDE Mega Size Plants In Israel: PPP Model Ashkelon, Israel Hadera, Israel Sorek, Israel BOT-25 year Operation began in 2005 Capacity of 118M m3/year GWI Award – ‘Desalination Plant of the Year’ in 2006 BOT- 25 year Operation began in 2009 Capacity of 127M m3/year Euromoney Project Finance ‘Deal of the Year Award’ in 2007 BOT-25 year Operation began 2013 Capacity of 150M m3/year World’s largest SWRO plant Desalination Plant of the year - 2014 17 17

5 Things the State of California wants you to Know Water is the essence of life for California California’s complex water system is in crisis A diverse portfolio approach is required Solutions require integration, alignment, and investment We all have a role to play in securing our future Source: State Water Plan 2016 update

Diverse Landscape of Water Rich and Water Poor Regions

Groundwater Health: Many Basins Remain Critically Poor 21 critically overdrafted basins and sub basins are in GSP status Impacts which can include: seawater intrusion, land subsidence, groundwater depletion, and chronic lowering of groundwater levels

What If Southern California had an uninterruptable and sustainable supply of water regardless of rainfall levels? Managers of existing water resources knew that their current demand levels were not subject to supply interruption? Additional water supplies could be brought on line in a timely fashion? Local and regional elected officials and economic developers could assure new “industrial” prospects that, if they locate in this region, will have water?

A Balanced Water Portfolio: A Goal for Southern California? Less reliance on imported water, More reliance on independent local supply

Reuse and Desalination: The necessary evil? Or the new source of water? The Benefits are clear: Dependable source (quantity and quality) Enables growth Enables proliferation in arid areas Predefined known cost But… There are also challenges: Comes at a cost Requires social and environmental responsibility

The Environmental and Social Impact of “Natural” vs. New Water Sources Environmental Costs Land subsidence Artificial lakes Disturbance of natural habitats Social Costs Source of water that is not secure  San Joaquin Valley, California

The Environmental and Social Impact of “Natural” vs The Environmental and Social Impact of “Natural” vs. New Water Sources( Cont.) Environmental benefits Avoid building more dams/canals Reduce water transportation effects (energy) Reduce irrigation by high chloride/high nitrate water Social benefits Secure source of water Enable growth and ignite economy boost Reduce need to purchase bottled water/water softeners It is extremely subjective to try and quantify/monetize environmental and social costs and benefits

Carlsbad, California, USA: Project Success An award-winning, milestone plant for the desalination industry Overview Capacity: 54 MGD (204,412 m3/day) Technology:  SWRO Project Type:  EPS and O&M – 30 years Footprint: 6 acres (24,000 m²) Off-Taker: San Diego County Water Authority (SDCWA) Project Developer: Poseidon Water Operational Date: December 2015

Is the Cost really Higher than “Natural Sources” Membrane Desalination Power Usage put in Perspective American Membrane Technology Association FACT No 1 FACT No 2 The fuel required to fly a jumbo jet at cruising altitude will be adequate to provide seawater RO desalinated water to over 300,000homes in the United States. the energy requirement for supplying desalinated water to a house in -the US will be less than an old refrigerator, but the same as a newer,

Santa Barbara Project Success: Reducing Cost through Advanced Engineering Retrofit of Existing Plant (1990 vintage) Customer wanted a scalable facility = IDE’s Modular Concept Capacity: 2.8 MGD (3125 AFY) Potential of expansion to 6.7 MGD (7500 AFY) Technology:  SWRO Project Type:  DBO (EPC and O&M – 5 years) Off-Taker: City of Santa Barbara Commission Date: May 2017 Accelerated Project Delivery Simultaneous site preparation and module construction

Santa Barbara - From 3D Model to Reality…

Santa Barbara Pre-Assembly Works

Santa Barbara Packing and Transportation

Santa Barbara Site Preparation in Parallel to Pre-Assembly of the Units

Santa Barbara: Under Construction (08-2016)

So what is the “Secret Sauce for Success”? Recognition of the Problem and a Sense of Urgency Drought remains the issue Average rainfall does not solve the problem Leadership and Policy Advocacy National, State and Local Level Adoption of Regional Approach to Water Planning e.g. San Diego; Santa Barbara Partnering with the Private Sector: Ample Capital is available through PPP model Trust factor and risk mitigation Technological advancement to reduce cost and environmental impact All Hands on Deck – Partnering for success

Together … in Partnership… We Can Do More … 17 proposed plants along the CA coast (= 500 MGD capacity) Reuse around the World and US Percentage Recycled Country 85% Israel 35% Singapore 10% Spain 6.5% USA 5.5% Saudi Arabia 0.9% Chile 0.6% Australia

Gilad Cohen giladc@ide-tech.com