A Black Swan event is a term used by Nicholas Taleb, to describe a turbulent event outside of the realm of our previous experience. According to Taleb, things which are anti-fragile, get stronger when challenged, while things which are fragile, break when shocked. The stock market and global supply chains are fragile. Our communities are displaying anti-fragile properties, they are becoming stronger. Many companies are also proving to be anti-fragile, with teams displaying the ability to work remotely, co-operate and achieve things hitherto deemed impossible. The global pandemic has raised awareness of how connected and vulnerable we are, as well as how empathic we can be.

Two lines from WB Yeats have been ringing in my ears the past fortnight:

‘All is changed, changed utterly

A Terrible Beauty is Born’.

Things have changed, changed utterly, that much is clear, but I don’t think we can see any beauty amid the terrible consequences. It may be less air travel and more time with our families.

A global recession will almost certainly follow, as surely as night follows day. This much is clear; the extent, duration, repercussions and feedback loops are unclear. I am cautious of any attempts to read the tea leaves, reminded of the words of Ray Dalio, that ‘those who live by a crystal ball, soon learn to eat ground glass’. There are however existing trends for which the current crisis will act as an accelerator, as opposed to a decelerator.

1. Concern regarding the control of Antibiotic-Resistant Bacteria in wastewater treatment plants

Just as the Bill Gates 2025 Ted Talk foretold the current crisis, we know there is another global health crisis barrelling down upon us with the spectre of antibiotic-resistant bacteria. This has been the subject of BlueTech crisis watch alerts and is covered in a research update as part of our Marie Curie Fellowship project.

This will accelerate the political will and public awareness of the effect on the global population of failures in the medical system. In turn, this is likely to increase pressure to reduce the land application of biosolids and treat hospital wastewater at the source.

2. The increased role of Digitisation and Automated Systems

An unplanned consequence of the current crisis is that it is providing a rapid test-bed for digital on-line control solutions that are being put through their paces at an unprecedented level having to respond to a wide range of real-life scenarios. One thing we know about water innovation from experience is that is often crisis-driven, and this is the catalyst to accelerate adoption. We are hearing all sorts of curious examples of how AI and Smart Systems are picking up anomalies in supply chains and in plant operations. A major risk is that operators will not be available to operate treatment plants and remote operations control provides resiliency.

3. A Driver for the Point of Use Treatment Market

We do not know if Covid 19 is spread via water or wastewater. This is covered very well in an excellent round-up of the latest advice in the Aquatrade update and the US EPA has similarly issued guidance that it is safe to drink tap water. What we do know is that a large portion of the diseases that affect us are waterborne and this fact, coupled with the after-shock on the global psyche of Covid 19, will alter sentiment and act as an accelerator for the use of Disinfection as part of an on-site treatment system. The availability of UV LED technology with a form factor suitable for incorporation into point-of-use is an enabler.

4. An increase in start-up company acquisitions

As closing new venture capital funding rounds becomes more difficult and revenue streams tighten, smaller technology companies will seek the safe harbour of being acquired by a large strategic corporate as a survival strategy. This is what we have seen in previous downturns. The areas highlighted in this article may provide fertile ground for potential acquisitions.

5. On-site Disinfectant Generation Technologies will receive stronger interest from Industrial and Commercial end-users

There was already a growing desire in the industrial and commercial sector to move towards an on-site generation of chemicals for everything from cooling towers to Clean in Place, although the economics of this are rarely viable or compelling when compared to purchase of bulk deliveries of commodity chemicals such as chlorine and other disinfectants.

Nevertheless, concerns regarding supply chain vulnerability in response to mass unprecedented demand for things like toilet paper and hand sanitiser is likely to live on in folk memory for some time to come. This creates an environment in which the ability to generate disinfectants, sanitisers and chemicals which can clean surfaces and pipes on-site, will be heightened. Expect to see companies such as DeNora and Evoqua, which carry on-site disinfectant generation technologies benefit from this along with on-site of hydrogen peroxides, such as HPnow, Peroxygen, SilverbulletandWaterstar.

6. An accelerator for the adoption of Online Bacterial Monitoring solutions

Legionella is the largest source of death due to waterborne illness in the United States. The search for an on-line real-time method to detect Legionella has long been a holy grail and unmet need. This is one aspect of the search for online bacterial monitoring addressed in a recently published BlueTech report onOnline Bacterial Monitoring. The current crisis can be viewed as an accelerator to increase demand for on-line bacterial monitoring solutions.

7. Off-Balance sheet financing of water assets

There has been a trend, albeit a slow trend, towards the off-balance-sheet financing of water-related assets by industrial companies. The desire to conserve capital and hedge against market uncertainty is an accelerator for those offering water-as-a-service business models.

In addition to the above broad thematic trends, new technology markets may emerge in response to unmet needs, such as how to treat wastewater from hand sanitiser production facilities, given that it kills bacteria and the desire to clean surfaces may give rise to use of direct production of hydroxyl radical mists from water vapour.

On a personal level, the upside of not travelling, is that I am enjoying being able to work in the garden with my children, and they for their part, are getting to listen in on interminable conference calls, which if not entertaining, are at some level, I hope educational for them!

Perhaps we will all be more anti-fragile when we reach the other side of this crisis.

 

Author: Paul O’Callaghan, CEO, BlueTech Research

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