Blue is the New Green

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Investors seem to like the idea. In March, Water Standard secured $250 million in venture funding, one of the largest investments to date for a water start-up. The company's first vessel -- a tanker that's currently used to transport vegetable oil -- should be ready to sail sometime in 2009. And thanks to recent regulations requiring that oil tankers be double hulled, there is an abundance of older single-hulled ships that are perfectly suited to join the fleet. Brock has spent much of the past year meeting with investors and potential customers in the Middle East, Chile, Cyprus, India, and China.

Whether based on land or at sea, almost all desalination plants built after 2000 use a technology called reverse osmosis, or RO, to get the salt out. Water is pushed at high pressure through a membrane that lets freshwater pass through but blocks salt and contaminants. RO technology is generally more efficient than other desalination methods that use heat to evaporate and distill water, but it still requires a lot of energy -- at seawater plants, almost half the costs are for the electricity required to push water through the membranes. This makes desalination one of the most expensive ways to produce freshwater: The cost of producing 1 cubic meter (264 gallons) of desalinated water ranges from about $1 to $1.50, compared with 10 cents to 20 cents to obtain water from a reservoir or well. (Average U.S. daily household use is about 350 gallons.)

The Los Angeles-based start-up NanoH2O is working on a way to make the process a lot more efficient. The company was founded in late 2005 by Robert Burk, an engineer with extensive experience on water and wastewater projects, and current CEO Jeff Green. It is now ramping up for mass production of a nanocomposite membrane based on technology developed by researchers at UCLA led by Eric Hoek, a professor of civil and environmental engineering. In pilot studies, it has proved nearly twice as productive as existing membranes -- meaning you can get almost twice as much water with the same energy input or the same amount of water for half the energy -- and has the potential to reduce the total expense of desalinated water as much as 25 percent. That would make it a far more attractive proposition for communities looking to diversify their water portfolio.

Unlike traditional RO membranes, which are just filters made of a dense polymer, NanoH2O's polymers interact with "thirsty" nanoparticles to draw in water and repel salt and contaminants as well as the organic materials and bacteria that tend to adhere to conventional membranes and decrease efficiency over time. The technology was an academic research project when Burk and Green, a serial entrepreneur who previously founded the software start-ups Stamps.com and Archive Inc., came across it in their search for a water-related technology to build a company around.

Why water? It's where the action is, Green says. Software, he believes, has largely become commoditized. With water, on the other hand, "core technology and intellectual property are still differentiators," he says. "As an entrepreneur, when you see the scarcity issues, and you see that technology can make a difference and that it's still a little early on the curve, all those factors led to a decision that it would be a good time to start to look into this."

Green and Burk moved quickly to secure the intellectual property through UCLA's tech transfer program and closed a seed round to speed up work. In 2007, the company received $5 million from Khosla Ventures, the clean-tech investment group led by Sun Microsystems co-founder Vinod Khosla. In August, it got $15 million more from Khosla and Oak Investment Partners. Now, with 11 employees and several prototypes being tested in the field, NanoH2O is in the process of shifting from a research and development venture to an operating company, with the goal of bringing a product to market by the end of next year. The market for RO membranes is dominated by big players -- including Dow, General Electric, Koch Industries, and the Japanese companies Nitto Denko and Toray. But Green is unfazed. "As big as Dow or GE are, they don't apply all their energies to reverse osmosis -- if you have the resources to stay independent, you can compete for that segment," he says. "For me as an entrepreneur, it's an exciting place to be."

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Adam Bluestein

A former editor at Real Simple, Adam Bluestein writes frequently about innovation and new technology. He lives with his wife and two children in Burlington, Vermont. @AdamBluestein