COSTS
The forecasts are based on an iterative process which utilizes sales by suppliers and balances these numbers with consumption by industry. This means that membrane sales aggregated for all the suppliers equals the aggregate consumption of all the industries. Furthermore, the aggregate sales of all the membrane suppliers multiplied by the ratio of membranes to equipment equals the aggregate of equipment suppliers sales. To make this final iteration requires a calculation of the ratio of membrane sales to equipment sales.
To illustrate this idea, consider the initial cost of membrane modules in relation to application. For seawater applications, the price for the skid with membrane modules, housings, pumps, cartridge prefiltration system, chemical injection system, piping between these items, and controls is $2 per gpd. Where the application is easier such as purifying surface water, the price for the equipment package drops to $1 per gpd. If the membrane module initial cost is $0.10 per gpd of capacity, then the membrane module price is either five or ten percent of the equipment package price. Note that this is based on the retail price of the membrane module and not the price the OEM pays for it.
New equipment sales each year are charted as a percentage of the installed base. For example, the desalination market is currently growing at a rate of 10 percent. This means the new mgd being added each year is 10 percent of the existing installed base. In some of the slower growing applications, the growth rate is only five percent or less. In addition, there is a replacement requirement which is based on an average of 20 years. However, since the numbers of units installed 20 years ago in many applications is very small, this replacement factor is negligible. An average three percent has been used for the replacement rate in this report. Therefore, if individual markets are expanding from 5 to 15 percent a year, new equipment sales will range from 8 to 18 percent of the installed base.
Membrane replacement rate is a significant factor in assessing costs. A four year replacement rate for membranes means that 25 percent of the installed base is being replaced each year. Consider a case where X represents the equipment base package value, and the module price is 5 to 10 percent of the equipment base. Factoring in the rate of 25 percent for replacement of modules each year, the replacement cost ranges from 1.25 percent X of the base to 2.5 percent X. Keeping in mind the new equipment sales range from 8 to 18 percent of the base, the ratio of total equipment to membrane ranges from a low of 8/2.5 or 3.2 to a high of 18/1.25 or 14.4.
These ratios change dramatically when the membrane life is short. In the example of the ultrafiltration system preceding ion exchange, the initial capital cost is $650,000 and the annual membrane cost is $50,000 or 7.6 percent of the base. If the application is only growing at five percent per year then membrane sales would exceed equipment sales. Figure C-1 shows the ratios under the above scenarios.