Energy Recovery Rides Clean Water Wave

While oil seems to be a scarce commodity, some say that water could soon be just as precious, if not more so.

The reason why is a classic supply-demand quandary: The amount of fresh water remains constant at 3% of all water on Earth. But according to the United Nations Population Fund, global consumption will double every two decades. So in 13 years, the International Water Management Institute estimates, one-third of the world's population will face a severe water shortage.

That puts some pressure on figuring out a way to make the other, saltier 97% of the world's water drinkable. And, increasingly, water desalination plants are popping up to do just that. The catch is, those plants themselves suck up a lot of energy, making them economically undesirable outside of places like the Middle East, where energy costs are cheap.

Enter Energy Recovery, a San Leandro, Calif.-based startup whose core product, the PX Pressure Exchanger, is designed to recapture the bulk of energy used to pump water through desalinating membranes. Energy Recovery says its PX devices reduce the energy required for desalination by 60%.

Earlier this month, Energy Recovery filed to sell 58 million shares in an IPO, hoping to raise $57 million to help it expand its operations. The company, which would debut on Nasdaq under the ticker ERII, has a foothold in a growing but competitive market. (The stock is expected to trade sometime next month).

Its reliance on large contracts with big one-time payments makes its revenue lumpy and erratic, but investors willing to stomach such financial turbulence might want to give a serious look.