374Water : Site Visit to 374Water’s Pilot Plant Highlights the Opportunity for Supercritical Oxidation in Water Treatment

The fact that water quality in large parts of the world - the U.S. very much included - leaves a lot to be desired is hardly a secret, even setting aside such headline-grabbing crises as what happened in Flint, Michigan or more recently in Jackson, Mississippi. Innovative solutions for water treatment are needed, and this week we saw one such solution in operation. 374Water (ticker SCWO) is a North Carolina-based provider of a technology known as supercritical water oxidation. After a site visit to a pilot plant on the Duke University campus - where the company was launched in 2018 - here are our takeaways. This should be of particular interest to our readers who are familiar with some larger providers of water treatment technology, such as A. O. Smith (AOS), Evoqua (AQUA), Gradiant (private), and Ovivo (private).

What is supercritical water oxidation?

First, a bit of physics 101: when a substance is above a certain threshold (critical point) of temperature and pressure, it has properties between a liquid and a gas. Water reaches a supercritical phase at 374 degrees Celsius and 221 bar of pressure. Supercritical water oxidation (SCWO) is based on a highly efficient oxidation reaction that takes advantage of this aspect of water. The physical-thermal process, powered by water and air, completely eliminates organic compounds.

What is the opportunity for water treatment?

374Water's SCWO solution - branded as AirSCWO - is able to treat a wide range of waste streams, both hazardous and non-hazardous. This includes the PFAS family of chemicals, conventional residuals and biosolids at wastewater treatment plants, animal waste, industrial waste and sludge, food waste, and landfill leachate. In addition to water utilities, the company's target customers include military bases (many of which are contaminated by PFAS), food and beverage operations, oil and gas facilities, and organic chemical or pharmaceutical factories. The addressable market in utility and industrial sludge treatment is estimated at $9 billion by 2026.

As compared to conventional water treatment, this technology has several selling points. First, the process is able to effectively handle many hard-to-treat compounds, such as PFAS and microplastics. Second, the process maximizes energy efficiency and, in fact, recovers energy and minerals. Third, there is no need to inject treatment chemicals, because water and air jointly do the proverbial work. Fourth, there is no methane byproduct, creating a climate-friendly profile.

What is the company's commercialization roadmap?

With 2Q22 revenue of just over $1 million, 374Water is in an early stage of commercialization. AirSCWO is designed to be modular, and product size will expand over time. The pilot plant we saw at Duke fits in a 20-foot shipping container. A commercial processing unit's daily capacity ranges from 6 to (eventually) 200 wet tons. Earlier this year, the Orange County Sanitation District in California purchased a 6-ton unit, on a demonstration basis, for the treatment of primary and secondary sludge, biosolids, and food waste. The company's opportunity with this particular customer - which serves 2.6 million people - may single-handedly reach $1 billion, assuming full-scale deployment. There is a memorandum of understanding with Midway, a Houston-based real estate developer. Internationally, the company has a subsidiary in Israel and a partnership with Forever Water in Ecuador.