Thread by @yishan

If you want to know the next big thing in "real atoms" investment macro-trends, I'll tell you right now.
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It is WATER.

Specifically, solar-powered reverse-osmosis desalination.

Here is why...

Water is the source of ALL wealth. That fact is so basic that we have all but forgotten it.

Water is so essential that even in ancient times, we built megaprojects to ensure that entire populations would have low-cost access to clean running water.

In any modern nation, water is the closest thing to a UBI-like resource we have: you can find clean water on-demand at any tap, and it is almost free. Many public places actually do provide it for free, at least in modest amounts.

Without water, you have no food, no sanitation, no life. Humans can survive for weeks without food. We die within a few days without water.

Until very recently, all water came from the mountains. We built a huge amount of infrastructure flowing it down snowpack, streams, rivers, dams, aqueducts - ironically, nearly almost all the way to the sea, where most of the human population lives and consumes freshwater.

Even so, the world faces a freshwater scarcity problem. There is a limit to how much water is produced by annual rainfall, and as we divert more and more of the flow to our coastal cities and agriculture, inland areas are drying out and turning into deserts.

Most hydrological surveys report that underground aquifer levels have been gradually dropping over the past few decades, because we just keep using more and more of it.

However, 3 years ago, a key techno-economic threshold was crossed, and it changes EVERYTHING.

That change was: the per-kwh cost of solar energy dropped below the per-kwh marginal cost of fossil fuels. This happened in 2018, and was reported first in a Lazard report published 2019.

lazard.com/perspective/lc…

What does solar power have to do with water?

Because the ONLY other source of freshwater that doesn't come from the mountains is desalinated seawater.

Human civilization's relationship to water contains one great irony: most people live within 100 miles of a coastline, on a planet 75% covered with water. Yet that water is salty, and we can neither drink it nor irrigate our crops with it.

JFK once said, “If we could produce fresh water from salt water at a low cost, that would indeed be a great service to humanity, and would dwarf any other scientific accomplishment.”

That day is now at hand.

Desalination has been around for decades, but it is energy-intensive, and until 2018, freshwater produced via desalination was only economical if powered by cheap fossil fuels, which is why it first gained widespread use in Israel and other Middle Eastern countries.

Desalination would not be feasible on a global scale because using such huge amounts of fossil fuels would be an environmental disaster.

But in 2018, the cost of solar fell below the marginal cost of fossil fuels, i.e. it's now cheaper to build NEW solar plants than to even continue operating existing coal plants.

Given that solar prices continue to drop by 50% every 4-5 years, this means it is now possible to cost-effectively produce freshwater at the shore, cheaply, and with very low emissions. The importance of this cannot be understated.

Not only that, but solar desalination is not subject to the solar intermittency issue. Why is this important?

Most residential/commercial solar installations require power at nighttime (when the sun isn't shining), which necessitates storing the power in expensive batteries. That's the main reason large-scale transition of our grid to solar remains difficult and slow.

But desalination doesn't need to run at night: you just run it when the sun is out, and store the freshwater in big cheap tanks. Solar panels are cheap (and getting cheaper), and you don't need to pay for expensive batteries.

This special feature of desalination applications can leapfrog the residential/commercial solar transition by several years.

It means that we can produce cheap water NEAR where it'll be consumed, and save on the billions we spend each year transporting trillions of cubic meters of water down from the mountains, over thousands and thousands of miles.

All of that mountain freshwater can be left to recharge our inland aquifers and restore the desertified ecosystems that are dying. Huge swaths of our planet can be passively restored by simply transitioning to near-coastal solar-powered desalination for our water needs.

Years ago in 2010, Michael Burry (The Big Short) correctly identified that the next big thing was water. It would soon become critical; scarcity makes it "political, and litigious. Transporting water is impractical for both political and physical reasons."

Now, the majority of human populations no longer need to: they can produce water close to where they live, leaving the bounty of natural mountain freshwater for smaller inland populations and the natural environment it used to feed for millennia before mankind.

The freshwater scarcity problem is OVER. In the next 10-15 years, the world will realize this, and given the prospect of low-cost, low-emissions, secure, locally-produced and -controlled freshwater supplies, we will see an enormous economic boom in this sector.

Mankind will take an enormous step forward in securing this most precious and basic of resources, both for ourselves AND for our natural environment.

What is more, solar-desalination enables us to produce enough freshwater to irrigate billions of acres of degraded and desertified land, enough to restore them to thriving forests and create a carbon sink of sufficient scale to offset all or most of human CO2 emissions.

That's what I'm pursuing with @TF_Global - a scalable solution to climate change using existing technology.

But beyond that, the broader opportunities afforded by low-cost solar desalination will represent the biggest infrastructural upgrade to human civilization we have seen in a lifetime.

And by the way, just to prove that this isn't just a bunch of analyst talk, we went and BUILT a 100% solar-powered desalination facility. Among fully off-grid examples go, it happens to be the world's largest (for now).

medium.com/@yishan/our-pr…

So this stuff WORKS.