Liquid assets: Why a local nonprofit wants this region to be the Silicon Valley of water

Abundance of water and smarts make it possible

CINCINNATI – The crucial element for Greater Cincinnati’s economic success in the 21st century could be exactly what the city leveraged in its steamboat heyday more than 150 years ago: Water.

That’s the idea of a nonprofit called Confluence. While other local technology start-ups and incubators have been grabbing headlines and attracting millions of dollars in funding, Confluence has been working to help the Northern Kentucky–Greater Cincinnati–Dayton region showcase its most abundant resource to draw interest and investment from around the world.

“If it’s going to happen anywhere in the U.S., this has got to be one of the top two places where we have a chance to become the Silicon Valley of water,” said Scott Dyer, a principal scientist with the Procter & Gamble Co. and a board member of Confluence. “Somehow, we’ve got to display this knowledge on a global scale.”

After all, that brain power could help the region capture more than $2.1 billion per year in water-related business, according to an estimate calculated for Confluence.

It helps that the Ohio River, the Licking River and the Great Miami Aquifer supply an abundance of water to the area.

Greater Cincinnati Water Works alone pumps 133 million gallons on an average day to supply drinking water to more than 1.1 million people.

The utility has the capacity to pump more than twice that amount – as much as 280 million gallons daily.

And that’s a tiny fraction of the more than 60 billion gallons of Ohio River water that flow past Cincinnati each day.

“We’re not going to be literally running out of water anytime soon,” said Alan Vicory, president of the Confluence board of directors and former executive director of the Ohio River Valley Water Sanitation Commission.

Region Has More Than Water

It’s not just all that water that makes the region a potential Silicon Valley.

A whopping 6,000 water scientists and engineers live in the Northern Kentucky-Greater Cincinnati-Dayton region. In fact, the region boasts more water-related patents per capita than any other in the country, said Teresa Harten, the EPA Cincinnati Water Technology Cluster Team Lead. The per-capita figure is more than three times the national average.

“L.A. has more. Massachusetts might have more,” she said. “But as far as the concentration per capita, we have the most in the country.”

That gives the region an abundance of brain power to equal its liquid assets – intellectual resources that can help inventors and entrepreneurs test their ideas, refine their products and get them to market faster, said Vicory, now a principal with Stantec, an international consulting firm based in Edmonton, Canada.

“Nowhere else in the world do you have this concentration,” he said. “There is just nothing quite like it.”

Region Boasts Rich History In Water Research

That depth of intelligence springs from more than 100 years of local water research and innovation that started with Greater Cincinnati Water Works.

The water works became the nation’s second major rapid-sand filtration plant in 1907, a change that resulted in a dramatic decrease in the number of new typhoid cases in the city.

The utility has been innovating ever since.

“Innovation has been with this utility ever since its beginning,” said Biju George, interim director of Greater Cincinnati Water Works. “Many things happened here first before anywhere else in the country.”

The federal government has focused its water research efforts here, too, starting in 1913.

And the EPA has a sprawling Test & Evaluation Center on the grounds of the Metropolitan Sewer District’s main wastewater treatment plant in Queensgate. There, EPA scientists have worked with dozens of local entrepreneurs and inventors who have big ideas but limited laboratory space to test them.

 

Those resources, combined with the research muscle of the University of Cincinnati, University of Dayton and the Wright Patterson Air Force Base, make up the pillars of the region’s water technology development, said Jim Marten, a Confluence board member and supply chain manager for Veolia Water Solutions and Technologies, a multi-billion-dollar international corporation with offices near Dayton.

Confluence is working to leverage all those assets to help grow established water technology companies in the region as well as start-ups.

To read WVXU's related story, please go here.

Local Companies Aim To Tap Huge Global Market

The goal is to create jobs for the region, and the potential is enormous. Global Water Intelligence, a publication based in Oxford, England, recently estimated the worldwide water market to be roughly $500 billion a year.

Most experts say the U.S. market is about $100 billion a year. With this region's concentration of water scientists and engineers, it should be able to capture a $2.1 billion share of that market, according to an estimate calculated for Confluence.

There’s so much potential, in fact, that the Cincinnati office of the U.S. Department of Commerce’s U.S. Commercial Service appointed a senior

international trade specialist to focus on helping local water technology companies find customers in other countries. The Small Business Administration wants to help, too, said Martin Golden, the SBA’s Columbus district director.

“There’s very fertile ground,” said Kara Sweeney, the outgoing senior international trade specialist with the U.S. Commercial Service. “There’s a lot of potential.”

While this area doesn’t face a water shortage anytime soon, it does share some of the same problems as the rest of the country – aging underground infrastructure for drinking water and sewage. The EPA has estimated it will cost more than $630 billion to address those infrastructure problems nationwide over the next 20 years.

For that reason, Northern Kentucky Water District CEO Ron Lovan hopes any new technology developed here is aimed at solving that infrastructure problem, rather than sensors that can detect ever-smaller levels of impurities.

“We reach a point of how clean is clean,” Lovan said. “And how much are our ratepayers and the taxpayers willing to pay for that additional level of treatment or that additional safeguard? That’s the challenge in our business.”

Newport-based CitiLogics wants to help.

The company works with utilities to use the data they gather to help cut energy costs and reduce the amount of “leakage,” water that flows through underground pipes but never makes it to customers.

“We’re trying to give the water utilities eyes that they didn’t have about the state of their infrastructure,” said CitiLogics co-founder Jim Uber, a professor of environmental engineering at UC.

Confluence helped connect CitiLogics with Greater Cincinnati Water Works and the Northern Kentucky Water District to test the company’s technology.

So far, it looks like Confluence is betting on a winner. CitiLogics already has gotten a $150,000 federal Small Business Innovation Research (SBIR) grant, which the state of Kentucky might match. The company also will be eligible for a follow-up $750,000 SBIR grant and another $500,000 in matching funds from Kentucky.

Then there’s Jason Barkeloo, CEO of the Cincinnati-based Bacterial Robotics. The company is using synthetic biology to create tiny bacterial robots for various industry needs.

His Pilus Energy subsidiary uses the technology for wastewater treatment. The tiny bacto-bots “eat” the pollution in wastewater and generate energy as a result.

Barkeloo is in talks with potential customers in India and China, places with large geographic areas that don’t have wastewater treatment infrastructure.

His plan is to license the technology in those countries, teaching scientists there how to build the bacto-bots. Then Pilus Energy will sell a genetic rights management system, or GRM, that must be added to the water that the bacto-bots treat.

If the bacto-bots don’t sense the GRM in the water, they self-destruct, Barkeloo said.

That way Pilus Energy’s customers would get to create jobs in their own countries, and Barkeloo’s company could generate revenue through licensing fees, the sale of GRM and technology updates as they’re issued.

“Because of our business model, we’ll be cheaper, faster and less risky,” he said.

How Confluence Is Working To Lure Investment

Confluence has taken several steps to make the broader region more attractive for water technology companies such as  CitiLogics and Pilus Energy, said Bill Scheyer, a Confluence board member and the president of Vision 2015, the Northern Kentucky planning organization.

For one, Confluence has identified “test beds” at EPA facilities and water utilities where inventors and entrepreneurs can try out their ideas, he said.

The nonprofit also negotiated an agreement among Ohio, Kentucky and Indiana state regulators so that if a company passes muster with one of the states, that would speed the approval process with the other two. Vicory called that agreement a “game changer.”

Those measures are designed to help business owners get to market faster, Vicory said. It can now take as long as 12 to 15 years from the time new water technology is created to the time it can be sold, a delay that industry experts fear is too long to address the planet’s worsening water crisis.

Confluence also has started to work with local lawyers who will help business owners protect their intellectual property, especially as they market their products and technology overseas, Scheyer said.

Read a full Q&A with Confluence at http://goo.gl/Pp4BEX

Still Water Work To Be Done

Even with all that progress, though, hurdles remain.

Since Confluence began its work in early 2011, many other regions across the U.S. have launched similar initiatives, known as clusters, said Peter Gallant, vice president for business development and regulatory affairs with Veolia in Ontario, Canada.

“Each cluster is coming up with its own unique model that’s based on the skills and talents and background and experience of its board,” said Gallant, whose duties include working with those clusters.

Competitors

include organizations in Phoenix, Ariz., and Fresno, Calif., Vicory said. And the Milwaukee Water Council, which aims to be the “Silicon Valley of fresh water,” has been around even longer than Confluence.

“It’s beginning to be a crowded space,” said Scott Koorndyk, chief operating officer for the Dayton Development Coalition and a Confluence board member. “I’m feeling very bullish on Confluence. But we’ve got to make a name for ourselves. We’ve got to have an organization that puts promise to what we’re saying.”

For that reason, some Confluence board members want the organization to focus on water technology, specifically. Others, like Scheyer, want to avoid the Silicon Valley comparisons.

Regardless, Confluence has to figure out a way to make sure small companies have a shot at developing new technologies and taking them to market, said Procter & Gamble’s Dyer.

Some of that will come down to money.

Vicory said Confluence is working with an investor in Canada and talking with local technology incubators to try to help make those funding connections – a critical step in making this region a Silicon Valley of any kind.

Barkeloo, for one, estimates he needs $1.2 million to get his Pilus Energy company to the point where it can generate revenue – a big number for investors who are used to quick returns from software companies.

“Until you actually show everyone you can take what you’ve done at the bench and scale it, you’re dead in the water,” Barkeloo said. “You’re in the valley of death."

This story is part of a five-day series, in collaboration with WVXU, examining the region's water technology potential, which could pump billions of dollars into the local economy each year. The series airs on WVXU and is being published on WCPO.com the week of Sept. 23 through Sept. 27. Go to http://www.wcpo.com/liquid-assets for more. You can also read WVXU's stories at http://wvxu.org/term/liquid-assets.

 

 

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