WORKWEEK

This is Keep Cool’s second deep dive in partnership with Pique Action. Watch their micro-doc on Epic Cleantec here.

Setting the Stage

A Zen master named Gisan asked a young student to bring him a pail of water to cool his bath. The student brought the water and, after cooling the bath, threw on to the ground the little that was left over. 

‘You dunce!’ the master scolded him. ‘Why didn’t you give the rest of the water to the plants? What right have you to waste even a drop of water in this temple?”

The young student attained Zen in that instant. He changed his name to Tekisui, which means a drop of water.

Famous Zen Koan – “A Drop of Water”

A water reuse revolution

Whether you look at California or Cape Town, recent years have come with worrying signs of water crises. And severe water shortages are likely to intensify over the coming decades; McKinsey predicts that demand for water will exceed supply by 40% as early as 2030 (source here). By 2050, demand for water could exceed sustainable supplies by 120%.

It’s not easy to create new water that’s fit for everyday use, let alone to drink. Desalination is taking off in places like Israel that are on the forefront of water shortages and also happen to be climate tech hotspots. While Israel plans to ultimately source the majority of its water from desalination, the process is energy intensive and expensive. This won’t be an option everywhere… e.g. places with no coastline. 

As such, countries are already brokering international deals for water assets. Take for instance a 2021 deal between Israel and Jordan that will see Jordan send solar energy to Israel in exchange for some of the desalinated water.

The common denominator in all of this is that countries like Israel and Jordan that are used to not having enough water naturally are making big moves to secure their future water situation. Places like California that haven’t historically had to worry as much? They’re unprepared.

No stat is more revealing perhaps than the rate at which different places in the world reuse water. Most of the water we use everyday goes towards things like flushing toilets and showering; drinking water is only a fraction of our water use. Countries like Israel are ahead of the curve here too. In a recent conversation with Keep Cool, Aaron Tartakovsky, co-founder and CEO of Epic Cleantec, noted that Israel, where he used to live, reuses up to 90% of all of their wastewater. In Los Angeles, California for example? That number is a mere 2% 😬.

What right do we have to waste even a drop of water, especially when there are countless opportunities to reuse it? 
As much as water shortages are a big challenge, looking at how much better most of the world could get at reusing water is a golden opportunity. An opportunity that Epic Cleantec will take advantage of. Ready to dive in deeper on onsite water reuse? 🤿

The inspiration

Water is all around us, and is integral to basically everything we do. Here’s how Aaron laid this out for us:

Water is omnipresent. We need it for everything we drink, the food we grow, to produce the semiconductors that power all the technology we use. There’s not a single industry that doesn’t touch water.

And yet, most of us have a pretty limited understanding of where and how the water we use everyday gets into our taps. Over the past century, we’ve hidden away much of our cities water infrastructure in the same way we’ve hidden away all the poultry and livestock that we eat. 

Out of sight, out of mind. Or as Aaron and the Epic Cleantec team say, “Flush and forget.” This speaks in part to why we don’t do a good job of optimizing our water usage. If we were closer to our water, perhaps we’d value it more. 

When I spoke with Aaron, I figured I’d be the greenhorn on the water and wastewater infrastructure front. As it turns out though, that was Aaron until seven years ago, too.

None of the Epic Cleantec founding team comes from a traditional water background. Which may have been a helpful leg up, not a ton has changed in the past hundred years of wastewater management and water reuse.

None of us come from the water and wastewater world. Frankly, I think that’s part of our secret sauce; part of what has enabled us to develop our concept is that we weren’t confined to the standard education. When we first started we were naive, which enabled us to think differently.

So what was the genesis for the business? On the tech front, Epic Cleantec’s initial work with the Bill and Melinda Gates Foundation informed their approach: 

My two co-founders essentially designed high tech toilets for the Gates Foundation. The Gates Foundation asked ‘How do we create water and wastewater solutions for the 2.5 billion people worldwide who don’t have access to clean water and reliable sanitation?’ In the process, we realized that water and wastewater issues are not just a problem in the developing world.

What issues did they identify? Most wastewater management at the municipal level is managed in big wastewater treatment plants that serve entire cities. In San Francisco, where Epic Cleantec is headquartered, one wastewater treatment plant treats 80% of the cities’ wastewater. These centers connect to buildings throughout the city with long, labyrinthine networks of pipes. This model has worked well enough for hundreds of years. Still, Aaron identified three key problems with this set-up, including ones that become more apparent as time wears on: 

1. Aging infrastructure: Pipes in U.S. cities are ~45 years old on average. Many weren’t designed to last longer than that.
2. Urban population growth: Many cities in the U.S. are growing rapidly, and the original infrastructure wasn’t necessarily built to accommodate this population growth. 
3. Climate change: Existing systems aren’t necessarily designed to handle shocks to the system that are becoming more frequent. Nor are they optimized to recycle water. 

At the extremes, problems with old water infrastructure can lead to disasters like what we saw in Flint, Michigan earlier this decade. At minimum, the cost it would take to simply perform needed maintenance on all of the water infrastructure in the U.S. is growing quickly. For perspective on said cost, Biden signed a $1T bill into law in November, of which $55B is devoted entirely to the U.S. ‘s water and wastewater infrastructure over the coming decades. 

Another challenge with the current model is how centralized it is. More than a million residents in Austin, Texas were issued a boil notice earlier this month after errors at a treatment facility meant it could be unsafe to drink the city’s water. When a few treatment plants service an entire city, single failures become system wide failures. 
Perhaps most importantly, the centralized nature of the current systems is really difficult to update or overhaul with new technology. Updating these massive wastewater treatment systems would be a massive undertaking, both in terms of time and capital. And if you wanted to revamp a wastewater treatment plant, where would you divert all that water too in the interim?

The technology

Epic Cleantec wants to decentralize water reuse. Epic Cleantec designs systems that can integrate into existing and new buildings alike, enhancing water reuse onsite. No connection to the typical, centralized wastewater treatment plants necessary. 

What do we mean by water reuse? Recycling isn’t just an opportunity for plastics. It’s a huge opportunity in water, too. Aaron shared a great anecdote from his father (also a co founder) on this front:

[My father] is originally from the Soviet Union, and got his training as an engineer in the Soviet aerospace program. He said, ‘Look, we send people up in a space, what do you think they’re drinking when they’re up there? Everything is recycled.’

While they’re not quite ready to reuse water for drinking, for non-potable applications, Epic Cleantec’s system can conserve a ton of water:

We deploy onsite water reuse systems into buildings or groups of buildings and we capture all the wastewater that would otherwise enter the sewer. We then recycle it right back into the building for non-potable applications. Toilet flushing, irrigation, cooling towers, commercial laundry, etc… By reusing water onsite, we can recycle up to 95% of projects’ water. That’s 95% less fresh drinking water that needs to be pulled from the city supply.

What do the treatment processes themselves look like? Epic Cleantec can treat greywater (doesn’t include high organic content, like fecal contaminants or food waste) and blackwater (does). On the water treatment side itself, one of the core technologies Epic offers is a membrane bioreactor, which is a combination of biology and physical filtration. Here’s how Aaron described the full process:

We use super thin membranes, smaller than the width of a human hair. Once water goes through the membrane separation it goes into a biological tank, which, like the human stomach, breaks down organics and pathogens. Between those two, you get extremely high quality water. Finally, they can also employ final disinfection and purification steps like UV, chlorination, and even reverse osmosis as necessary.

Epic Cleantec is more than just a stand-in for centralized wastewater treatment on a smaller scale however. One of the things that separates their process from other wastewater treatment processes is that their outputs are threefold. They’re not just confined to reusing and cleaning water. They also produce carbon rich soil products and help buildings save energy. 

The soil products come in from the blackwater treatment process. Specifically, when Epic Cleantec removes solids from wastewater, they are often carbon and nutrient rich; Epic Cleantec can turn these into fertilizers for cities’ green spaces. 

On the heat and energy side, a lot of energy is used to heat water (e.g. for your morning shower). Most systems don’t reuse or retain any of that heat – you might see it coming up out of the ground as steam as you walk around your neighborhood in the winter. This is effectively a stranded energy source. Just like water can be recycled, Epic Cleantec creates a more circular system that retains more of this heat. 

In sum, the savings and efficiency passed on to clients are considerable. They save on water costs by recycling up to 95% of non-potable water in any given water ‘cycle’, they save money on water heating, and some of the ‘waste’ in wastewater is valorized for soil products, too.*

Aaron gave me a great tagline on this front, namely that “There’s no waste in wastewater. There is just wasted water.”

The Business

One question I love to ask companies operating in climate tech verticals that are just now picking up steam is whether there’s another vertical that offers successful roadmaps that their own can follow, too. One vertical that comes up a lot is solar. Aaron noted wastewater could follow a similar path to solar: 

We studied solar and are trying to do the same thing for water and wastewater. [In energy] we saw a shift from centralized infrastructure – whether coal, natural gas, or nuclear – to decentralized systems, e.g. solar or wind. What’s amazing about that is that you build more resilience. Decentralized systems can also get up and running more quickly, not just because of the lower cost, but because they can leverage private capital more easily.

Epic Cleantec’s business model itself is reasonably straightforward – they make money on system sales and installations. To date, typical clients include everything from individual buildings to the scale of a district. Clients include operations like wineries, breweries, resorts, tech campuses. Really, any operation with a high water usage can be optimal. 

In some instances, they’ll also look to work with community systems. E.g. one site they’re looking at is a community of approximately 100 homes in Hawaii, where broken water and wastewater infrastructure is a pernicious problem, both for communities and for the environment (think coral degradation from wastewater leaching into the ocean, for instance).

The Impact

The impact of reusing more water is straightforward. In San Francisco for instance, each drop of water reused in a system like Epic Cleantec’s is one less that has to be sourced from the Hetch Hetchy dam. That means there’s more water to use for other applications, whether it be for drinking water or for farmers in the Central Valley. And as we’ve discussed, Epic Cleantec’s systems can also create other efficiencies in buildings, such as reducing the amount of energy needed to heat water. 

All of Epic Cleantec’s systems are electric. As long as the grid isn’t 100% renewable, there’s an emissions footprint associated with integrating the systems in a building. Still, at the macro level, water reuse with Epic Cleantec’s systems makes a significant impact even in the interim world in which fossil fuels still rule electricity production. Imagine for instance how much energy it would take to desalinate equivalent amounts of water instead of saving said water through re-use. Similarly, the heat savings that Epic Cleantec’s systems generate could, in Aaron’s view, ultimately make their operations energy neutral, if not negative.

Globally, Epic Cleantec will also explore ways to make its solutions available to communities  that desperately need access to clean water but don’t look like their current customer in San Francisco. In the U.S. alone there are millions of people who don’t have access to clean water or reliable sanitation. If you expand your focus globally, that number balloons to 2.5B. 

Aaron’s perspective on how to best get water to these communities is that they can skip straight over the centralized model that reigns in urban metros:

How do we create a solution that can mimic what happened with Telecom. Developed countries moved from poles and wires to cell phones. Places in the developing world meanwhile never had to go through that pole and wire phase, they went directly to decentralized forms of communication.

From San Francisco to Somalia, where 60% of people lack basic water services, there’s a lot of promise in implementing decentralized water treatment and reuse systems. In the places that haven’t traditionally had centralized wastewater treatment, deploying decentralized systems could be a faster, cheaper way to democratize water access. 

Challenges and Next Steps

On the heels of a $9.4M Series A in December, Epic Cleantec is ready to scale their solutions across the country. Of course, scaling is never easy. Aaron positioned it as the premier challenge for all climate technologies, which is an aside that’s worth highlighting:

We have all the technological solutions. This is as true for water, wastewater, as it is for many other climate tech solutions. The main question becomes how do we deploy them more quickly?

In Epic Cleantec’s case, the regulatory environment poses a challenge as well. Considering how critical clean water is, you can’t just march into any new municipality and set up a wastewater treatment system.

Regulatory headwinds can turn to tailwinds too, however. San Francisco recently became the first city in the country to require all new large developments over 100,000 sq. ft to include an onsite water cycling system. That’s a massive boon for Epic Cleantec. If they can partner with major developers in urban metros to include their systems in all of their new builds, that could make for an even stronger business model.

These regulatory changes don’t happen overnight however; Aaron noted that legislation has been in the works for six years in San Francisco. Aaron’s background is in politics, which makes this a strong suit for him. Epic Cleantec garners incredible leverage by being at the center of creating these first-of-its-kind regulatory playbooks on how decentralized water systems can work in urban environments. Once San Francisco outlines the standards, Epic Cleantec can take that framework to other cities:

Beyond San Francisco, Los Angeles now has requirements for new buildings to include onsite water reuse systems. Austin just launched their own program in December. Washington voted on their own regulations. We are where the solar folks were 10 to 15 years ago. It’s a powerful position to help write the regulatory playbook as a business that will benefit from those tailwinds.

Beyond the regulatory environment, scaling onsite water reuse also comes with maintenance and monitoring challenges. Perhaps even more importantly than electricity generation, water reuse systems have to work. If you have hundreds or thousands of systems operating in a distributed fashion across the country, you need a robust way to monitor their performance. 

To this end Epic Cleantec is investing heavily in robust data monitoring. This isn’t just to ensure its systems are all working properly. In addition, there’s a ton of insights that they can feed back to buildings and the city itself, e.g. with respect to building’s energy usage to heat water. Further, even at the level of public health, processing wastewater can yield a lot of valuable insights which are more actionable at smaller scales:

I think one area where we think it’s a really exciting opportunity is just the amount of data that we can unlock out of wastewater interest. One thing we’re hearing a lot about right now is his wastewater epidemiology, where you can detect COVID in a community, two weeks earlier than traditional testing by testing the wastewater in that community…

When problems do arise, you also need to be able to service systems readily. Epic Cleantec plans to have a team of nationwide wastewater operators to ensure systems are running well and to fix any that aren’t. This strikes me as one of the hardest things to scale actually, especially if they team up with philanthropies down the road to do work in the Global South as well. When we check in with Aaron in six months, we’ll make sure to get an update on that front.

In closing

In The Big Short, there’s a famous ending screen that tells the viewers that one of the investors who successfully bet on the global financial system collapsing is now investing almost exclusively in water. 

A lot of climate tech innovation focuses on reducing or removing emissions. A lot of investment focuses on energy production and electrifying transport. Earlier in the century, between 2000 and 2013, total investment (across venture, public, corporate, etc.) in clean energy in the U.S. dwarfed investment in water nearly 50-fold. 

As the climate changes, water shortages are one of the most dangerous and problematic knock-on effects that we can expect to become very acute, very quickly. Reusing as much water as possible is an intuitive place to start. 

We look forward to keeping up with Epic Cleantec’s progress 🤝.

* Epic Cleantec is careful not to use these in soil in which food producing crops grow. The reason being? PFAS, man-made chemicals in a lot of consumer products, can pass from our diets into our biosolids (i.e. poop). Subsequently, if those biosolids are used in fertilizer or on farms, the resulting crops can contain unhealthy levels of PFAS.