Energy Recovery has opened a new manufacturing facility in Saudi Arabia that will ultimately produce its full line of pressure exchangers, with the company targeting full-scale operations during the first half of 2028 as it moves production closer to one of the world’s largest desalination markets.
The facility is located in the Dammam 2nd Industrial Zone and spans approximately 40,000 square feet. Energy Recovery secured the site under a long-term lease and said its location near supply-chain partners and a deep-water port will provide efficient access to raw materials and logistics.
Energy Recovery expects operating expenses in Dammam, including facility, manufacturing and utilities costs, to be meaningfully lower than comparable costs in the San Francisco Bay Area.
The company will continue to manufacture important ceramic components at its San Leandro Center of Excellence before shipping them to Dammam for finishing, assembly, and testing. The structure is intended to preserve existing product quality while lowering manufacturing costs and developing a local workforce.
Energy Recovery expects to move beyond pilot production relatively quickly and reach full-scale operations by the first half of 2028. Production will initially focus on the flagship PX product line before expanding toward the company’s broader product portfolio.
The location reflects the scale of Saudi Arabia’s expected water infrastructure investment. Saudi desalination capacity is projected to increase from approximately 16 million cubic meters per day in 2025 to 19 million cubic meters per day by 2031.
More broadly, Energy Recovery says its desalination Megaproject pipeline exceeds $500 million and industry expectations point to more than 8% annual growth in desalination capital spending between 2025 and 2030.
Near-term results have been disrupted by the war involving Iran. Q2 revenue declined 57.2% to $12 million as Megaproject revenue fell to $2.7 million from $14.8 million. Desalination OEM and Aftermarket revenue was comparatively resilient at a combined $8.8 million versus $10.7 million.
Despite the revenue decline, Energy Recovery generated $37.3 million of operating cash flow during the first half, compared with $14.8 million a year earlier.
Operating expenses declined to $14.8 million from $16.5 million, supported by the wind-down of the company’s CO2 business. Energy Recovery expects approximately $7 million of annualized savings from that closure.
The Saudi facility gives Energy Recovery a long-term manufacturing platform positioned directly within a region management expects to account for a significant portion of future desalination demand while potentially lowering the cost structure of its core pressure exchanger products.
KEY QUOTES:
“We are excited to announce the opening of a new manufacturing facility in Saudi Arabia, which will produce our full line of pressure exchangers.”
“The choice of Saudi Arabia reflects both the importance of this market to Energy Recovery and our ability to further reduce manufacturing costs as this facility gains scale.”
Energy Recovery Management
