I think the US market can be cracked by Fluence, but it will...

I think the US market can be cracked by Fluence, but it will take a well thought out strategy and time to execute... which I believe Fluence finally have.

The strategy to succeed in each region is different for Fluence, for now in China it is Aspirals for regional areas where expensive infrastructure is not currently in place and is not feasible to install, or highway rest stops / train stations where high human activity is concentrated in a small area, and a 40-foot container wouldn't look out of place. I suspect farming (fruit, veg / meat) and industry (textiles) may also be a target in China, where water usage is high... but we'll see.

In SE Asia we may see the same interest in Aspirals for the above uses, but greenfield SUBRE installations are a natural fit. Installing submerged MABRs into a what would be a typical wastewater plant, suddenly enhances the throughput by approx 20%. Anybody going for a tender for a new wastewater plant that is aware of Fluence's MABR in that region is going to win the tender simply on how efficient and cost effective that wastewater plant will be.

So the wastewater market in large parts of Asia is essentially a blank canvas that is looking to build new or replace extremely old and ineffective wastewater treatment facilities. Fluence's MABR is making itself known in these regions at a time when wastewater treatment is getting more and more attention, and more importantly capital invested.

So the traction we are seeing building in Asia makes a lot of sense, and I am very bullish on what it can achieve in the next few years. We are in the right place with the right products at the right time.

The US market is a totally different beast. There is expensive infrastructure already in place that whilst it is expensive to build and maintain.. it is already built, so to remove it will cost a lot of money ... and while the cost to maintain is getting more and more expensive, there is no 'proven and cost effective' solution to replace their existing systems.

For that reason, I can see that the US strategy is to firstly target commercial companies (e.g. farming, meat production, textiles, theme parks etc) with cheaper utility bills. They are doing this by selling 'water as a service' ... which is going to generate recurring revenue for the SPS business (high margin, predictable revenue streams). I don't expect it to be earth shattering revenue first up, but these build and once they get their first customer.. the second will be easier and so forth. The goal here is to target the low hanging fruit that exists in a well developed country.. and that is to simply sell the end product at a lower price, rather than target replacing the infrastructure .. which is extremely tough and unwise.

Over time Fluence will have built a sizeable foot print in the US with Nirobox/MABR, and before you know it there will be thousands of MABR plants and hundreds if not thousands of Nirobox's operating globally... and an array of customers in the US buying water that was been produced by Fluence's Nirobox and Aspirals. At this stage, I believe Fluence will be in a position to tackle what I would consider the next key target market in the US.. and that is the 16,000 wastewater plants dotted across the US (China has less than 2,000 ... which also shows how many greenfield waste water plants are to be built in China in the coming years/decades).

And I believe the product that the US will embrace first (or a big player in the industry wants to acquire) in earnest is Fluence's SUBRE. The US has too much infrastructure in place to simply scrap and rebuild... what would make sense is that existing wastewater plants seek upgrades to increase throughput. What better way than to simply drop in SUBRE into the existing waste water plant, and you get an instant 20% throughput?

Anyway I still think that is some years away... but in the meantime Fluence will do well to secure commercial partners to buy 'water as a service' which is a lucrative business if they execute it successfully. I don't see why they couldn't.. it's a no brainer, but they needed to simplify their business and sharpen their strategy to find the low hanging fruit in each region order to pick it.