Energy Makes Up Half of Water Desalination Plant Costs: Study

Energy Makes Up Half of Desalination Plant Costs: Study

Energy is the largest single expense for desalination plants, accounting for as much as half of the costs to make drinking water from the sea, according to a report. Desalination plants on average use about 15,000 kilowatt- hours of power for every million gallons of fresh water that’s produced, the Pacific Institute said today in a report. In comparison, wastewater reuse draws as much as 8,300 kilowatt- hours of power for the same volume and importing a similar amount of water into Southern California requires as much as 14,000 kilowatt-hours of electricity, it said. There are 17 desalination plants proposed in California and two in Mexico to help supply area homes and businesses, according to Heather Cooley, co-director of the institute’s water program. While the projects may ease water strains for area utilities, they’ll increase suppliers’ exposure to variable energy prices, she said by phone. “While you may be improving your water reliability, you may be increasing your vulnerability to energy price changes over time,” Cooley said. A 25 percent increase in energy expenses would raise the cost of producing water by about 9 percent and 15 percent at reverse osmosis and thermal desalination plants respectively, according to the report. Electricity prices in California are projected to rise by about 27 percent from 2008 to 2020 in inflation-adjusted dollars as power grid infrastructure is maintained or replaced, capacity is added and more renewable energy is integrated.

Poseidon Plant

Poseidon Resources’s Carlsbad desalination plant in Southern California where construction began this year is one of the 17 projects and will be the Western Hemisphere’s largest when completed. San Diego’s water authority has agreed to buy the water for 30 years. JPMorgan Chase & Co. last year led a $922 million public-private bond offering for the plant.

The high energy requirements for desalination raise concerns about emissions, Cooley said. “If we are dramatically increasing our production from seawater desalination, that could dramatically increase our greenhouse-gas emissions at a time when we’re trying to reduce them.”

Producers can mitigate those effects by incorporating renewable energy and energy-efficiency measures or purchasing carbon offsets, she said.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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