Water. desalination + reuse

February/March 2013

Water. Desalination + reuse

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Key issues for seawater Desalination in california: cost and Financing _________ By Heather cooley, Pacific Institute, USA ___ Editor's Note: The Pacific Institute published a controversial paper, Desalination, With A Grain Of Salt, in June 2006, assessing seawater desalination in California. report author Heather Cooley updated her work in an article in Desalination & Water Reuse (August/september 2007), while Nikolay Voutchkov, then associated with the Carlsbad project, wrote a response to the report in D&WR (November/ December 2007). six years later, Cooley has returned to the subject, with another report, published late last year by the Pacific Institute. IN JUNE 2006, the Pacific Institute released Desalination, With a Grain of Salt, an assessment of the advantages and disadvantages of seawater desalination for California. At that time, there were an estimated 21 active seawater desalination proposals along the California coast. Since then, only one project, a small plant in Sand City, has been permitted and built. A second plant, in Carlsbad, has had all of the necessary permits in place since 2009 and only recently secured financing. Interest in seawater desalination, however, remains high in California and many agencies are conducting technical and environmental studies and pilot projects to determine whether to develop full-scale facilities. Beginning in 2011, the Pacific Institute initiated a new research project on seawater desalination. As part of that effort, we conducted 25 one-on-one interviews with industry experts, water agencies, community groups, and regulatory agencies to identify some of the key outstanding issues for seawater desalination in California. In 2012 and in early 2013, the institute is continuing to produce a series of research reports that evaluate these issues. The first report, released in July 2012, provided an update of the proposed seawater desalination projects along the coast of California. The second report, summarized in this article, provides detailed information about the cost of seawater desalination projects, how they are financed, and some of the risks associated with these projects. Other issues that will be addressed in future reports include the marine impacts of seawater desalination, the energy requirements and associated greenhouse gas emissions of desalination, and an overview of the permitting process in California. How MucH Does seawater Desalination cost? Both the cost of the water produced and the complex financial arrangements needed to develop a project are key factors that will determine the ultimate success and extent of desalination in California. Our analysis finds that the cost to produce water from a desalination plant is highly variable. Recent estimates for plants proposed in California range from US$ 1,900 to more than US$ 3,000 per acre-foot, or US$ 1.54 - US$ 2.43/m3 (Table 1). While the cost of seawater desalination has declined considerably over the past 20 years, desalination costs remain high, and there are unlikely to be any major cost breakthroughs in the near- to mid-term. Indeed, desalination costs may increase in response to rising energy prices and stricter design requirements. The public and decision-makers must exercise caution when comparing cost estimates for different seawater desalination projects. In many cases, costs are reported in ways that are not directly comparable. For example, some report the cost of the desalination plant alone, while others include the additional infrastructure, eg, conveyance pipelines needed to integrate the desalination plant into the rest of the water system. Some estimates include the cost to finance the project, while others do not. Even when there is an apples-to-apples comparison, there are a number of site- and project-specific factors that make cost comparisons difficult, such as energy, land, and labor costs. Furthermore, it is important to look at the project costs comprehensively. The introduction of a new source of water increases the amount of wastewater that must be collected, treated, and disposed. Some communities may have adequate wastewater treatment capacity, and the additional costs would simply be the variable O&M costs associated with that treatment. In other communities, however, wastewater treatment capacity may need to be expanded, which represents an additional, and in some cases significant, capital cost to the community. While these costs would apply to all of the water supply projects under consideration to meet demand, these costs would not be incurred if water demand was met through water conservation and efficiency improvements. How will Projects Be FinanceD in caliFornia? For most of the proposed projects in California, the financing mechanism has not yet been determined. Desalination projects that are being developed solely by public water agencies will likely use municipal revenue bonds or other conventional financing methods. Additional support may be provided through government grant and loan programs. Nine of the proposed plants in California, however, may February-March 2013 | Desalination & Water Reuse | 27 |

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