Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/792465
come and kick the tyres if you will, and make decisions based on facts, rather than hyperbole," says Riva. As a private entity working in the water sector, Poseidon has evolved a capability particularly around managing relations with the local communities that it serves. "From the private developer's perspective, it's important to appreciate that the partnership is between a private entity and a community. And it may be a public agency but they are representative of the community, and so you need to keep that in mind," he says. "We spent a lot of time attending the public meetings." The developer has learned to operate with a high degree of transparency in its process, and lots of involve- ment by the community through their water agency. "People seem very emotional about water supply, and so it takes a different mindset, you need to understand that and to adjust your approach accordingly," says Riva. One aspect of community relations is managing per- ceptions around the cost of water. As a developer, Posei- don provides capital to build, and arranges the debt to finance, its projects, and bears the construction and operating risks. This means that it typically wants to reap a relatively higher return earlier in the water contract in order to service debt, but over time that the debt burden should ease off. "You have to compare the price to the alternatives that the communities have. If you build one of these projects you're importing less water. So you com- pare the cost of this water to the cost of imported water. In the first year of operation, the water from this new plant is more expensive than imported water, but you're talking about a 30-year contract," Riva says. The rate of increase in water prices over time is expected to be lower from the desalination plant compared to imported water. "When the agencies did their analysis, they con- cluded that at some point within the first 10 years of operation, the water from the desalination plant becomes less expensive, and when you look at it over the 30-year period, this water should be cheaper than the cost of imported water, if history is any guide to the potential escalating prices," says Riva. Unlike other participants that are building similar size projects in the water sector, Poseidon doesn't have a pro- Carlsbad desal plant in San Diego County, California, has become a go-to project for state agencies across the US that want to learn about how public- private partnerships can work for water assets Water. desalination + reuse March 2017 Interview 11 prietary technology. "We select what we think is the best technological solution, and then hire process providers to engineer that, build it, and operate it on our behalf. We have the skills and the domain expertise to be able to put these projects together. We have expertise in finance, permitting and contracting in order to assemble a project that can then be moved onto the engineering design, and construction phase," says Riva. So where, beyond the Huntington Beach project that continues to wend its way through permitting, are the opportunities for just such a desalination developer in the years ahead? "Mexico and Brazil have come on our screen again more recently, and we are starting to prospect, particu- larly in Mexico," says Riva. And there is the growing market in the US for water reuse projects, including in Florida and Texas, which Riva considers Poseidon par- ticularly well-placed to develop. "Reuse is one of these areas that suits a private devel- oper, because there's a high degree of complexity and expertise needed. A lot of public agencies have those skills, but a number would rather not take on projects of that complexity and the risks associated with them. They want to pass off those kinds of risks to a private sector developer that has a track record in doing this," he says. Poseidon is "quite bullish" about opportunities gen- erally in the US, and elsewhere. While it's not necessar- ily the case that experience of the permitting process in California will be directly applicable elsewhere, the skills involved in bringing projects forward to construction stage are highly transferable. "Reuse in the US is definitely an opportunity for growth because the biggest impediment to it has been public acceptance. Studies show that's changing over time. People are gaining greater confidence in the ability to clean up the waters, and from a technical standpoint it's clearly doable, and we think that increasingly you will see communities that want to do that," says Riva. With 20 years experience in the bag, and markets seemingly in need of its particular combination of capa- bilities, this water project developer has much to look forward to.