Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/867173
PRICE SENSITIVITY KNOWLEDGE OF LATEST PROJECT FINANCE AND TECHNOLOGY INNOVATIONS COULD UNLOCK PROJECTS • price sensitivity is high — one South African Rand equals seven cents in US money • county can be seen as behind the curve in acceptance of PPPs as funding model • perceptions of operating costs do not reflect recent developments in RO technology and energy recovery One of the most signi cant drivers of projects in South Africa, and across Africa more widely, is price. "The big barrier to foreign companies is the water price here, it's below a dollar per cube. It kills them. When you nance locally you can structure your nance in such a way that you get the water purchase price down," says Callaghan. The prices noted in GrahamTek's white paper were an overall project price of ZAR 8.5 billion ($630 million), and a water price of ZAR 11.50 ($0.85) per cube. The really big step-change that could help to free up the potential for more water projects in South Africa, as well as other parts of Africa, is around acceptance of public- private partnerships (PPPs) as a nancing model. "We have really had to sell the fact that they don't have to invest the up-front capital Water. desalination + reuse September 2017 In Site 21 ESKOM TENDERS ELECTRICITY UTILITY IS DEVELOPING DESALINATION PROJECTS • three desalination projects in sight at the nuclear power plant site • brackish groundwater projects are for utility's own use • seawater desalination pilot project to tender shortly, in partnership with City of Cape Town South African electricity utility Eskom is a potentially signi cant player in the solution for Cape Town. The site of its Koeberg Nuclear Power Station on the South Atlantic coast, just to the north of the City of Cape Town, is well situated to supply the city's main water network, and the complex already has an intake and outfall infrastructure in place. Further, the possibility of providing warm water from the nuclear power plant cooling process could help to bring down the cost of desalination process. expenditure (capex). We've got the funding, we want to put the plant there, we want to operate and maintain it; we want to be responsible for the success of the plant so that it doesn't become a white elephant, badly maintained and unproductive, costly to run," Callaghan says. The company's proposal was to create a PPP company where the City of Cape Town owns the land and infrastructure, and the private partners participate in the equity, providing funds to deploy the operating assets. It would be covered by a 25-year Water Treatment Agreement, and the capex will be funded and recovered through a Water Purchase Agreement. In spring 2017, GrahamTek became a preferred supplier of one of the major development banks in Africa, and is now working with them on several projects, including wastewater and groundwater treatment, as well as seawater desal. It is hoping that the price advantage of being locally manufactured and locally nanced will provide a competitive boost in the Cape Town competition. "We are very clear that water projects are not just about technology. It's about your entire package. You've got to have proper funding, and insurance cover. It's very important in Africa that things don't break down and there are huge costs down the line. It's all about the water price at the end of the day," Graham says. Also on price, there is work still to do to communicate the technological developments in desalination that are bringing down energy usage and costs, including the latest RO processes and energy recovery technologies. "We've been educating them on the facts that the cost of desal have reduced over recent times with technology improvements, and proper funding packages in place now." Unfortunately, the market didn't respond well to our fi rst tender. Velaphi Ntuli, manager, Koeberg Nuclear Power Station