De-Risking Water Supply Through Source Energy

From an innovative company called Energy Points, an interesting piece on the watergy connection below:

North Carolina in 2007. Brazil in 2012. Texas in 2013. And California right now. What do they have in common?

Droughts and heat waves are becoming routine in many parts of the world, and they can pose major challenges for the corporation. Short-term emergency water curtailments can be expensive—especially for heavy water users, like the agricultural and power industries and manufacturers. Long-term water scarcity can have a substantial impact on a company’s ability to grow. And there are always the unexpected ripple effects that impact supply chains for business of all types: neither ski resorts, nor even posh New York bakeries are immune.

Water risks can be minimized

We also know that drought- and heat-related emergencies are avoidable. But large scale water resource planning is a process that takes decades, not a few years, and the staggering inertia of most water laws means that decisions to update regulations and invest in new infrastructure are rife with political conflict. How can businesses reasonably expect to insulate themselves from short- and long-term risks in the face of so much climatological, regulatory, and political uncertainty?

As businesses, we first need to recognize that water resource planners and utilities face tremendous pressure to balance two diametrically opposed goals: keep water costs low and make sure we have enough in the future. But if the last five years have taught us anything, it’s that our society is great at the former, and not so great at the latter.

Second, we need to realize that, as a result, resource efficiency decisions (i.e., “sustainability” decisions) that are solely based on financial returns will necessarily provide an incomplete picture. Water projects like grey water systems, drip irrigation, low flow fixtures, or green roofs don’t make economic sense in places where they may be needed the most. Consider the fact that water is about 3x more expensive in Boston than it is in Phoenix, and almost 5x more expensive in Seattle. Water prices reflect nothing more than financed infrastructure costs, historical rights, labor, and operational energy expenses—all of which are accounted for only after new infrastructure decisions have been made. In other words, water prices follow social and political currents.

US Water Prices vs Source Energy | Energy Points | Source Energy IntelligenceIt’s only in rare circumstances that they have followed hydrological realities. What we’ve come to understand at Energy Points is that creating a durable and resilient water supply can be energetically expensive in areas where demands are high and the natural supply is low. California is a great example of this. Price-wise, it’s a mixed bag, but there’s a significant trend in the amount of energy needed to supply water across the state. According to a 2006 California Energy Commission Study, it takes about 3.5 kWh to deliver a thousand gallons of clean water to end users in Northern California. In Southern California, that value is over 3x higher at 11.1 kWh per thousand gallons.  According to the USGS, the U.S. average is about 1.9 kWh per thousand gallons.

Source energy is the key to quantifying long- & short-term water price structure

The trend isn’t coincidental, either. It is the result of increasingly strained supplies and growing populations that are willing to go to great lengths to acquire their water. Because of the strong relationship we see between water prices and real investments in both infrastructure and operational energy, it stands to reason that areas with chronic drought, low water prices, crumbling infrastructure, and woefully inadequate long-term water supply plans are due for a reckoning in one form or another. Costs to businesses will come in the form of more frequent curtailments (precautionary or because the wells have run dry) or in the form of higher water prices over the long run (due to new drought resilient infrastructure investments).


Water, energy, and climate are strongly coupled and depend on location and time | Energy Points | Source Energy Intelligence


That begins to answer the long-term risks of water supply, but the corporation must also consider near term risks. It is one thing to say that, in the long run, a thirsty city will close its water gap with a steady uptick in energy consumption per gallon, but coping with present drought is something else. As we’ve said, it takes years to plan and execute new water supply strategies. A guarantee for water 5 years from now from a new desalination facility is worthless to the farmer who needs water today.

Luckily, we can put boundaries on the energetic worth of this water, too. In true emergencies, water is trucked in (whether a company can pay to have this happen is another matter). This fact alone makes excessive consumption of water during a drought extremely wasteful. Its replacement value is extremely high (equivalent to roughly 500 kWh of electricity per thousand gallons of water, or about 250 times higher than the US average).

Further complicating matters is that water, energy, and climate are closely linked, and they impact each other at different time scales. Our source energy choices impact climate in the long term. Climate change continually impacts the water cycle. Water scarcity changes our source energy options, sometimes in extreme ways. Changes to our energy supply impact our ability to move, treat, and store water. The hydrological cycle has a major impact on macro- and micro-climates. And extreme weather and climate events put strains on both our energy generation and water supply systems. These feedbacks require a process-oriented approach if the information is to be leveraged effectively.

Our solution: Water scarcity is a source energy story

We know that, given enough energy, we can provide water anywhere on earth. Even the most extreme water scarcity can be mitigated, but at a very high energy costs. Therefore, the first thing that organizations (C&I) need to understand is their vulnerability to water scarcity within the context of their total energy exposure. Total energy exposure includes all of the life cycle energy needed to conduct business, including direct energy consumption (fuels for heating, travel), electricity consumption, water use, and materials/waste. The significance of the water component of their energy supply chain may change on a month to month basis, reflecting both long-term water scarcity conditions as well as more short-term water supply crises.

Understand vulnerability to water scarcity within the context of their total energy exposure | Energy Points | Source Energy Intelligence

This provides a measure of de-risking potential that is completely decoupled from near term financial payback analyses. Water prices are distorted. They tend to reflect only past societal and political decisions, not present water constraints or future climate realities. Further, the site and time based energy value of water needs to reflect all aspects of the energy-water-climate nexus mentioned earlier. To do all of this, we:

  1. Quantify the actual amount of energy needed to supply water to a give location based on local conditions, elevation, distances from surface and groundwater sources, etc.
  2. Quantify the additional energy needed to A) mitigate current drought conditions (e.g. short term, high energy solutions), and B) the energy needed to create a drought resistant supply (e.g. introducing brackish groundwater or ocean water desalination) over the long term and under dynamic global climate conditions—all while considering local reservoir and groundwater levels.
  3. Account for differences in the life cycle source energy efficiency for moving and treating the water. For instance, it takes a smaller quantity of fossil fuel energy to generate 1 kWh of electricity from wind than from coal. Likewise, a CCF of conventional natural gas takes less energy to acquire than unconventional (fracked) gas.
  4. Finally, account for the major environmental externalities associated with these fuel sources. These include, among others, GHGs, water use, land use, and waste.

This is how you de-risk a water supply chain | Energy Points | Source Energy Intelligence

For the commercial enterprise, a major advantage of rolling up these values into one energy unit is that it allows equitable comparisons within and across resources. Water in Boston and water in Phoenix have different values, reflecting local differences in energy, water, and climate. A gallon of water in Boston can be compared to a kWh of electricity in Boston. It also gives us an indication of the true value of water in any given location (i.e., externalities have been internalized). This information is designed to complement oft-used financial approaches to sustainability decisions, allowing the corporation to plan water saving strategies in any location with both short- and long-term visibility. For a water utility, the advantage of such a system is that it allows them to plan their assets and price water more rationally.

The approach is also iterative. Conditions change (e.g. extreme weather events occur, local climate varies, populations respond, new industries come and go), and the energetic value of water in a given location increases or decreases as a result.

This is how you de-risk a water supply chain: quantify water based on a geotemporal analysis of the source energy needed to deliver it. Include scarcity and other externalities.

This entry was posted on Friday, February 28th, 2014 at 12:06 am and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Author
As the scarcity of water and energy continues to grow, the linkage between these two critical resources will become more defined and even more acute in the months ahead.  This blog is committed to analyzing and referencing articles, reports, and interviews that can help unlock the nascent, complex and expanding linkages between water and energy -- The Watergy Nexus -- and will endeavor to provide a central clearinghouse for insightful articles and comments for all to consider.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has held a lifelong interest in environmental and conservation issues, primarily as they relate to freshwater scarcity, renewable energy, and national park policy.  Working from a water-scarce base in Las Vegas with his wife and son, he is the founder of Water Politics, an organization dedicated to the identification and analysis of geopolitical water issues arising from the world’s growing and vast water deficits, and is also a co-founder of SmartMarkets, an eco-preneurial venture that applies web 2.0 technology and online social networking innovations to motivate energy & water conservation.  He previously worked for an independent power producer in Central Asia; co-authored an article appearing in the Summer 2010 issue of the Tulane Environmental Law Journal, titled: “The Water Ethic: The Inexorable Birth Of A Certain Alienable Right”; and authored an article appearing in the inaugural issue of Johns Hopkins University's Global Water Magazine in July 2010 titled: “H2Own: The Water Ethic and an Equitable Market for the Exchange of Individual Water Efficiency Credits.”