A Primer On Energy Efficiency For Municipal Water And Wastewater Utilities

By Feng Liu, Alain Ouedraogo, Seema Manghee, and Alexander Danilenko
Energy Sector Management Assistance Program - The World Bank

This primer is concerned with energy use and efficiency of network-based water supply and wastewater treatment in urban areas. It focuses on the supply side of the municipal water cycle, including the extraction, treatment, and distribution of water, and collection and treatment of wastewater — activities which are directly managed by water and wastewater utilities (WWUs). Demand-side issues of the municipal water cycle, including water-use efficiency and water conservation, are referred to where linkages to energy efficiency (EE) are critical, but are not discussed in detail.

Electricity costs are usually between 5 to 30 percent of total operating costs among WWUs. The share is usually higher in developing countries and can go up to 40 percent or more in some countries. Such energy costs often contribute to high and unsustainable operating costs that directly affect the financial health of WWUs.

Improving EE is at the core of measures to reduce operational cost at WWUs. Since energy represents the largest controllable operational expenditure of most WWUs, and many EE measures have a payback period of less than five years, investing in EE supports quicker and greater expansion of clean water access for the poor by making the system cheaper to operate.

For cash-strapped cities, improving the EE of WWUs helps alleviate government fiscal constraints while also lessening the upward pressure on water and wastewater tariffs. On a national or global level, improving EE of WWUs reduces the pressure of adding new power generation capacity and reduces the emissions of local and global pollutants.

Based on the review of existing literature, most of the commonly applied technical measures to address EE issues at WWUs generate 10 to 30 percent energy savings per measure and have 1- to 5-year payback periods. Financially viable energy savings depend on the vintage and conditions of facilities, technologies used, effective energy prices, and other factors affecting the technical and financial performances of individual WWUs. Despite these challenges, there is evidence that significant energy savings at WWUs in developing countries can be attained cost effectively.

Adopting efficiency measures, such as those described in this primer, could see global energy saving potential of the sector at its current level of operation in the range of 34 to168 terawatt hours (TWh) per year. The upper bound is roughly the annual generation of 23large thermal power plants, or more than the annual electricity production of Indonesia in2008.

The main challenges to scaling up EE in municipal water and wastewater services stem from sector governance issues, knowledge gaps, and financing hurdles. Utility governance affects the overall performance of individual WWUs and influences decision making, incentives and actions for energy management. This is likely the most significant barrier to WWU EE in many developing countries. Addressing knowledge gaps requires efforts to systematize data collection, training, and capacity building at utilities, supported by local and national governments. Financing hurdles can be reduced by introducing dedicated EE funds to address large but disaggregated investment needs and by promoting third-party financing through energy/water savings performance contracts.

The Energy Efficient Cities Initiative (EECI) of ESMAP was launched in 2008 to support municipal EE scale-up in World Bank (WB) operations and WB client countries. This primer is part of EECI’s knowledge clearinghouse function to inform WB staff working in urban water supply and wastewater management, as well as in energy, about the opportunities and good practices for improving EE and reducing energy cost in municipal WWUs.