Traditional water supplies are no longer a certainty for many municipal water utilities across the U.S., sparking a wave of investment in water reuse and desalination projects exceeding $18B. A critical driver to their adoption are demonstrated cost declines and competitiveness with more traditional water supplies, according to new analysis from Bluefield Research.
"Without a doubt, California's five-year drought has been a catalyst for recent project development. Utilities as far away as Georgia are seeking ways to mitigate water risk," according to Bluefield Research Director, Erin Bonney Casey. "Utility customers are already facing higher water rates - up 25% since 2012 - and the prospect of stabilized water rates is unlikely without more efficient water supply management."
According to Bluefield's cost of water analysis, traditional water supplies cost $3.90 per 1000 gallons (which can be broken down into $2.95/1000 gallons for transmission and $0.95/1000 gallons for water rights purchases). Reclaimed water supplies in the U.S. now cost, on average, $3.60 per 1000 gallons, falling below that threshold. Seawater desalination plants in the U.S. supply water for between US$3.03/1000 gallons and US$8.14/1000 gallons at an average cost of $5.15 per 1000 gallons.
Water reuse - recycling treated wastewater for irrigation and potable needs - continues to gain momentum. So far, 17 states have planned reuse projects in the pipeline exceeding $18B in total investment. California and Florida continue to lead reuse development, but planned capacity additions in Hawaii, Georgia, Wyoming, North Dakota, Pennsylvania, and Tennessee signal more widespread adoption. Bluefield's nationwide database of reuse projects has ballooned to 763 projects, highlighting the market's near-term potential.
In California, which represents 48% of planned projects, there is also growing awareness that droughts are cyclical. Even with a strong start to the rainy season in Northern California's Sierra, dry southern California remains the U.S. epicenter for reuse development and is showing no signs of letting up. The state must look forward and prepare for the next drought.
"The fact that project development is happening in new states shows that that water reuse is no longer just a drought mitigation strategy, but instead a viable option for utilities to boost water supplies. Several years ago, when our project pipeline database was only 135 projects, many were identified as an immediate response to drought, but now that the drought has subsided, we are still coming across new projects aimed at expanding system capacity in the long-term." says Bonney Casey.
While reuse has emerged as the frontrunner among alternative supplies, utilities continue to evaluate other supply options, such as seawater and brackish water desalination. Desalination costs have declined significantly over the last decade with the introduction of reverse osmosis technology and energy recovery devices; membrane solutions' costs have declined by over 60% compared to thermal desalination. However, permitting seawater desalination plants has proven to be a herculean challenge, pushing interest in brackish desalination. In California alone, 17 brackish water desalination plants are under planning with a combined capacity of 252,000 m3/d.
"At the end of the day, repairing aging pipes to reduce leakage is still the most cost-effective option at US$1.21 per 1000 gallons, and one that is often over-looked as a source of water," according to Bonney Casey. "The bottom line is that water supply concerns aren't going away. Fortunately, a group of forward-looking utilities are a taking a portfolio of solutions approach." says Bonney Casey.
About Bluefield Research
Bluefield Research provides data, analysis and insights on global water markets. Executives rely on our water experts to validate their assumptions, address critical questions, and strengthen strategic planning processes. Bluefield helps key decision-makers at municipal utilities, engineering, procurement, & construction firms, technology and equipment suppliers, and investment firms advance their water strategies. For more information, visit www.bluefieldresearch.com.