Why Energy Efficiency Is The Quietest Form Of Risk Management
By David Kim-Hak
In Phoenix, a water resources director at a large food and beverage plant is looking at two numbers that nobody, a decade ago, would have thought to read together. The first is her Central Arizona Project (CAP) allocation, operating under a Tier 1 shortage that has cut CAP’s supply by roughly 30%. The second is her utility bill, which has risen more than 30% since 2020. Both numbers are moving in the wrong direction, and both are tied to the same set of forces.
A thousand miles east, a plant manager at a semiconductor fab in central Texas is running a different calculation. His fab consumes roughly as much water in a day as a small city, most of it processed through reverse osmosis systems that are the single largest electricity consumer on site. He is signing a new multi-year power contract in ERCOT, the most volatile large grid in the country, surrounded by a data center buildout that has added gigawatts of competing demand in his substations. Every assumption in the model was calibrated against a different decade.
In Flanders, a process engineer is designing a direct potable reuse system for a regional water utility. The project exists because the Flemish government, responding to repeated drought, now requires reuse at meaningful scale. Her education taught her to optimize for treatment performance and membrane life. The project’s economics now depend at least as much on kilowatt-hours per cubic meter, and her models for optimizing that number have changed more in the last three years than in the previous twenty.
These three people have never met. They work in different industries, on different continents, at different scales; yet, they are looking at the same problem. For most of the last century, water scarcity, energy price volatility, and the infrastructure demands of computing were three separate concerns in three separate industries. Those boundaries are gone.
I have spent the last 20 years inside the water treatment industry, most of it focused on how to do more with less energy. The first decade of my career was about making reverse osmosis membranes better: more selective and less energy-hungry. What has changed is not the industry’s goal. We have always cared about energy efficiency, especially in seawater desalination, where the pressures involved made the math unavoidable. What has changed is the pace and scale of what operators are up against, and how far down the pressure spectrum the math now reaches. This is no longer just a sustainability story. It is a risk management story, and it applies to every facility that treats water through a membrane.
Water Has Always Been An Energy Story. The Urgency Is New.
For anyone working in advanced water treatment, the fact that reverse osmosis is energy-intensive is not a discovery. Seawater desalination has consumed 3 to 4 kilowatt-hours per cubic meter for decades. That number, already down sharply from earlier generations, is why energy recovery technology was invented in the first place.
What has shifted is the scope. The same math that made energy recovery essential in seawater desalination is now reaching into brackish water reuse, industrial wastewater treatment, and municipal drinking water reuse. Pressures that used to be considered too low to bother with (operating at 100 to 200 psi rather than 1,000) are now large enough targets to matter. What is pulling treatment into these new applications, and these new pressure ranges, is water stress. The World Resources Institute estimates that roughly four billion people already live under high water stress at least one month of the year, with some 70 trillion dollars of global economic activity exposed to high water stress by mid-century. That stress forces reuse. Reuse means treatment. Treatment, at any pressure, means electricity. The kilowatt-hour is the problem now, everywhere on the spectrum, because of what has happened to the price of that kilowatt-hour.
Volatility Is The New Baseline
For the better part of a decade, industrial electricity prices behaved like a slowly shifting floor. From 2016 through 2020, wholesale prices in most major markets were remarkably stable. A plant built in 2018 could reasonably expect its electricity costs to drift, not lurch, through the early 2020s. That baseline is gone.
According to U.S. Energy Information Administration (EIA) data, retail electricity prices rose 7.1% in 2021, 12% in 2022, 6.3% in 2023, dipped slightly in 2024, then jumped another 7.6% through mid-2025. U.S. wholesale prices in the first half of 2025 rose roughly 40% year over year. In the top data center states (Virginia, Ohio, Illinois, California) cumulative retail increases since 2020 range from 31 to 64%. In Europe, average wholesale electricity prices rose 10% year over year in 2025 alone, to roughly $95 per megawatt-hour, according to International Energy Agency (IEA) data. These are not cyclical movements. They are structural shifts no hedging playbook written before 2021 was designed to handle.
Geopolitics is part of the picture. The war in Ukraine reset European gas prices. Middle East instability has done the same for oil futures and shipping lanes. But the structural driver is not geopolitics. It is the collision of an aging grid, rising industrial demand, and the arrival of a new class of electricity consumer whose appetite has no precedent.
That consumer is the data center. The EIA now expects US commercial electricity consumption to grow 5% in 2026, a sharp revision upward driven primarily by hyperscaler construction. The IEA projects global data center electricity consumption doubling to roughly 945 terawatt hours by 2030. In the U.S., data centers are on track to consume more electricity for processing data than all of the country’s energy-intensive manufacturing combined, including aluminum, steel, cement, and chemicals, by the end of the decade. Every water-treating facility (industrial, municipal, or otherwise) is now competing for electrons with a buyer whose willingness to pay is higher than theirs.
The Hedge No One Is Talking About
Public conversation about this risk is dominated by the supply side. Build more renewables, more gas, more nuclear. Sign long-term PPAs. All of these matter. None are quick, and none are individually sufficient. The grid is constrained by permitting timelines, interconnection queues measured in years, and a competition for electrons that operators of water infrastructure are not winning.
The demand side is the lever almost no one talks about, and it is the only lever any individual facility fully controls. Every kilowatt-hour a plant does not consume is a kilowatt-hour it does not have to buy, forecast, hedge, or explain. It is a kilowatt-hour immune to tariff decisions in Brussels, gas disruptions in the Baltic, or compute demand from a hyperscaler two counties over.
The industry I joined 20 years ago treated energy recovery as a specialized concern for seawater desalination. That framing is outdated. The same physics that justifies energy recovery at 70 bar in a desalination plant justifies it at 10 bar in a municipal reuse system and at 120 bar in an industrial zero-liquid-discharge line. The pressures differ. The logic does not.
Proof, At Two Ends Of The Pressure Spectrum
Consider two sites that, on the surface, have almost nothing in common.
The first is the Water Production Center in Hofstade, a town in Flanders. Recurrent droughts pushed the Flemish government into one of Europe’s most ambitious water reuse programs, and Hofstade is among the first direct potable reuse systems in Europe operating on municipal wastewater effluent. It produces 400 million liters of drinking water a year, enough for roughly 12,000 people. The reverse osmosis system operates at low pressure, between 100 and 200 psi. Integrating a low-pressure energy recovery device reduced electricity consumption by about 23%, with a payback period of roughly three years.
The second is a lithium iron phosphate cathode manufacturing facility in central China’s Hubei province, producing 50,000 tons per year of the material that powers batteries in electric vehicles worldwide. The wastewater stream is brutal, with dissolved solids orders of magnitude higher than a Belgian treatment plant encounters. The facility uses high-pressure and ultra-high-pressure reverse osmosis, up to 120 bar, to drive the water toward zero liquid discharge. Integrating energy recovery into the high-pressure stages cut energy consumption in those stages by roughly 51%, and treated water is now recirculated into the battery production process itself.
One Belgian town at low pressure. One Chinese factory at ultra-high pressure. The physics that makes their economics work is the same, and the lesson that matters for every operator in between is that the economics now work across the full range.
The Operators Who Will Still Be Standing
The next decade will not be kinder to water-treating facilities than the last one. Water stress will intensify. Electricity prices will remain structurally higher and more volatile than before 2021. Data center demand will continue to crowd industrial and municipal users in the same regions where water is scarcest.
The facilities that navigate this most successfully will not necessarily be the ones with the biggest power contracts or the most visible sustainability commitments. They will be the ones that built or retrofitted toward using less energy per unit of water, across every pressure range their operations touch. Their reward will be quiet: fewer surprises, tighter operating margins, more optionality when shocks arrive. It is the reward of having prepared for weather that has already begun.
David Kim-Hak is Vice President of Wastewater for Energy Recovery.