Huntington Beach Desalination
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An independent financial analysis of the SDCWA and Poseidon Resources Water Purchase Agreement shows that ratepayers could be at risk. 11/26/12
Press Release: Orange County Coastkeeper, Surfrider Foundation, Residents for Responsible Desalination (R4RD) and the Coastal Environmental Rights Foundation have appealed the Poseidon HB NPDES permit to the State Water Resources Control Board. 3/14/12
Poseidon Resources, a private Connecticut corporation, is seeking to withdraw ocean water off Huntington Beach and convert that seawater into private freshwater sold to water districts to supplement or replace less expensive domestic groundwater. Poseidon promises this publicly subsidized, private facility will provide water security during droughts; but what is the true cost of this project, and can Orange County afford to speculate on what would be the largest facility of its type in North America?
Coastkeeper is not opposed to the construction and operation of desalination plants in Orange County as one of many tools to ensure a secure source of reliable freshwater. We do oppose the use of expensive and environmentally damaging technology to augment water supply issues for the “promise” of processed seawater, which would be the most costly option in California.
Coastkeeper supports responsible desalination that considers the true costs of a desalination plant, including the burdens of financing, subsidies, energy demand, the environment, reliability, and aesthetics.
Orange County should focus scarce rate and taxpayer resources on the most efficient and cost effective options for water security before approving Poseidon’s proposed desalination plant. The water agencies responsible for supplying Poseidon subsidies should first determine the water supply needs of Orange County for the foreseeable future and develop a strategy to achieve those goals by using the best available technology with the lowest price and highest potential for water savings. Desalination may be one of the tools that water agencies and the public chose to pursue, but not before fully exploring and adopting the less expensive and proven options such as conservation or funding the expansion of the existing Ground Water Replenishment System (GWRS).
The chief environmental harm caused by a desalination facility in Huntington Beach will be from the process of withdrawing water from the ocean and replacing it with highly concentrated brine discharge. In addition to the brine, Poseidon will use harmful chemicals to clean the membranes and reverse the flow of the intake pipes to push these chemicals, along with seawater, into the ocean. Beyond chemical and brine pollution, early studies of desalination facilities found increased concentrations of copper, lead, and iron in the water column and sediment near discharge points. The source of this contamination was corrosion of desalination equipment, which leached heavy metals into the discharge. (Source: Pacific Institute)
The cooling water infrastructure used by coastal power plants is proposed by desalination advocates as existing water intake infrastructure suited for use by coastal desalination plants. However, as the independent Pacific Institutenoted in their comprehensive report on California desalination plants, the California Energy Commission recently declared in a report that “seawater…is not just water. It is a habitat and contains an entire ecosystem of phytoplankton, fishes, and invertebrates.” The environmental harm from the existing cooling water infrastructure, commonly referred to as “Once-Through-Cooling,” is two-fold and is referred to as impingement and entrainment. Impingement kills large organisms, such as fish, mammals, birds, and invertebrates when they are pinned against large screens over the intake pipes. Entrainment occurs when smaller organisms, such as small fish, eggs, plankton, and larvae pass though the intake screens and are killed during the cooling system’s operation before they are discharged back into the ocean. According to the Water Resources Control Board, studies estimate that once-through cooling at Huntington Beach Generating Station (HBGS) results in entrainment of 104 million to 345 million fish larvae per year, depending on flow, and impingement of 51,000 fish.
The impact to the natural marine environment due to Once-Through-Cooling is not completely understood, but the state of California is phasing out the use of this acknowledged harmful and antiquated technology by coastal power plants between 2010 and 2024. Proven, cost-effective and less harmful alternatives to Once-Through-Cooling exist, and the continuation of this infrastructure for desalination will only continue to damage the marine ecosystem the state has a duty to protect.
The Pacific Institute’s report declares that although the cost of desalination technology has fallen, “it remains an expensive water supply option” and that “[d]esalination facilities are being proposed in locations where considerable cost-effective conservation and efficiency improvements are still possible.” The report continues to explain that California urban rate payers rarely pay more than $1.00 to $3.00 per thousand gallons for their water and even the most efficient large desalination facilities will not have production costs fall below $3.00 to $3.50 per thousand gallons. This could result in the cost of delivery being as high as $9 to $10 per thousand gallons. At that price, the cost of supplementing our existing groundwater supplies with desalinated water would be a shock to customers without significant subsidies.
As a real life Southern California example, the The San Diego County Water Authority (SDCWA) is signing a 30-year “take or pay” contract with Poseidon for at least 48,000 (and up to 56,000) acre-feet of water per year for a desalination plant in Carlsbad. SDCWA ratepayers can expect water bills to increase by at least 8 – 11 percent. Without a contract cap on the cost for SDCWA to purchase the water, or the price the consumer will be required to pay, water bills are expected to hit unforeseen heights.
Latest estimates released by Poseidon and SDCWA reveal the true cost for desalinated water has almost tripled since originally proposed, from about $900 per acre-foot to almost $2400 per acre-foot (with no cost cap). Analysts speculate the $2400 estimate is still low. Poseidon initially promised the cost of desalinated water from the Carlsbad facility would not exceed the cost of imported water, a claim environmentalists correctly called economically infeasible.
In addition, the State Water Resources Control Board (SWRCB) is in the process of amending the California Ocean Plan to include provisions and restrictions for ocean desalination facilities, and it is possible that those changes will place additional obligations on Poseidon’s Desalination Plant – changes that the SDCWA has not factored in to the true cost of the water…The expert reports have been criticized by consultants hired by Poseidon. Nonetheless, should the recommendations submitted by the expert panels be adopted by the SWRCB, it will result in significant costs not currently under consideration or accounted for.
Orange County should be skeptical when hearing claims that this facility is “different” or that processed seawater will cost less than other plants worldwide. Desalination plants in the Mediterranean, Australia or Florida are frequently and selectively cited as successful examples of existing desalination plants. However, it is important to realize that California possess unique economic considerations not found in other global facilities. These factors must be considered when comparing the cost per unit of water from a California plant to that derived from an Israeli or Algerian plant. One critically important cost variable is the source of the seawater. California receives its cold water from the north, and cold ocean water is more expensive to desalinate than warmer ocean water, such as the waters of the Mediterranean or Florida. Similarly, the cost of desalinated water increases as the salt content of the source water is more concentrated. For example, Gulf of Mexico has an approximate salinity concentration of 23 to 33 grams per liter while the Pacific Ocean has an approximate salinity of 38 grams per liter. This seemingly small variation has a significant impact on the economics of any desalination facility, and should be considered when comparing the cost effectiveness of two plants in relation to each other. The costs associated with desalination facilities is highly site specific, and a thorough analysis on the cost-effectiveness of this technology must be completed prior to approving any project. (Pacific Institute)
Hidden subsidies obscure the true cost of desalinated water from rate and taxpayers and give the appearance of desalinated water as a cost effective alternative to conservation and the expansion of existing water-saving technology, such as GWRS. For example, Poseidon reportedly secured a $0.77 per thousand gallon subsidy from the Southern California Metropolitan Water District (“Metropolitan”) for their proposed Carlsbad Desalination Facility. This subsidy reduces the apparent cost to ratepayers from $2.90 per thousand gallons to $2.15 per thousand gallons. However, because San Diego ratepayers contribute to Metropolitan, the water’s actual cost to consumers is misleading. (R4RD)
Green House Gasses (GHG)
SDCWA should protect itself, and its ratepayers, and ask Poseidon to demonstrate where the cost of fulfilling its GHG permit requirement is included in the current estimates being negotiated.
Special Condition 10 of Poseidon’s CDP (for the Carlsbad plant) requires it to account for all of its indirect greenhouse gas (GHG) emissions resulting from electricity use each year by implementing its approved Energy Minimization and Greenhouse Gas Reduction Plan (GHG Plan). When the California Coastal Commission (CCC) approved Poseidon’s GHG Plan in August 2008, Poseidon asserted that each acre-foot of water produced by desalination would replace imported water from the State Water Project on a one-to-one basis. As a result, the vast majority of its GHG emissions (70 percent) were automatically “offset”, and Poseidon projected it would only have to purchase carbon offsets for approximately 16,000 metric tons of carbon dioxide equivalent (MtCO2e). However, Poseidon has since acknowledged that the desalinated water it produces will NOT replace imported water on a one-to-one basis. This admission radically changes the amount of carbon offsets Poseidon will have to purchase by more than 500 percent from 16,000 MtCO2e to about 83,500 MtCO2e.
The cost of carbon offsets fluctuates with the voluntary over-the-counter market. Current estimates range from $5 to $40 per MtCO2e. In order for Poseidon to buy five times more carbon offsets than originally planned, it must further raise the cost of desalinated water…Importantly, this is NOT a one-time cost. Poseidon, per Special Condition 10, must account for its indirect GHGs each year, and thus must buy the necessary amount of carbon offsets each year as well. The average price for MtCO2e has only increased over time, and this trend is predicted for the future. Regardless of the exact price of MtCO2e, this represents a new cost to the overall price per acre-foot.
Poseidon’s proposed desalination plant will require an enormous amount of electricity in a state where rolling blackouts and energy shortages are a living memory. Once operational, Poseidon’s plant will demand 840 megawatts of power per day, operating 24 hours a day. This demand is equivalent to adding 30,000 to 35,000 residential homes. This makes energy demand one of the single largest costs in operating the Poseidon plant, and a cost which can be highly variable if recent history is any indication. (SEIR)
If this project is constructed, Orange County will simply exchange the promise of partial water reliability for the exposure to energy price spikes, which only increase the already high cost of desalinated water. Additionally, Poseidon’s projected costs anticipate using preheated cooling water from the nearby AES power plant as source water for the desalination process. However, this technology is scheduled to be phased out by coastal power plants in the near future and preheated water will no longer be the source water for the desalination process. As the temperature of source water decreases, the amount of energy required to convert the seawater to freshwater increases. Therefore, as this antiquated cooling technology is phased out at coastal power plants, the amount of energy required to produce the same amount of water will only increase. This exposes the water districts, and thus the ratepayers, to even higher costs.
As energy prices rise over time including contributing factors such as the closure of the San Onofre Nuclear Generating Station, the cost to produce desalinated water will increase at a rate greater than those non-energy dependent methods of water security, such as conservation or GWRS. In addition
For the San Diego plant in Carlsbad, in addition to building costs, under the agreement ratepayers will be saddled with unknown liabilities related to high energy costs associated with removal of salt from seawater. Compounding the financial uncertainty is the possible shutdown of the San Onofre plant. Further, Poseidon’s Coastal Development Permit (CDP) requires development of a Green House Gas Reduction Plan (GHG Plan) to achieve full carbon neutrality. After original CDP approval, environmentalists proved Poseidon intentionally misled the California Coastal Commission by contending its desalinated water would replace an equivalent amount of imported water; thus the offsets it claimed as part of its GHG Plan were no longer valid, and new, unknown costs of implementing a revised GHG Plan will be shifted to the SDCWA ratepayers. To date, Poseidon refuses to include such costs in its stated price per acre-foot of desalinated water.
The cost of desalinated water is expensive due to the high energy usage involved in production. Compounding this, the cost of electricity in the San Diego area is increasingly volatile due to the shutdown of the San Onofre Nuclear Generating Station. The liability for paying for the variable impact of the energy cost to produce the desalinated water has been assigned to SDCWA ratepayers.
The independent think-tank Equinox Center has this to say about energy and desal:
“Concerns about the availability and cost of energy, as well as greenhouse gas emissions, make energy intensity a key issue in assessing the different water options. Desalination is the most energy intense solution, with an estimated requirement of 4,100 to 5,100 (kilowatt hours) per acre foot.”
Energy costs make up a larger percentage of the cost of desalinated water than any other water supply. For Poseidon’s project, energy accounts for a quarter of the price of desalinated water. Thus, as energy prices go up they will disproportionately impact this water supply source. (Poseidon Water Purchase Agreement Press Release)
In 2004, the California Coastal Commission identified growth inducement as potentially “the most significant effect” of proposed desalination projects. The operation of Poseidon’s Huntington Beach plant, along with other Poseidon desalination plants in southern California, could provide the resources for additional development of the region and further strain the natural coastal and inland environment of Orange County.
Case Study: The Experience of Poseidon’s Tampa Bay Desalination Facility
In March 1999, Florida water officials authorized the construction of a 25 MGD desalination facility at Apollo Beach to serve the city of Tampa. Currently the largest desalination plant in America, the facility was promised to be privately owned and operated with a budget of $158 million and scheduled to be operational in 2003. Intended to offset declining groundwater levels and a growing population, the Poseidon facility would generate enough water to supply 1.8 million customers.
After a series of contractor bankruptcies and running $40 million over budget the Tampa Bay desalination plant opened five years behind schedule in 2008. The plant failed its initial performance test, and required $30 million dollars in repairs to replace such items as corroded machinery and frequently fouling membranes. To date, Tampa has consistently failed to meet their promised freshwater production levels. This failure not only weakens Poseidon’s argument of water independence, but also significantly increased the cost of operating the plant per unit of water. The facility also violated their sewer discharge permit due to the discharge of cleaning chemicals used to treat the sensitive membranes.
Tampa Bay should be a warning to Huntington Beach and local water districts to avoid exposing tax and ratepayers to the potential for a partially constructed facility sandwiched between a highly prized beach and protected wetland. There is strong evidence to suggest that if Tampa was to occur again here, the cost to the public could be substantially greater. Energy costs in the T
ampa area of Florida are unusually low ($.04 per kilowatt hour) compared to California, meaning the energy cost to operate the facility would be substantially greater. The salinity of the water off Tampa Bay is substantially lower than the Pacific Ocean (26,000 parts per million compared to 33,000 to 40,000 for typical seawater), meaning the efficiency and longevity of the membranes would be reduced. Finally, Tampa’s financing was over a 30 year period at an interest rate of only 5.2%, a duration unlikely to be repeated during this experiment. (Pacific Institute: Desalination – With a Grain of Salt: A California Perspective)
Additionally, the (San Diego) Water Purchase Agreement (WPA) will require purchase of water at all times, under all circumstances, whether needed or not, guaranteeing Poseidon and its investors a strong profit. However, this places ratepayers at substantial financial risk. Elsewhere, such as Tampa Bay and Sydney, water agencies have decided to let expensive desalination plants sit idle due to extremely high operational costs. Under the WPA, the desalination plant will never be shut down, even in the wettest of years.
Marco Gonzalez, Legal Director of the Coastal Environmental Rights Foundation (CERF) states “At some point, the public needs to step up and educate itself on the potential long term financial implications this project. Poseidon is known for promising a lot, and then coming up with excuses when it fails to deliver. I cannot fathom how anyone thinks it makes sense to take this sort of risk with public funds. At the very least, the fact that the cost of this project has tripled since it was first proposed should cause red lights and sirens to go off.””
Environmental groups urge ratepayers to voice their concerns over the costs associated with Poseidon’s agreement with SDCWA, as there are alternative, more cost-effective options for water supply reliability in San Diego County and throughout the region, i
ncluding a publicly owned desalination plant, water recycling, and conservation. In Orange County, we also have these alternatives including an expansion to our existing GWRS plant.
Practical Alternatives to Desalination
Desalination facilities are the most expensive method for replacing imported water and should only be considered after water agencies have implemented all cost-effective water conservation and efficiency measures.
Before the SDWCA commits ratepayers to paying at least $3.5 billion for desalinated water, we should compare this with the cost of other alternatives.
Approximately 61 percent of the County Water Authority’s water goes to residential use. About 60 percent of that water is used outdoors, primarily for irrigation. This outdoor water use will account for about 311,000 acre-feet per year in 2030. The County Water Authority’s modeling predicts a shortage of 111,000 acre-feet in an “uncertainty scenario” which is used to justify the need for Poseidon’s project. By simply reducing outdoor irrigation by one-third this gap can be filled. Instead, to obtain half that amount, or 56,000 acre feet ratepayers will pay over $115 million annually. In contrast, conservation comprised only $10 million of the SDCWA’s 2010-2011 budget, but resulted in 67,000 acre-feet of conserved water. In other words, as a “take or pay” contract, Poseidon’s Water Purchase Agreement is actually a disincentive to conservation because ratepayers will pay for this water regardless of how much they use, or conserve.
Low-Impact Development (“LID”) and the implementation of conservation strategies is a cost-effective and proven method to reduce our water demand. Landscaping strategies include simple measures such as repairing broken pipes and infrastructure. According to the Los Angeles Times, the Metropolitan Water District estimates 9.2% of the water used by water agencies in southern California is “unaccounted for.” One common belief of the source of this loss is leaking and broken underground water pipes and mains. For example, the Los Angeles Department of Water and Power reports an average of 23 leaks for every 100 miles of pipe. Infrastructure retrofit projects would increase the reliability of the water distribution system, secure the water we transport throughout in southern California, with the potential to create thousands of high quality construction jobs and support the companies that supply the materials to increase our water security.
For example, according to the American Society of Civil Engineers’ Report Card, in Louisville, KY in 2009, there was rehabilitation for 75 miles of water main to extend the useful life of the system and reduce water main breaks. In addition, 9.5 miles of water main would be replaced to improve water quality, fire hydrant flow and reduce maintenance. They also mention that in Port Angeles, WA, in 2008, the City of Port Angeles completed a project to replace the water mains and sidewalks in the downtown area. The replacement water mains bring the city’s downtown area to a service level that meets current fire flow standards, reduces seismic risks and helps prevent water main failures due to age. The original water mains were installed in 1914.
Groundwater Replenishment System (GWRS)
Orange County is a recognized national leader in purifying contaminated water for use as groundwater recharge. Orange County’s system is the largest of its kind in the world and has garnered international praise for its design and operation. In 1997, the Orange County Sanitation District and the Orange County Water District collaborated to create a system that would preserve local groundwater resources and prevent seawater from infiltrating and contaminating the groundwater basin (a saltwater intrusion barrier). The system diverts sewage from the Orange County Sanitation District, originally destined for the ocean, pretreats the water by submerging membrane modules at a rate of 86 MGD before it enters a Reverse Osmosis unit where it is then treated by ultraviolet light and hydrogen peroxide disinfectant. The result is water that satisfies federal drinking water standards and even requires the addition of minerals before it is discharged. Operational since 2008, GWRS generates enough purified water to serve 500,000 people.
The $480 million GWRS microfiltration facility produces 70 MGD of purified water for use in Orange County. Half of the purified water is diverted to recharge the Orange County basin aquifer and the remaining water is injected into the seawater intrusion barrier. In addition to protecting our groundwater supply, another advantage to this system is that it diverts sewage away from discharge into the natural environment, thereby reducing our impact on the sensitive marine environment. GWRS is an existing proven technology, which demands less energy and generates fewer greenhouse gas emissions than the unproven Poseidon desalination plant or importing water from northern California.
The Orange County Sanitation District and Orange County Water District have secured financing to expand the state-of-the-art GWRS to 100 MGD from 70 MGD. With projected population increases and anticipated reduction in water diversion from northern California’s depleting Sierra Nevada mountains, Orange County should be investing more towards GWRS and conservation measures.
GWRS is the most practical option for our regional water supply problems and recognizes the expansion of existing infrastructure as the most cost-effective approach to reducing our dependence on imported freshwater. According to the Report Card for America’s Infrastructure, GWRS is between 35% and 75% less expensive than saltwater desalination and will consume half the energy.