Australia’s quench may flip switches of ‘white elephant’ Victoria plant

Bloomberg

On the southeast coast of Australia, a A$5.7 billion ($4.1 billion) processing plant to turn the ocean into a source of drinking water has sat idle since it was built in 2012. That could change soon.
The state of Victoria will decide by April whether to switch it on, sucking water from the Bass Strait through an underground tunnel into a complex of more than two dozen buildings in a seaside town south of Melbourne. At the heart of the facility is technology that can remove salt and supply as much as 150 billion liters (40 billion gallons) of water a year, or about a third of the city’s consumption.
Australia, the world’s driest inhabited continent, largely hasn’t needed more than A$8 billion of desalination plants built in response to the so-called Millennium Drought, and critics have portrayed the Victorian project as a white elephant. Yet a decline in Melbourne water storage to the lowest level in almost four years and a drop in rainfall have stoked expectations that the plant may not be in limbo for long.
“Right now is probably the first time since it opened where there is a really serious decision to be made,” Victoria’s Water Minister Lisa Neville, who will ultimately make the call on ordering desalinated supplies, said in an interview. Dam levels have dipped more since. “Unfortunately, indications are at the moment that the trends are likely to continue.” The decision in Australia looms as nations from the US to China grapple with how to respond to water shortages, drought and population growth.

VEOLIA, GE
The desalination industry, whose major companies include Veolia Environnement SA, General Electric Co., Doosan Heavy Industries & Construction Co. and IDE Technologies Ltd., are positioning themselves to be part of the solution. Desalinated water capacity worldwide may more than double by 2030, according to Global Water Intelligence, a UK research firm, and the International Desalination Association, a U.S. trade group.
‘GOOD OMEN’
Flipping the switch in Victoria could be a “good omen” for the sector, endorsing desalination as a way to tackle water scarcity, said Michael Porter, a professor at Deakin University in Melbourne and a desalination specialist. While Australia’s investments in the technology probably should have been made in phases, all six major plants across the nation should be operating by 2030, with the potential for others to be built, he said.
“What we bought is insurance — insurance that has recently turned out to be irrelevant,” Porter said. “But if you haven’t been robbed, do you curse your insurance policy? Desalination will have its time.”
When dry spells hit, governments that built plants to purify seawater tend to be glad they have them, said Randy Truby, a former International Desalination Association president, who runs a consultancy in California. The industry aims to learn from the experiences of communities where projects haven’t operated consistently, he said.

SANTA BARBARA, MONTEREY
The Carlsbad ocean desalination plant, the largest in the Western Hemisphere, started in Southern California in December. The city of Santa Barbara later this year is planning to reactivate a plant built during a drought in the early 1990s, but mothballed when rain returned. American Water Works Co. said in December it’s working to complete a project on the Monterey Peninsula in the next three years to four years.
“We’re being very deliberate about building desalination plants” in the US, said Truby, who has worked in the industry since 1969. “It’s not a panacea, but it’s part of the overall water management plan.”
Peter Walsh, the leader of Victoria’s opposition Nationals and the party’s water spokesman, said the current Labor government seems “hellbent” on turning on its desalination plant to justify its 2007 decision to build it. Walsh, who was the water minister from 2010 to 2014, has opposed the A$3.5 billion investment in the facility, and said it should only be used as a last resort.
The plant, at Wonthaggi, is estimated to cost the state about A$620 million in the 12 months through June, without actually producing water, while turning it on would add at least A$27 million to the annual cost, according to state documents. Over the life of the contract, it’s estimated to cost more than A$18 billion, documents show.

ENERGY NEEDS
Governments weighing desalination globally should examine all sources, including water recycling, and consider the amount of electricity required to power any projects, Walsh said. Energy use can account for more than half of the operating costs at a seawater plant, according to the Australian Water Association.
Global desalination contracts are forecast to increase after declining in recent years, and annual spending on projects will reach almost $20 billion in 2020, according to Oxford-based Global Water Intelligence and the desalination association.
Demand will be driven by the Middle East, Asia-Pacific, India, parts of Africa and the U.S., with capacity projected to rise at least 50 percent over the next five years, Suez Environnement Co., one of the operators of the Victoria project, wrote in an e-mail.

REVERSE-OSMOSIS
The Victorian plant uses reverse-osmosis, which pushes seawater through filtration membranes to remove salt and other impurities. The project could start delivering supplies within 10 weeks of getting an order, according to AquaSure, contracted by the government to build and operate the plant. The state government reviews whether to use the facility annually.
The project, estimated to be the 12th biggest in the world, would require about 90 megawatts of power each year. AquaSure said all of the electricity it uses from the grid will be offset by purchases of renewable energy certificates.
Desalination plants have also been built in Sydney, the Gold Coast, Adelaide and Perth. Although more than 40 percent of Perth’s water needs are supplied by two desalination plants, the Sydney facility has been in standby mode since 2012. The two others are running at reduced capacity. Droughts are projected to become more frequent and severe in southern Australia, according to government researchers.