The Energy-Water Nexus

We know there’s an energy problem. We know there’s a water problem.

But perhaps less well-known is that we have an energy-water problem. It’s called the energy-water nexus, and it has serious implications for policymakers, investors, and businesses of all types.

In fact, water forms a nexus with most industries.

For example, it takes 37 gallons of water to grow, package, and ship enough coffee to make one cup. A hamburger requires about 634 gallons to make it to your stomach.

But the dependence is particularly acute in the energy-water nexus.

The Energy-Water Nexus

It can take up to 168 gallons of water to get one barrel of oil from oil sands. And 800 gallons are required to generate one megawatt-hour of electricity.

The problem is mounting so quickly that spats are beginning to emerge over water rights.

In Colorado, according to Discover Magazine, "producing 1.55 million barrels of oil per day would require 378,000 acre-feet of water each year, compared to the Denver metro area’s consumption, which is less than 300,000 acre feet."

You read that right. Local oil shale production could consume more water than the entire Denver metro area. The Colorado Independent has said "there will be a major political battle over water rights."

And the public is already in an uproar as oil companies, including Shell and ExxonMobil, have raced to secure well over 656 billion gallons worth of water rights – enough to quench all of Denver for three years. Some of those are "senior" rights, which give the companies priority access to water, even in dry years.

So, you can understand the citizens’ concern.

And the oil companies’ eagerness to secure adequate water for their operations should underscore the reality of the problem.

But oil isn’t the only industry where water is causing worry.

The Wall Street Journal recently reported that "power companies are pulling back from plans to build traditional power plants that require steady streams of water to operate." That article also reported, "the electric-power industry accounts for nearly half of all water withdrawals in the U.S."

Residents across the country have objected to the construction of new power plants based on water woes. And major utilities like Sempra and Tri-State Generation have pulled the plug on building new plants as a result.

To combat the amount of water consumed by traditional power plants, utilities are increasingly turning to alternative technologies. A wind turbine, for example, "can save 200 to 600 gallons of water compared with the amount required by a modern gas-fired power plant to make that same amount."

And according to the WSJ, "solar arrays are gaining momentum because their water needs are minimal."

The Flip Side & Beyond

The other side of this coin is the energy requirements for clean water.

Nationwide, the transportation and purification of water consumes 4% of all electricity. It’s worse in California. There, water consumes 19% of the state’s electricity and 31% of its natural gas use.

Desalination would be a glaringly simple solution, except for the fact that 50%-80% of its costs are for energy to pressurize water in order to force it through membranes.

And the "nexus" is only the beginning of water’s problems.

Water systems are failing. Most water pipes in this country were laid in years following World War II, from 1945-1965, and are now past their useful life-a fact many know, but are unwilling to deal with.

It is these inferior post-War pipes (pre-War pipes were actually better quality) that are responsible for 50% of all leaks in the U.S. A huge number when you consider, though you may not believe it at first, that 20%-40% of all drinking water is lost through leaky pipes.

The aging water infrastructure is also evidence by the 300,000+ water main breaks that occur each year.

And there’s more. . .

Water tables and aquifers are falling. And river discharge is also down. I recently covered a report claiming we’ve lost the equivalent of The Mississippi in global river flow over the past 60 years.

These problems have been quietly brewing for some time, but are only now rising to the surface.

The stimulus dedicated about $12 billion to clean water and related infrastructure. And that money is already beginning to flow. Just last week Ag Secretary Tom Vilsack gave away over $600 million for rural water projects.

This is going to be a years-long event. The EPA has said $277 billion are needed just to maintain our water infrastructure, so the $12 billion from the stimulus is only a tease.

Expect new companies with new solutions to emerge. Expect conservation to come with incentives. Expect market-beating returns from water investments. And expect much more attention to be paid to water problems in the near future.

Nick Hodge is a regular contributor to Green Chip Review and Energy & Capital. One of the bright young minds in today's cleantech industry, Nick is putting his knowledge of nascent green markets to use in several ways. . . He's the Managing Editor of Alternative Energy Speculator, an investment advisory service focused on taking advantage of every aspect of cleaner energy, from the stop-gap companies that are making a fortune lowering carbon emissions to makers of more fuel efficient engines and other technologies that will help the U.S. successfully build a bridge from current fuel to the energy of the future. Nick also runs Green Chip International, which is dedicated to giving you the sharpest insight, not just into clean technology trends but also the geopolitical context that makes markets move. A featured guest on Canada's Business News Network and Yahoo!'s Tech Ticker, Nick is also very interested in uncovering the massive profit opportunities associated with a growing lack of freshwater and the maturation of the global carbon markets. Nick is also the co-author of the bestselling book, Investing in Renewable Energy: Making Money on Green Chip Stocks.

5 responses

  1. Excellent post. One thing to remember though – it’s not like water is “destroyed” or “used up” in most of the uses above, especially cooling purposes. It’s not like we’re burning water like coal. Still, we obviously have a challenge on our hands keeping it clean and not contaminating what we’ve got!

  2. Energy and water can also work together as a solution. Through performance contracting, energy efficiency upgrades generate savings on utility bills that can help fund water efficiency measures such as bathroom fixture upgrades and other water-savings improvements. For example, Charleston, South Carolina installed a smart irrigation system in its parks and around municipal buildings that analyzes daily weather data from satellites and combines it with information about the type of vegetation, soil, ground slope and other factors to provide the exact amount of water to keep the landscaping green and growing when the plants need it, not when they don’t. The system cuts water use by up to 40% and was paid for through savings on utility bills.

  3. To elaborate on the energy requirements for water, according to the California Energy Commission, it takes 4,000 and 12,700 kWh per million gallons for water that is supplied, treated, consumed, treated again, and disposed of in Northern and
    Southern California, respectively. The number is so much higher for Southern California because of the energy requirements to convey water from the north, and also from the Colorado River.

  4. Good article, but I would add that there’s a flip side to the e/w nexus that is too often overlooked: When you build any thermoelectric generating plant (nuclear, coal, nat. gas, oil, etc.), that uses a supply of water for cooling, you’re buying into a decades-long dependency on that source. If the available water is reduced in volume or increased in temperature enough by a heat wave, you could be forced to throttle back or shut down the plant. In recent years there have been numerous instances of this, including this year in France when a portion of their nuclear power plants had to be throttled back, forcing them to import enough electricity from England to power Paris. We’re appropriately concerned about CO2 emissions from power plants, but we need to be equally concerned about their water requirements and dependencies.

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