MENA - The case of disappearing wateron Feb 10, 2014
In the wake of the International Water Summit, held in Abu Dhabi in January, MENA’s water woes are big news. Studies carried out by the Abu Dhabi Environmental Agency contained frightening statistics as to why we should all be worried about falling groundwater levels in the UAE. It might be less than obvious as to why the Clean Energy Business Council (CEBC) has just launched a research paper on water. The answer lies in looking at the extraordinary amount of energy used to create alternatives to natural water supply in the MENA region. In fact, the IEA estimates that six of the biggest users of desalination in MENA - Algeria, Kuwait, Libya, Qatar, Saudi Arabia and the UAE - use approximately 10% of their energy demand for desalination purposes. Huge potential for energy savings and renewable energy alternatives for generating water supply propelled CEBC to look at this topic in more detail. Clean energy may actually be driven by the desperate need for water generation in the region.
The Threat of Water Supply and Demand Gap in the Region
The water supply and demand gap is a growing problem. The World Bank estimates that the gap will reach 200 km cubed in 2040 in an average climate change scenario. This is 50 times the amount of renewable sources of water available in the GCC countries as a whole every year. Basic economics tells us that an increasing supply and demand gap can only mean increasing water prices and CEBC warns that this means profit impacts for the private sector when the true cost of supply is passed through to them.
Of the water supply options, wastewater reuse is far more economical than desalination, mainly due to its lower energy requirements. In addition, in the wastewater process they are starting to produce interesting by products such as plastics and fertilizer. However, in spite of the high cost of desalination, the urgent need to bridge the water gap in MENA means that the region will account more than 54% of the world’s growth in desalination capacity according to Navigant Research Group.
How will this Increased Demand for Energy to Produce Water change the Industry Landscape?
Traditionally, within MENA, authorities met their power and water demands by co-locating natural gas power plants with desalination plants. They used the waste heat from power generation to boil and distill the seawater, saving on energy costs. An analysis of these plants now shows that power generated by them is only required during the summer when all the air-conditioning units are switched on and demand peaks. As a result, the energy savings from co-location are only enjoyed during those summer months. The rest of the year the plants are run purely for desalination purposes, resulting in substantial fuel inefficiencies. On CEBC’s analysis, power and water generation will increasingly be separated in years to come to increase flexibility for utilities and maximize fuel efficiency.
MENA will also come to embrace renewable sources of energy for desalination purposes in a greater way, not least because of the uncertainty surrounding natural gas prices in the region. This will make not just environmental sense but economic sense in the near future. Cost estimates for all forms of renewables are surprisingly close to the equivalent fossil fuel desalination cost, with solar CSP and geothermal sources leading the competition for base load desalination purposes.
Better use of water by all within the MENA region is required. 80% of water in the MENA region is used for agriculture yet it only contributes 2% to GDP. Ironically, the cost of repairing damage to our groundwater resources could cost us that 2% of GDP earned by agriculture. Reducing demand from agriculture and other sectors is key to keeping the bill for the bridging the water gap down. The World Bank estimates that up to $300 billion can be saved by reducing demand. CEBC noted that higher water tariffs in Dubai do not necessarily impact a person’s decision to drink more water. Why is this? Is everyone actually charged for the water they consume? Maybe an employer pays so that individuals don’t feel the pinch from increased prices or are individuals simply exempt from tariffs? Why is this value of this precious resource not adequately appreciated or costed?
What does Rising Costs Mean for the Private Sector?
CEBC calculated that for an industry such as cement, an increase in the cost of water could push the companies looked at into the red with increased costs of up to $15 million a year in some sectors. The conclusion can only be that it is not just the public sector that may lose a night’s sleep over water, the private sector will have to sit up and take notice of water management issues sooner rather than later.
The author, Alice Cowman, is the programme director at Clean Energy Business Council