A Market Approach to Wastewater

Wastewater treatment is commonly considered an environmental problem, but it is also a resource issue – one that represents an opportunity for innovative solutions, not just in many developing countries, but also in parts of the United States where water is scarce. Generally, this problem is addressed only from a regulatory angle – but regulation is not the only constructive approach to wastewater. There are market-based ways to deal with wastewater that address the environmental problems, while finding opportunities that generate wealth, especially in the use of wastewater
for energy.

Nuclear plant cooling with wastewater

A notable example of the use of wastewater in energy production is the Palo Verde Nuclear Generating Station in Arizona, which uses partially treated wastewater for its large-scale coolant needs. In 2010, the cities of Phoenix, Glendale, Mesa, Scottsdale and Tempe, along with the utility company Arizona Public Service and the Salt River Project, reached a 40-year comprehensive water contract expanding the existing arrangement, to provide cooling water essential to power production at Palo Verde Nuclear Generating Station, the nation’s largest energy producer. The agreement is a “win-win”, as it also offered revenue for the maintenance and technological enhancement of a key wastewater treatment plant with the capacity to treat more than 200 million gallons of raw sewage every day, provided that Palo Verde makes a $30 million payment, in four annual installments of $7.5 million.

The agreement provides an annual allotment of up to 26 billion gallons of treated effluent to Palo Verde. Because of its desert location, Palo Verde is the only nuclear power plant in the world currently using treated effluent. This is piped from the 91st Avenue Wastewater Treatment Plant in Phoenix to Palo Verde, where it is further treated and recycled to meet the nuclear energy plant’s cooling needs. The wastewater will be purchased according to a negotiated fee structure from the Arizona Municipal Water Users Association’s Sub-Regional Operating Group (SROG). It is initially priced at approximately $58 per acre-foot, which will be adjusted annually to reach approximately $300 per acre-foot in 2026. Thereafter, the price adjustments will be tied to a basket of three waterand power-related indices that are part of the Consumer Price Index. SROG is responsible for the ownership and operation of the 91st Avenue Wastewater Treatment Plant, which delivers treated effluent to Palo Verde. The City of Phoenix oversees the wastewater plant’s daily operations.

This water agreement offers a number of benefits: it provides cooling water for a reliable source of power for Arizona; establishes fair rates for treated effluent; enables the creation of much-needed revenue and jobs for each SROG member city; fosters the highly productive use of treated effluent, which is a resource that grows as the population expands; and generates revenue for the maintenance and technological upgrading of the 91st Avenue Wastewater Treatment Plant. While this is an especially mutually advantageous and profitable agreement, treated effluent is likely to become a valuable resource not only in arid areas like the Southwestern United States, but all across the country.

Use of wastewater in fracking

As the cost of recycling wastewater falls, it could prove to be the most effective way to mitigate many of the waterrelated environmental concerns surrounding hydraulic fracturing (fracking). Fracking is an industrial process that requires large amounts of fresh water. Estimates vary widely, from 1.6 million gallons up to 5 million gallons per
oil well.

Common methods for disposing of water used in fracking include treatment and discharge to surface waters, deep well injection, storage in open-air pits and use on roads for ice or dust control. Various technologies also exist to clean the flowback water that is a byproduct of the initial fracking process well enough that it can be reused to drill other wells; however, the level of cleaning needed to reuse this water for fracking may be significantly less than completely restoring it to natural levels of purity. Oil and gas companies are under mounting pressure to address numerous water-related environmental concerns. These include the heavy use of fresh water resources, which are scarce, especially in dry areas; the potential migration of contaminants from deep injection wells to nearby aquifers; and even increased truck traffic to transport water from well sites to treatment or disposal sites, resulting in increased emissions, road damage and noise pollution.

Because open-air storage, use on roads, or other purposes not requiring treatment causes environmental concerns, deep well injection and cleaning and reuse are the two most viable options for recycling waste water from fracking. Deep well injection has been the most cost effective option, but it does nothing to deal with the fresh water availability issue, which is both an environmental issue and a cost issue, particularly in arid areas. Furthermore, disposal wells have been linked to increased frequency of earthquakes in areas such as Oklahoma and Ohio, which is a serious concern, even though these earthquakes have been relatively minor to date.

Recycling flowback water avoids all these environmental concerns, including that of fresh water scarcity. Recycling can also be used for produced water (or water brine), which comes out of the wellbore along with oil and/or gas and flows continuously over the life of the well, offering further conservation possibilities. It is currently more expensive than deep well injection, but costs are coming down and new entrants, such as Ecosphere Technologies and OriginClear, claim they can compete on price with deep well injection, though this is yet to be proven. Even if this is not yet true, increased recycling of flowback water may become a necessary cost of doing business.

Power generation from wastewater processes

The most promising and potentially profitable strategy for wastewater management is to utilize it in algae biomass production. Earlier processes for separating energy dense lipids from algae were too energy-intensive to be either cost-competitive or cleaner alternatives to fossil fuels. The breakthrough innovation that makes the new generation of plants cost-effective and profitable is that they combine the production of various products (fuel, clean water, and fertilizer) and often combine several utilities, thus allowing such hybrid facilities to generate revenue in an efficient, resourceful, and eco-friendly manner.

Anaerobic digesters can generate biogas to be used for power generation and heating. A large-scale example of the use of this process is at the Newtown Creek Wastewater Treatment Plant in New York, which has a 310 million gallon per day processing capacity. In December 2013, New York City announced a two-fold public-private initiative to reduce the amount of organic waste sent to landfills, as well as to produce a reliable source of clean energy and improve air quality. Under this initiative, Waste Management delivers pre-processed organic food waste to the Newtown Creek Wastewater Treatment Plant where it is added to wastewater sludge to increase the production of biogas. Then, in a first-of-its kind project, a for-profit power company, National Grid, converts the biogas byproduct into pipeline quality renewable natural gas for residential and commercial use. Together, the two parts of this project can produce enough pollution-free energy to heat nearly 5,200 New York City homes, harnessing a significant portion of the 1.3 billion gallons of wastewater generated in New York each day, at no cost to those paying for New York City water.

Outside advanced countries, using wastewater as a resource is even more important

Among the most urgent concerns for the future is the availability of enough water for a human population projected to reach 9.6 billion people by 2050. It is well-recognized that access to clean water and good sanitation is a crucial element in fighting poverty and promoting economic development. However, global consumption patterns show increased demand, and the waste that pollutes water supplies remains an unmitigated hazard in most underdeveloped countries. For example, an estimated 70 percent of drinking water in India is contaminated by sewage. The United Nations estimates that, if current water consumption trends continue, 1.8 billion people will experience water shortages as soon as 2025. Among solutions with great potential are the development and deployment of technologies that use wastewater as a resource, which can generate incentives for industries and municipalities to treat waste that is otherwise discharged into vital waterways.

If done effectively, wastewater management can combine economic growth and environmental protection. The World Bank estimates that the return on investment in infrastructure for sanitation can be as much as five-fold, while poor sanitation can cost a country up to seven percent of annual GDP in increased healthcare expenses and reduced labor productivity costs. Strategies for water management will be more effective if they include recognition of the resource potential of wastewater in creating opportunities for sustainable economic development and growth. Wastewater treatment is needed to mitigate the hazards of agricultural, industrial, and municipal by-products. However, investors are wary of water infrastructure projects that often have high upfront costs and long development periods, so multi-billion dollar wastewater treatment facilities remain concentrated in developed economies and advanced regions in developing countries. A U.N. study articulates this disparity; on average, high-income countries treat 70 percent of wastewater (North America treats 75 percent), while low-income countries treat only 8 percent of wastewater. Because of actual or projected water scarcity, some of the more prosperous governments in drier areas invest in technologies for desalination and water purification, but these approaches have only limited effect and do not address water pollution more directly.

Despite public health experts’ recognition of the urgency of water sanitation issues, dirty water is not effectively controlled by policies and regulations alone. Market-based approaches recognize problems and exploit opportunities for solutions that generate wealth, which is why there are excellent prospects for the development of wastewater resources for energy, both in the United States and abroad.

While this broader approach may seem far from consumer concerns, it can reduce the costs of wastewater treatment and provide offsetting revenue, thereby reducing power costs. If a market approach is used more broadly, it may relieve some of the pressure on water resources in dry areas, in the U.S. as well as abroad.

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