17 September 2019 / Erin Bonney Casey
Water Reuse: Where is the money and where is the opportunity?
Just back from the 34th annual WateReuse Symposium in San Diego last week, I am struck by how far the water reuse space has come in the past few years. This is my 4th time attending and speaking; we used to talk about how and if? And now the discussion is around when, how to pay for it and what other opportunities exist.
With over 700 projects in planning across the US, we know the reuse market is growing, but it is heartening to see that with growth, the discussions around reuse are more hard-hitting and relevant. Particularly exciting was the unveiling of the EPA’s new Draft Water Reuse Action Plan which outlines forward momentum for the sector as a whole.
It is particularly exciting to see participants outside the water sector – including private finance and industrial water users – contributing to the conversation on reusing wastewater further highlighting how far the industry has come and how important water reuse is to the future of water.
My takeaways include:
How Do We Pay for Reuse Projects?
A hot topic in reuse is financing, affordability, and equity – specifically the best financing models for reuse projects, both through public money and private financing. For municipal projects, low-interest, government loans and grants (e.g. state revolving funds, WIFIA, and Bureau of Reclamation) are critical for these types of public works projects.
As always, municipal water and sewer rates represent a key source of funding for water infrastructure investment as a whole. While utilities have been historically challenged to justify rate increases for reuse projects, the task is becoming easier in the wake of new, proven installations. Nonetheless, communication is key. Most ratepayers remain in the dark about where their water supply comes from, how wastewater is treated, and the potential for reclaimed water to secure future water supplies. Balancing the necessity for raising rates vs. affordability will remain in any case.
Decentralized Reuse Taking Center Stage.
A number of driving factors are pushing growth of decentralized reuse. Utilities are poised to realize savings on deferred investment in expansion of drinking water supplies and wastewater treatment capacity. Quantifying these potential savings enable utilities to provide financial support to the development of on-site non-potable reuse systems.
At the same time, private property owners are increasingly empowered to pursue decentralized, onsite treatment for non-potable reuse to achieve water sustainability goals and certifications, such as LEED building standard, as we saw in the Salesforce building in San Francisco.
No doubt, significant hurdles remain. The economics of decentralized systems don’t always provide the wanted return on investment for private property developers. In parallel, utilities are wary of decentralized systems cutting into their revenues streams– by reducing potable water sales and by reducing sewer discharges. However, technology solutions exist, corporations are more attune to water costs, supply risks, and sustainability, and the financial community is demonstrating interest. As such, decentralized reuse will play a key role going forward.
New Applications for Reclaimed Water– Getting beyond Municipal Systems.
In past years the WateReuse Symposium has focused, almost exclusively on municipal reuse. Specifically, there has been a big push towards, potable reuse. While these efforts continue, there is now a robust pipeline of municipal reuse projects in development, including large-scale potable reuse, and the leading edge of the market has shifted to looking for additional opportunities for reuse. Reuse opportunities at airports, offers opportunity as well as reuse for food and beverage facilities, for agriculture, for oil and gas operations, especially water-intensive fracking activity, and for biopharmaceutical wastewater.
Outsiders See Potential Opportunity in Reuse.
Contributing to discussions on emerging opportunities were first time conference attendees from outside of the water space. Although, investors (e.g. private equity) with experience in the distributed electric power systems (e.g. photovoltaics, batteries) are befuddled by low ROIs, partly stifled by water’s role as a common good. It’s early, so expectations are that new business models and solutions will emerge to address these issues.
Water conferences run the risk of being an echo-chamber for water professionals who all agree about the direction we should be heading to best manage our water resources. It is clear we need to continue to reach out to other water intensive industries to include these varied perspectives into conversations about water reuse adoption. I look forward to seeing an even more diverse group of companies at next year’s Symposium.
Erin Bonney Casey is a Research Director with Bluefield Research, a market research and insight firm focused exclusively on supporting companies addressing opportunities in water. Learn more about how Bluefield is helping companies make more informed decisions with data-backed intelligence at bluefieldresearch.com.