Desalination & Reuse Handbook - Flipbook - Page 64
IDA
WATER SECURITY
HANDBOOK
A handful of extra-large projects using ‘other’ (primary and secondary) treatment technologies, all of them producing recycled
wastewater for irrigation, have been contracted in these markets since 2015, most notably the 1.6 million m3/d Abu Rawash WWTP
in Egypt, and two Mexican WWTPs using secondary technology in Mexico City and Guadalajara with capacities of 345,600 m3/d and
734,400 m3/d respectively. Tertiary capacity has also boomed in the UAE and Saudi Arabia, much of it due to new capacity and tertiary
upgrades to older facilities providing water for agricultural irrigation in the Middle East and Gulf regions.
Private finance
Despite creating a valuable asset in the form of treated effluent, a reliable business model for privately-financed municipal wastewater
treatment has yet to emerge. Private finance has found relatively limited success in municipal wastewater reuse procurement, with just a
handful of privately financed projects around the world. Compared to desalination, wastewater projects carry greater uncertainty related
to technology choice and feedwater quality. Nevertheless, a number of models have offered promising results in different contexts
worldwide, with more likely to follow as rates of reuse increase and industrial water demand continues to rise.
In India, Maharashtra State Power Generation Company (MAHAGENCO) signed an offtake agreement for a portion of the 150,000 m3/d
of treated sewage effluent (TSE) produced at a private WWTP in Nagpur, Maharashtra. Project developer Vishvaraj Infrastructure expanded
and upgraded the plant several years earlier under an annuity payment model, in which capital expenditure is reimbursed by the client
at pre-determined intervals. The developer charges a flat fee for operational expenses and shares revenues from the sale of TSE with the
client. Construction of tertiary treatment capacity and a treated water pipeline at the plant commenced when the offtake agreement was
signed with MAHAGENCO. A further agreement with India’s National Thermal Power Company may follow in the near future. National
regulations requiring use of treated wastewater in power generation facilities are key to the viability of such agreements.
Industrial parks can form a consistent customer for sale of TSE, but private sector participation in projects involving municipal
wastewater are rare. Typically payment is made for wastewater treatment alone, with the TSE produced remaining the property of the
client. Independent sewerage treatment projects (ISTP) in the Gulf use this model, with a project company receiving payment from
municipal clients for sewage treated on a tariff basis. So-called ‘buy-back’ contracts proposed in Iran would give project developers the
right to sell TSE to industrial clients in place of payment for wastewater treatment, but continued uncertainty surrounding US sanctions
on Iran mean that no planned projects using this structure look likely to move forward. Meanwhile, several wastewater build-transferoperate (BTO) projects are planned in Taiwan that will allow municipalities to sell TSE for use in industrial parks, forming part of
ambitious national targets to increase wastewater reuse capacity to 1.32 million m3/d by 2031, from 424,000 m3/d in 2015.
Some US municipalities have partnered directly with industry to raise revenue from TSE and reduce industrial use of fresh water.
However, it is difficult to marry together industrial and municipal priorities and successes are rare. Unpredictable long-term water
demand makes industrial partners reluctant to commit to purchase agreements, while long-term reductions in wastewater generation
due to water conservation can also be a cause for concern. In other cases, industrial users have chosen to fund capital expenses
instead of pursuing long-term purchase agreements, resulting in a simpler arrangement and avoiding the need to factor conveyance
infrastructure costs, which are often the largest expense associated with a municipal-industrial partnership, into a water tariff.
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