Ringside: Desalination at Scale is Cost Competitive

On May 22, 2022, the California Coastal Commission voted unanimously to deny final approval for a desalination plant in Huntington Beach. It would have produced 56,000 acre feet of fresh water per year, and would have been privately financed.

To describe in detail the 20 year and roughly $100 million ordeal that federal, state, regional, and local agencies put the contractor through, along with continuous litigation, could consume volumes. But with this final rejection by the Coastal Commission, the project died.

With that legacy, it’s become very unlikely any other civil engineering firm will ever try to build a big desalination plant on the California coast. The reasons aren’t based on cost, or energy consumption, or even environmental impact. Regulations, driven by ideology instead of facts, killed desalination.

It’s always surprising the vehemence with which opponents of desalination make their arguments. Some of these critics are concerned about securing adequate water to continue farming, and correctly point out that desalination is expensive. But compared to what?

Because most of the annual cost for water projects, once they’re built, comes down to paying off the construction bonds, a useful way to measure their return on investment is to divide the capital cost by the projected annual yield. The results may surprise critics of desalination. Let’s start with the Delta Tunnel.

At a construction cost of $30 billion (nobody to-date has been willing to bet it will cost less), and the California Department of Water Resources projecting an annual yield of 500,000 acre feet, that comes down to a cost/yield result of $60,000 per acre foot. If we suppose that twice that amount is ever pushed through the tunnel, and the existing Delta pumps are not throttled back proportionately, we still arrive at a price of $30,000 per acre foot.

Next consider the Temperance Flat Reservoir, proposed for years and approved by voters, but unlikely to ever get built. This reservoir, estimated to cost $3 billion, would not block the San Joaquin River because it would be located upstream from the existing Millerton Reservoir. It would have a storage capacity of 1.3 million acre feet, but estimates of its annual yield tend to peak at around 100,000 acre feet per year; again, $30,000 per acre foot.

That brings us back to the Huntington Beach desalination plant, which was projected to cost $1.5 billion and produce 56,000 acre feet per year. That equates to a cost/yield of $26,786 per acre foot.

Notwithstanding the fact that discussion and debate and financing challenges centering on the Delta Conveyance has tied California’s water supply industry up in knots for years and will continue to into the foreseeable future, we need the tunnel. We also need Temperance Flat, we need desalination plants, and multiple additional projects, because to have water security, we need multiple sources of water. As for the costs, they are all ridiculously inflated, and that, too, is a feature of California’s regulatory and litigious environment. But what about energy?

The energy cost to desalinate ocean water continues to drop, but let’s start with Carlsbad since it’s been operating for years. The electricity cost at Carlsbad is 3,500 kilowatt-hours per acre foot. It may be possible to do much better. Ocean Well, a company pioneering a desalination process that “harvests the natural hydrostatic pressure found at depths of 400 meters below sea level to drive the reverse osmosis process,” claims they can get the energy consumption down to 2,500 kilowatt-hours per acre foot. The theoretical minimum may be lower still, at around 1,200 kilowatt-hours per acre foot.

To put this into perspective, imagine Californians installed desalination plants up and down its coastline, utilizing modular designs that promise to dramatically lower capital costs. If these desalination plants were producing 1 million acre feet per year, operating at Carlsbad’s efficiency, that would carry an annual electricity cost of 3,500 gigawatt-hours. Californians today consume nearly 300,000 gigawatt-hours of electricity per year. By increasing our electricity demand by barely more than one percent, we could add a million acre feet to our urban water supply, and rehydrate our parched and rationed cities.

When envisioning a future of abundance, there are new assumptions we should consider. Construction costs can come down because of automation and new technologies. Continuously rising capital costs are not inevitable. Labor costs are not driving construction costs higher; the money is being wasted on preventable litigation and regulations, not labor. This means partnerships with private sector unions on big projects requiring highly skilled workers don’t necessitate crippling additional costs. And finally, electricity had better come down in cost. Isn’t that the promise of renewables? How else do we expect to electrify more vehicles and become a hub for AI? And to accomplish that, all that is required is to stop closing down natural gas powered electricity generating plants, and instead allow them to run at capacity and compete with renewables. Prices will plummet.

Around the world desalination is transforming economies and improving quality of life. California’s reluctance to lead the way is a huge missed opportunity.