Water-Energy Nexus: Business Risks and Rewards by Eliot Metzger, Brandon Owens, Paul Reig, William Hua Wen, and Robert Young

One of the topics, water and its role in the grid, that I hoped to explore in the last book, Grid,  posted on the blog, did not get covered. Bakke acknowledged water's importance but did not explain why. Fortunately, a report produced by the World Resources Institute discussed the connection between these two vital human needs, the water-energy nexus. GE contributed to the study.

The Executive Summary begins by declaring a water shortage worldwide. The shortage will determine the availability of clean water and energy in developed and developing countries. Clean water depends, in part,  on desalination plants that run on energy and water reuse, reliant on water treatment, also requires energy. Energy production, transmission, and distribution--of either coal, oil, gas, or electricity--use large amounts of water, ranking highest water and energy usage.

Geographically, the report inspects the water-energy nexus in three general regions--Middle East and North Africa, China, and the United States. The authors believe that other areas of the world can extrapolate from these examples and from the checklist that they provide:

• Acknowledge emerging risks to supplies of water and energy, but don't overlook solutions that address demand. . .
• Take full advantage of water reuse and energy recovery. . .
• Shift demand to alternative water options and clean energy resources. .
• Create new partnerships and business models. . . (p. 2)

Addressing the report to businesses, the authors realized that companies must justify infrastructure modifications, technologies, and conservation efforts with return on investment data. Facing a future of population growth, projected to reach 9 billion in 2040, increased urbanization, migration, "international trade, cultural and technological changes, and climate change" (p.2) business react to these factors that will stress water, energy, and other resource demands. The consequences result in the prominent risks of "scarcity and volatility, including increased costs, regulations, and supply vulnerabilities and disruptions" (p. 4).  Several factors challenge any solution: coordinating efficient infrastructure development, funding, and, in the case of water, pricing that reflects production costs.

The report poses two basic questions:

• Where are companies facing risks at the nexus of water and energy resource challenges?
• What are the opportunities for companies to reduce exposure to these risks and meet customers' needs in tomorrow's markets?

Within this context the report detailed the desalination risks and rewards in the Middle East and North Africa (MENA), the thermoelectric power plant construction in China, and the shale and "tight" oil drilling in the United States and water requirements within these three regions. The report anticipates a water gap in the MENA region by 2050 of 85 to 283 billion cubic meters per year. Israel and oil rich countries of the Arabian Peninsula currently meet their gap through desalination and its three dominant technologies--reverse osmosis, multi-stage flash distillation, and multi-effect distillation. The oil rich countries use significant percentages of national oil and gas resources to power desalination plants that emit greenhouse gases, contributing to carbon dioxide levels. Technology improvements to desalination have reduced cost. Mining and treating brackish water from underground aquifers, using renewable energy sources,  and the reuse of waste water offer cheaper alternatives to desalination. Since the task of getting water falls on women in the MENA area, the authors suggest that policy makers and developers include women as stakeholders.






In the case study on China's thermoelectric (coal, gas, nuclear)  power plants, the authors noted that the plants "are coal fired and require a significant supply of freshwater for cooling" (p. 19). Complicating the situation of these plants is their location in water stressed areas and the dual threats of population growth and increased demand and global warming. Transporting water from less stressed areas to the plants will incur distribution costs. The authors repeat their suggestions for China, as they did for countries in MENA: mining brackish water, renewable energy sources, and reuse. Because the plants generate power for industrial purposes, the authors encourage a partner ship between plant operators and their customers to reduce demand, increase efficiencies, and upgrade infrastructure.





New sources of energy in the United States--natural gas and 'tight oil' extraction or hydraulic fracturing--require water in areas frequently water-stressed. The authors point particularly at "the western plains, California, and Texas" (p. 28). Again, the authors look to recycled wastewater as a substitute for freshwater in the hydraulic fracturing process, the use of brackish water, a  waterless fracturing process, and using data, obtained through sensors and remote devises,  to analyze and determine efficiencies and sustainable practices in the natural gas and oil supply chain. The authors also advocate pricing carbon and competitively pricing water to refine solutions to scare water. They accumulated the solutions for all three regions into their conclusion of this report.