Water scarcity could drive push towards wind and solar

In 2010, more water – 583 billion cubic metres – than is discharged each year by the mighty Ganges River in India was used to meet the world’s growing energy needs.

It’s an interesting statistic, but why should that matter? Well, if the world continues on its merry way, power capacity – particularly with water-hungry energy technologies such as coal and nuclear – and water-dependent extractive techniques such as coal, shale gas and tar sands, are going to grow quickly, and, according to the International Energy Agency, the world’s demand for water will grow at twice the pace, putting pressure on increasingly scarce water resources.

In countries such as India and China which are already experiencing water stress, power demands will grow 70 per cent over the next 20 years. Most of their water is reserved for agricultural and municipal needs. Both countries, like many others in the developing world, are water stressed, and neither can afford to replicate the US, where nearly half of the water consumption is reserved for energy use – biofuels, coal mining, gas extraction, and generation.

The pressure is so great that the IEA has, for the first time, dedicated a whole chapter of its annual reference work, the World Energy Outlook, to the issue of water scarcity and energy supply.  It says water is going to become an “increasingly serious” issue for unconventional gas development and power generation in parts of China and the US, and for the growing fleet of water-dependent power plants in India, and the oil sands production in Canada.

It seems to serve as a warning to those that wish to invest in energy projects. As a general rule – with the exception of water-hungry nuclear – the more emissions intensive the energy type, the more water it needs. The politics of climate change may mean that no limits on carbon emissions are imposed to restrain the development of these technologies, but nature may impose its own restraint through the access to water. And, as the IEA notes, a surging population, a growing economy and heightening climate change impacts will further impact on energy reliability and costs.

It might be the first time that the IEA has addressed the issue of water stress and its impact on the electricity sector, but private analysts have been watching the issue carefully for some time.

In September, HSBC Bank issued a report, entitled No water, no power, that looked at the challenges facing China and its electricity demand, highlighting the fact that its most coal-rich and industrialised provinces faced the most critical water shortages, and the ambitious expansion plans for power capacity faced real constraints. “There is a mismatch between water capacity and planned capacity additions,” it noted.

The HSBC report said that some 47 per cent of China’s coal reserves are located in provinces where water is scarce (see graph), and HSBC thinks there may not be enough water to extract it. “Coal requires water to extract, transport, process (wash), store and dispose. We think water scarcity is another reason for authorities to reduce reliance on fossil fuels,” they wrote. “Without a vast improvement in the water efficiency of power capacity, some power plants potentially run the risk of becoming stranded assets.”

The Chinese administration is obviously aware of the challenges. “We should launch a revolution in energy production and consumption, impose a ceiling on total energy consumption,” the outgoing leader Hu Jintao told the party congress this week.

The IEA picks up on a similar theme. It notes that energy efficiency and wind energy and solar PV are the energy options with the lowest water requirements (see table below), and in its 450 scenario – where the world acts boldly to limit global warming – the deployment of these technologies means that water use grows only marginally over the coming decades.

In its business-as-usual and its “lip service” scenarios – where governments do a little bit on climate but not terribly much – water demands grow exponentially.

However, apart its focus on energy efficiency and renewables such as solar PV and wind, the IEA’s mainstream 450 Scenario also requires technologies – including nuclear power, CCS-fitted power plants and conventional biofuels – whose high water-use requirements must be taken into account. All of these technologies can find ways of using less water, but to do so adds to operating and capital costs, and can make the plants less efficient in some instances. Solar thermal – or concentrated solar power – which uses the sun’s heat (instead of coal) to boil water – is also water hungry.

The HSBC report notes that three provinces – Shanxi, Shaanxi, Inner Mongolia and Xinjiang – hold 74 per cent of China’s total coal resources, but only 7 per cent of the nation’s water resources. This could limit the scope to build power plants in those areas, forcing more coal to be transported to demand centres, adding to capacity bottlenecks – the infamous 110km traffic jam in China in 2010 was caused by more than 10,000 trucks carrying coal supplies from Inner Mongolia. Water shortages in those areas have already caused the cancellation of dozens of water intensive coal-to-liquids projects.

In nuclear power, while all of China’s existing plants use seawater for cooling, future plans include the development of inland nuclear power facilities – three are due to start construction during the course of the 12th Five-Year Plan – that will add to competition for scarce water resources where the plants are sited.

The IEA notes that India is facing similar problems. Summer water shortages in 2010 caused the 2.3GW Chandrapur coal-fired power station in Maharashtra to shut down, leading to power outages across the state. The plant again faced water shortages, due to the delayed monsoon, in mid-2012, and water shortages in northern India have at times reduced hydropower generation, exacerbating power shortages due to insufficient coal supply to power plants.

In the US, the IEA notes, concerns about water availability and the effect of production on water quality could also significantly slow the development of shale gas production – particularly in water-poor states such as Texas.

“There is no doubt that water is growing in importance as a criterion for assessing the physical, economic and environmental viability of energy projects,” the IEA notes.

The Agency says there are several options to address this: one is a greater reliance on renewable energy technologies that have minimal water requirements, such as solar PV and wind; another is to improve the efficiency of plants, and another is to deploy more advanced cooling systems. (The CSIRO is working on one technology that uses minimal amounts of water for solar thermal plants).