Every Drop Counts
Valuing the Water Used to Generate Electricity
Resource Planning by Western Utilities: Steps Toward Integration of Energy and Water Fact Sheet
Click here for state by state data on how various states are trying to integrate water into electrical resource planning processes.
Electrical power generation is one of the biggest consumers of water, so every decision to build a new power plant places additional burdens on already tight water supplies. In contrast, clean, renewable sources of energy are far less water intensive and can even create 'new' water supplies when they replace traditional power plants. Nowhere do these types of energy planning decisions have greater consequence than in the dry American West.
Most electric utilities and state and federal regulators do not adequately consider the value of the large volumes of water power plants consume. Electric utilities typically appropriate or purchase water rights for new thermoelectric power plants, but the cost of these water rights does not reflect the opportunity cost of water use over the life of the power plant — 40 to 50 years or longer. And increasingly, existing and proposed power plants compete directly with water demands for growing food, providing for growing urban areas, and sustaining the West's rivers and streams.
Prices paid for water sales reflect the
changing value of water in the West.
In Colorado, prices rose dramatically
with population growth and drought.
In "Every Drop Counts, Valuing the Water Used to Generate Electricity", Western Resource Advocates analyzed the prices paid for water by the three different sectors—municipal, agricultural, and environmental—that compete with power plants for scarce water supplies. In addition, we assess the authority and practice of regulators across six states to consider water in evaluating utilities' electric resource plans. We found that, across the region, the degree to which water influences regulators' and utilities' electric resource planning decisions varies significantly.
Municipal tap fees, which
are affected by several factors,
often reflect the cost of developing
Our report reaches three conclusions:
- At a minimum, utilities across the region should report water consumption for existing facilities, along with projected water consumption for different proposed portfolios, as part of their integrated resource plans.
- In considering new water-intensive power plants, utilities and regulators should assess the value of water today, the potential value of water in the future, and the opportunity cost of using water for power generation over the lifetime of the power plant.
- Regulators and electric utilities should consider the benefits of maintaining flexibility, and the role of water-efficient forms of generation and energy efficiency as a hedge against short- or long-term drought.
"(Global warming in the Southwest) is among the most rapid in the nation, significantly more than the global average in some areas. This is driving declines in spring snowpack and Colorado River flow … Further water cycle changes are projected, which, combined with increasing temperatures, signal a serious water supply challenge in the decades and centuries ahead."
U.S. Global Change Research Program