Innovatia

The energy–water nexus The Millennium Drought crisis spawned a significant surge in urban water infrastruc- ture investment, which grew from a record $2.4bn in major cities alone in 2004–05 to more than $14bn in 2008 at the height of the drought. An increase in energy use for urban water supplies was one problem. But when this in- crease in energy was added to a rise in elec- tricity costs, the energy bill for urban water increased significantly. Ultimately, these costs were incorporated into water prices and passed on to consumers. In many plac- es, it was no longer true to say that water is a small element of the cost of living compared with other utilities, such as gas and electricity. To compound the challenge, Australia has a goal to reduce greenhouse gas (GHG) emis- sions to 80 per cent below 2000 levels by 2050 (Australian Government Department of Climate Change and Energy Efficiency, 2012). This meant that if the water sector was to contribute proportionately, then energy use for urban water would need to be reduced by more than 90 per cent from the project- ed 2030 levels. This drove a major focus on the water and energy sectors navigating the interrelated challenges of climate change, growing demand and resource security. Util- ities have been actively exploring how to match renewable energy sources, from solar to biogas generation, to their various energy requirements. Today, water utilities in Australia: • generate about 20 per cent of their en- ergy needs from their own renewable sources, made up of cogeneration, hy-

the efforts of people, organisations and gov- ernments have been a feature of the devel- opment of the urban water sector since early European settlement and have helped to pro- vide secure water services to our cities and towns in the context of such variability. They have also made Australia a leader in the de- velopment of reticulated wastewater systems and treatment technologies to protect public health, urban amenity and the environment. Australia’s urban water systems evolved from the late 19th century, developing a strong engineering culture with a focus on technical performance. By the 1980s, prices were based mainly on the rateable value of properties served; cross-subsidies were rife; water businesses regulated their own prices and, in some cases, environmental perfor- mance; metering of consumption was not universal; and most capital works were un- dertaken by deploying day labour. A consensus began to emerge in states and territories that this situation was not sustain- able, and a process of reform began, driv- en partly by growing community concerns about environmental impacts and growing challenges involving capital investments. These problems, combined with broader rec- ognition by governments and the commu- nity of the need to manage water resources efficiently and sustainably, drove the devel- opment and implementation of the first ma- jor coordinated national reform efforts. In 1994, the Council of Australian Govern- ments (COAG) water-reform agenda was part of a broader era of micro-economic reform known as the National Competition Policy (NCP) reforms. The NCP reforms aimed to

droelectricity and solar, with cogenera- tion accounting for approximately 15 per cent of energy production • generate more than 60 per cent of their own electricity through co-digestion fa- cilities at wastewater treatment plants • produce about 9 per cent of electricity output in the National Electricity Market through hydroelectric plants • fully offset desalination plants by re- newable, wind and solar energy • generate approximately 34MW of biogas electricity • are developing capabilities in the hydro- gen industry. How this works in practice SA Water is seeking to integrate renewable energy technologies across their operations. They are investing more than $300 million to install 154MW of solar photovoltaic genera- tion at around 35 sites, along with 34MWh of energy storage devices, by the end of 2020. Unitywater is using biosolids energy gen- eration at existing sewage treatment plants, alongside smart energy-efficiency initia- tives, to reduce reliance on fossil fuels, save $2.5 million in costs and keep customer bills as low as possible. Yarra Valley Water’s ReWaste waste-to-en- ergy facility in Wollert has been in operation for more than two years, producing enough energy each year to power up to 1,500 homes. The plant generates 90 per cent less greenhouse gas than using fossil fuels from the grid and saves 8,500 tonnes of carbon per year. Jacobs has worked with Yarra Valley Water

harness competitive forces to increase effi- ciency and community welfare in response to concerns about Australia’s overall eco- nomic performance and productivity. As a result, institutional separation of pol- icy setting, service delivery and regulatory enforcement, in addition to pricing and mar- ket-oriented water resource allocation re- forms, were achieved. Under the new model, governments were to articulate clear, meas- urable and coherent policy objectives and provide water-service providers with the au- tonomy and incentive to deliver. In return, service providers were to be transparent and accountable by clearly demonstrating per- formance to customers, government, regu- lators, shareholders and the community. In recognition of continuing water-relat- ed challenges, particularly the Millennium Drought (2001–09), the National Water Initi- ative (2004) set out a more detailed and am- bitious reform agenda aimed at optimising the economic, social and environmental out- comes associated with water in urban and rural areas. Implementation of those reforms has transformed the urban water sector. “In 1994, through reformation and in- novation Australia had water resource allocation reforms which harnessed the competitive forces to increase efficiency and community welfare.”

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INNOVATIA

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