The business case for improving water resilience

(in draft)

Introduction of the level 6 industrial and commercial restriction tariffs has significantly improved the business case for most water efficiency interventions. However even under normal conditions, some of these projects remain financially feasible

The GreenCape Sector Development Agency, a non-profit organisation that drives the widespread adoption of economically viable green economy solutions from the Western Cape, has developed a financial feasibility excel tool to help commercial and industrial buildings choose suitable interventions. The user can specify the consumption reduction required and interventions considered. With several assumptions and calculations, these are then translated to potential savings and internal rate of returns.

The Western Cape is currently experiencing a severe water crisis, and when the threat of Day Zero was first announced (the time when the municipal water supply would be cut off and alternative emergency water collection points would come into effect) many companies and residences rushed to secure alternative water sources, mainly through drilling boreholes to access groundwater. But, as GreenCape shows, this is the last option in terms of increasing cost and complexity:

  1. Understand water uses and risks
  2. Reduce consumption
  3. Re-use onsite water
  4. Find an alternative water supply

Water resilience is a financial no brainer

For manufacturing companies at any scale, smart metering is a no-regret measure, with payback periods of less than a year even under level 1 (cheaper, non-crisis) tariffs. (For reference, restriction tariffs level 1: R22.78/kl consumptive, R20.47/kl sanitation; Level 6: R52.61/kl consumptive, R44.56/kl sanitation).The model used a conservative estimate of 5% water saved, but this does not consider the savings possible from detecting and repairing leaks; the savings has typically been shown to be much higher.

Interventions that have payback periods of less than a year include toilet and tap efficiency fittings and smart metering. Other short payback interventions that was not modelled include staff training and awareness and diverting water for reuse, for example greywater reuse. Water audits also fall in this category, and we expect to see much more innovation in this regard as the ‘black box’ of the process operations get unpacked to follow clean production principles. At the moment the bulk of the interventions look at augmenting the water coming into the process and re-using the water coming out of the process, but not really what is going on inside the process, apart from leak detection. There are signs of industry starting to consider how to improve operations within the process.

Longer payback interventions include groundwater production, rainwater harvesting, effluent reuse and upgrading treated municipal effluent to process standards. Other longer payback interventions not included in GreenCape’s model include seawater desalination, treatment of blackwater for reuse, and investment in new production equipment that is more water efficient.

The case studies presented are most encouraging not only because of the resilience and ability to adapt to the water crisis with relatively small investments and short payback times. These interventions are long-term wins, as these savings remain after the crisis has past.

Moving towards water resilience is not always a smooth ride

Not all companies have the funds available to implement these changes, however. The tariff increases did not coincide with budget cycles leading many to be strained with the emergency measures and unable to invest. Without exemptions or some form of financial assistance, it is more feasible for many companies to simply close down. Others have outsourced the manufacturing to other provinces, which echoes the economic impact of the drought. Companies are also now seeing insurance companies increasing their requirements for various water saving initiatives to mitigate their risk of closure as a result of increased operating costs.

The technology providers seem to prefer big companies, likely because the return on investment is higher and the risk is lower. There is a gap in the market to cater to small companies, the residential market and the informal economy. There is a need to have a verification process of technologies, and the Western Cape 110% Green initiative has created a new technology evaluation process with disclaimers, but we are in unchartered territory and it will take time to develop strategies to evaluate the reputability of suppliers.

Audience participants, mainly from UCT Future Water, noted there is also much that is not understood yet . A big unknown is how to process wastewater beyond the basic principles of ‘dilution is the solution to pollution’, aeration, evaporation or filtration – each reaching the limits of available resources – water, energy, land or brine treatment , respectively. There is also a lack of appropriate standards for the treatment process itself, and the geotechnical risks for watertank placement is still largely ignored, especially in the residential sector. We are gaining an understanding of how domestic municipal wastewater works, in part because sanitation is such a large fraction of the total wastewater produced in South Africa . But apart from not being able to manage that appropriately (40% to 50% of the 1400 wastewater treatment works in South Africa are not in a good state and 80% of them are medium to high risk . This is also a global problem), we still need to learn what it means to have different complexities in the stream – for example high salts, or high fats, or recalcitrant lignocellulosic materials. Here there is much innovation happening, but these are still early in the commercialisation stages. Ultimately, the best way is to prevent these complex streams from forming in the first place – applying the principles of cleaner production.

The bottom line: Water resilience projects are financially feasible

Bridget Fundikwa of Green Cape says that the introduction of the level 6 industrial and commercial restriction tariffs has significantly improved the business case for most water efficiency interventions. However even under normal conditions, some of these projects remain financially feasible.

This article was initiated through a conversation between Future Water and The GreenCape Sector Development Agency as part of the Bridging Waters conversation series. The full report will be published by end June 2018 .

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