An economic analysis of desalination and potential application in China

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An economic analysis of desalination and
potential application in China
Yuan Zhou Research unit Sustainability and
Global Change Hamburg University 1 July, 2003
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Saltwater, when it turns into vapor, becomes
sweet and the vapor does not form
saltwater again when it condenses.
Aristotle, fourth Century
B.C.
If we could ever competitively at a cheap rate,
get freshwater from saltwater, that would be in
the long term interests of humanity and
would dwarf any other scientific
accomplishments.
John F. Kennedy, 1961
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Aim of the study

• to evaluate the costs of desalination
• on a global scale
• to assess desalination potential
• as a viable alternate water source
• for China

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Outline of the talk

• A global overview of desalination
• The trends of costs of desalination
• Implications to water resources in China
• water shortages in China
• potential application of desalination

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Introduction to desalination

• 97 of the earths water is seawater
• salt content gt 30,000 mg/liter
• Domestic water supply requires
• dissolved solids contentlt1000 mg/l
• Drinking water lt 500 mg/l
• Desalination refers to the wide range of
  technical processes designed to remove salts from
  water.

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Consumers

• Desalination has developed rapidly,
• is an important source in parts of
• Middle east
• Arabian Gulf
• North Africa and some islands
• and become increasingly explored by
• many other regions as well

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Major consumers in the world
Total capacity versus country
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A global overview
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Desalination technologies 1

• Thermal processes
• - mimic natural water cycle, produce water
  vapor, then condensed to form fresh water
• MSF - multistage flash distillation
• MED multiple effect distillation
• VC Vapor compression distillation

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Desalination technologies 2

• Membrane processes
• - remove salt ions from water by using
  membranes that selectively permit or prohibit the
  passage of certain ions.
• ED Electrodialysis
• RO Reverse osmosis
• Other process freezing, membrane distillation,
  solar and wind-driven systems, etc

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World desalination capacity
by process by raw
water quality
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Costs of desalination

• Capital costs
• direct costs
• purchase of equipment, land, construction
  charges and pre-treatment of water
• indirect costs
• interest, insurance, construction overheads,
  project
• management and contingency costs
• Annual OM costs
• labor, energy, chemicals, consumables and
  spares

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Data

• Data from IDA Worldwide Desalting Plants
  Inventory Report No.17
• Contain about 3000 data points from 1950 up to
  now for MSF and RO
• Data include country, location, total capacity,
  units, process, equipment, water quality, user,
  contract year and investment costs.

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Calculation

A is amortized annual capital cost, P is
investment in original year i discount rate 8,
n the economic plant life, 25 yrs
Due to lack of data, we took 60 of total costs
as OM costs all costs converted to 1995 base
year level, according to the United States
Consumer Price Index.
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Costs analysis of MSF
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Costs of MSF by plant capacity
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Developments of RO process

• RO became more popular during the last decades
• Operating costs reduced
• lower-cost, higher-flux, higher
• salt-rejecting membranes that
• can operate efficiently at lower
• pressures
• use of pressure recovery devices

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Costs analysis of RO
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Costs of RO by raw water quality
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Results

• MSF today
• 1.0 /m3 seawater desalting for China
• RO today
• 0.6 /m3 brackish or wastewater
• 1.0 /m3 seawater
• - become lower with time, especially RO

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Implications to Water Resources in China

• Water resources in China
• Water demands and shortages in the future
• Water pricing in China
• Potential desalination

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Water resources in China

• A total amount of 2800 km3 of water
• Average water per capita is only 2220 m3
• -- ranking 121th place in the world
• In 2050 it goes down to 1700 m3/capita
• -- threshold of water stress
• Water is not evenly distributed in both spatial
  and temporal terms

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Major river basins in China
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Water resource per capita (1997)
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Water withdrawal increases 1
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Water withdrawal increases 2
In North China, water resources are over
exploited and the utilization rate reaches 50 or
more International criteria more than 40
withdrawal as a threshold of severe water
scarcity
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Water demands in the future 1
Population projection in China
GDP projection under three scenarios
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Water demands 2
Water demands projection in the next 50 years
(km3/yr)
 
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Water Shortages in North China
Water shortage for Huang he, Huai he and Hai he
basin (km3/yr)
including current water transfer capacity
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Major Rivers in China
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South-north Water Transfer Scheme
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Water shortages 2
Water shortages estimation with half water
transfer capacity (km3/yr)

including current water transfer capacity
future water transfer
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Desalination potential in China

• Recently Chinese scientists have developed atomic
  reactors to provide heating to desalinate
  seawater, by burning used fuel from nuclear power
  stations under normal pressure.
• A pilot project will be established in the
  coastal city of Yingkou, with daily capacity
  80,000 m3/d
• However, application is very limited.
• Total seawater desalting 18000 m3/d
• but more capacity on brackish and river water

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Desalination potential

• For coastal cities, seawater desalting
• Inland cities, brackish or wastewater
  desalination
• Wastewater double effects
• - reduce discharge of waste directly
• into river
• - provide more water supply
• In 1999, 60 km3/yr discharge (67Ind)
• In 1997, 14 of wastewater treated

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Current water prices in water shortage cities
(/m3)
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Water pricing in China 1

• Water charges kept low for a long time due to the
  governmental policy
• Water is not fully charged based on the actual
  cost occurred but subsidized by the government
• However, its increasing,
• e.g. in 2005 Beijing, 6 RMB(0.72)/m3
• 2 of income for water

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Water pricing 2

• The South-North Water Transfer Scheme will raise
  water prices dramatically due to the huge
  investment capital, by at least 0.1/m3
• Government will realize that subsidy to water
  sector will not be highly beneficial to the
  nation in the long run.
• Water is often wasted or used inefficiently due
  to the low prices and lack of awareness.

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Conclusions 1

• Improved desalination technologies and
  accumulated management experiences have been
  playing important roles to reduce the unit cost
  of water noticeably over time.
• To date, the average cost of desalted water using
  MSF has been reduced to about 0.9 /m3 and RO to
  0.7 /m3. very competitive for traditional water
  resources

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Conclusions 2

• Unit cost of 1.0 /m3 for seawater desalination
  is suggested for China and a unit cost of 0.6
  /m3 for brackish and wastewater using RO process
  would be appropriate.
• As the technology develops, RO process would be a
  favorable choice for both seawater and brackish
  water desalination in the country

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Conclusions 3

• Water demand and supply projections indicate that
  water shortage will become ever severe within the
  next 50 years in China.
• Especially in North China, although taking into
  account water to be transferred under the scheme,
  water deficiency is estimated to be 16 km3/yr in
  2050. Desalination is therefore suggested to be a
  strong potential.
• Particularly for coastal cities, desalination can
  provide water for industries that do not have a
  high requirement of water quality

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Conclusions 4

• Low water prices are the major obstacle, water is
  not charged based on the principle of market
  economy
• Water pricing will be an effective economic
  instrument to conserve water and raise awareness
• Governmental policy should facilitate the pricing
  reforms and step by step fill the gaps between
  costs of desalted water and actual water prices
• Desalination can provide reliable water supply
  and will be economically feasible, therefore it
  is requested to invest in and undertake
  consistently research on selecting planting sites
  and brine disposal in the near future