Knee Deep in 1st Year PhD Reading- Spain’s Desal Gone Bust, at a Glance

Retrieved from the NY Times

Knee Deep in 1st Year PhD Reading- Spain’s Desal Gone Bust, at a Glance

by Miles Ten Brinke

Miles, Peak Water columnist and avowed Hydrophilic energy-head, has found his way to Britain where he’s lost his California perma-tan and is now a 1st year PhD student at the University of Manchester  after studying an Energy Policy MSc at the University of Exeter in Cornwall.  He’s now trapped in the Nexus, researching the transition to sustainability of the global water-energy system.

In this early part of my PhD I have been and will continue to spend the majority of my time leafing through the academic literature, getting the lay of the land and hunting out my little niche. All the while I’m trying to connect all the new bits back to what most interests me practically and empirically about my subject. What’s most satisfying is the moment you come across a paper which chimes with an interesting news story or policy wonkiness you recently found, both helping to clarify and flesh out the other.

That’s why I’m so keen right now to give my take on a recent story from Spain- the bubble’s burst for its desal. The short of it is that Spain (supported by a tranche of EU funds) has already spent €1.8 billion (of a projected €2.5 billion total cost) constructing a fleet of desalination plants (51 approved plants) to provide a more climate secure national source of water, but with the recent implosion of public funds and rising energy prices the whole enterprise has stopped dead in its tracks. Desalination is a subject I’ve brushed with previously, and one I plan to revisit frequently.  Spain too, has come up a lot in my recent desk research and I have a feeling it may even up providing a case study or two. It combines a few essential ingredients to pique my interest- a lot going politically and economically (federalist with lots of regionalism and nationalism, forefront of the austerity battles and the EU sovereign debt crisis, a significant asymmetry between electricity and water markets, etc.), a set of environmental conditions lending itself to my research (water resource scarcity, likely increasing aridity, etc.) and ample Nexus examples (from municipal utility management to desalination).

There are a number of really intriguing points to this story. Thus far this is the biggest single push for desalination I’ve yet come across, by a wide margin. The plant in the NY Times coverage (in Torrevieja) alone has the capacity to produce 220 million cubic metres a day, largest in the world. All that has come through an industry under public ownership and management in stark contrast to a liberalised electricity market, with prices for the former kept low and the latter rapidly rising. Then there’s the fact that 80% of of Spain’s water goes to agriculture, and that both farmers and consumers are deeply opposed to any rise in their water costs. Several of the commentators from the piece argue that this is much a more political set of challenges than economic (i.e. toxic for politicians for consumer costs to rise in a terrible economic climate and go up against a powerful agricultural coalition).

Whether or not due to the original planning or the execution this seems text book disastrous policymaking. Desalination has a whole hell of a lot to do with relative water and electricity prices, to go down that road you generally want a rise in the first and fall in the second. Desal water just generally isn’t economic against more conventional sources yet, and more importantly if you have both wholesale and retail electricity prices dramatically rising without any significant water parallel the case for desal all but falls apart. At this early stage energy inputs are likely to play a significant part in operation and maintenance , especially in otherwise depressed economic circumstances. The state-run element of the water industry could potentially have unto itself hampered all the efforts- when budgets got tight and the overspend fell away the incumbent inertia just may have and may continue to slow or even limit the innovation and change  needed (this isn’t just the potential case for public owned natural monopolies, as likely in a liberalised utility market which tend toward consolidation of a few large incumbent firms and high costs to market entry).

That said, it is true that if this was the socio-technical pathway chosen by its government Spain still should have been able to avoid much of the difficulties of its current state. They could have taken on the agricultural interests and made their case to the people that this was a necessary sacrifice, that accelerating the rate of passing on the cost was the price for transition. At the very least there could have been more of a re-evaluation and trajectory shift post 2008 crash (though to be fair I wouldn’t argue that strongly yet without more evidence), the original assumption in the boom years after all being that there’d be a real need for more water. Demand and prices have not risen as expected and the cost living has gotten a lot more difficult for the average Spaniard in recent years, just look at the employment statistics.

So at a glance, looks like Spain went all in all wrong on its desalination bet.

~Miles On Water


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