FINAL REPORT Evaluation of Seawater Desalination Projects ...

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EVALUATION OF SEAWATER DESALINATION PROJECTS PROPOSED FOR THE MONTEREY PENINSULA 5 Economics This section provides a review of the economics of each of the four projects. Reviewed items include the following: • Capital cost • Operating cost • Unit cost • Total energy consumption/efficiency • Quality of cost estimate (conceptual, preliminary, bid, etc.) • Age of cost estimate • Energy cost assumptions • Financing – identification & adequacy The four projects have supporting documentation in various stages of development. The CWP is at a conceptual or preliminary level. This assessment is based on the supporting documentation that has been provided. The CWP has done the most work on resolving sitespecific technical issues. With this knowledge the estimators are able to make a more complete assessment of the associated construction costs, thus allowing a lower contingency for the estimate. The SCDP is also at a conceptual or preliminary level but is less developed than the CWP. The SCDP does not have a preferred treatment plant site or preferred pipeline alignment, although it has construction cost estimates for potential alignments. Some site-specific information has been developed but at this time is very general. The MBRSDP is the least developed and is at a screening level of development. Construction cost estimates are apparently developed from projects of a similar nature. As each of the projects progresses and more detailed construction cost estimates are made we would expect the estimates to more accurately reflect the specific site conditions. Since many of those site conditions are unknown at this time, the construction cost estimates may not accurately reflect the ultimate construction costs. More accurate estimates would be expected to develop as the projects develop. The basic technology used for any of the three terrestrially based desalination plants would be similar. Although there are differing philosophies on the pretreatment requirements, the bulk of the desalination system requirements will be comparable; therefore, we would expect any of the three terrestrially based desalination facilities to have similar unit costs with small Monterey Peninsula Water Management District 5-1
EVALUATION OF SEAWATER DESALINATION PROJECTS PROPOSED FOR THE MONTEREY PENINSULA deviations due to varying site conditions. This is also assuming that the same quality and grade of materials are used for each project. There may, however, be some savings for a larger capacity plant due to the economies of scale. Any present differences in the unit cost of the desalination facilities appear to be due to the methodology used to prepare the cost estimate or to differing assumptions on material selection. The four projects have differing treated water capacities and are proposed for different locations. These factors affect the length and diameter of the proposed treated water pipelines. The CWP and MBRSDP would be located within or adjacent to the MLPP. Both projects could benefit from purchasing power directly from the power plant and not be subject to power costs from the power grid. The reduced power rates are estimated to be on the order of 40 percent and represent a considerable savings in power cost over the project life. The SCDP would have to pay the going rate for power from the power grid for its facilities. The SDV proposal assumes use of subsidized biodiesel for power. Table 2 summarizes the four projects’ current cost status. To aid in comparison, land 42 and pilot project costs have been omitted, and costs have been updated to 2007 cost levels and refined by the B-E team as described in the table’s footnotes. Detailed MBRSDP and SDV data subject to non-disclosure agreements are not shown. Of particular note is the cost per acre-ft for the CWP Regional Project and the large MBRSDP and SDV projects being within 10 percent of each other. Given some of the unknown cost elements as described in this section, 10 percent represents a very small difference. The CWP basic project’s per-acre-ft costs would be expected to be higher than those of the CWP Regional Project alternative due to the diseconomy of small scale. 42 Land costs are omitted due to their very different handling by project proponents. Land and right-of-way costs provided by proponents are included where available in Table 3, Table 6, and Table 7 for the CWP, MBRSDP and SCDP, respectively. See discussion of MBRSDP land and right-of-way costs on p.5-9 through 5-11. No land or right of way costs for on-land SDV pumping and distribution facilities was provided. Monterey Peninsula Water Management District 5-2
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FINAL REPORT Evaluation of Seawater Desalination Projects ...

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