Water has tremendous value — people, crops, industry, and the environment all rely on this limited resource. In the arid and semi-arid West, the value of water is even more pronounced, rising precipitously in times of drought and scarcity. Climate change models project increased rates of evapotranspiration throughout the West, more severe droughts, and reduced runoff in the Colorado River. Accordingly, the value of water in the Southwest will continue to rise.
In 2005, power plants in six states — Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming — consumed an estimated 395,000 acre-feet (AF) of water. These plants impact our region’s rivers and aquifers, and tie up water that could meet growing urban, agricultural, or environmental needs.
Electric utilities’ choices can have vastly different impacts on water resources. A wet-cooled coal plant, for example, typically uses three times as much water as a combined-cycle gas plant; wind turbines, solar photovoltaic panels, and energy efficiency use no water; and employing dry cooling in a thermoelectric power plant can reduce water use by 90%. Yet most electric utilities and regulators do not adequately consider water in their future resource plans. Electric utilities typically appropriate or purchase water rights for new thermoelectric power plants, but the cost of these water rights does not reflect the opportunity cost of water use over the life of the power plant — 40 to 50 years or longer.
While the value of water is highly varied, it is not zero. This report attempts to develop a range of values of water for use in electric resource planning. Western Resource Advocates (WRA) analyzed the prices paid for water by the three different sectors that compete with power plants: municipal, agricultural, and environmental (Figure ES 1). In addition, we assessed the authority of regulators in the six states to consider water in evaluating utilities’ electric resource plans. We found that, across the region, the degree to which water influences regulators’ and utilities’ electric resource planning decisions varies significantly.
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