june 2016 business breakfast

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BUSINESS BREAKFAST June 2016

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BUSINESS BREAKFASTJune 2016

Good morning and thanks for taking the time from your busy schedules to come together and talk all things water.This morning Ill cover 3 areas:The state of play in terms of our citys water securityWhats happening on the prices frontAnd some of the strategic initiatives Yarra Valley Water has underway to

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OPERATING ENVIRONMENTPopulation Growth double by 2050

Climate Change

Changing demographics and customer expectations

Rapid technological change

Lets take a look at the Operating Environment and the key factors influencing our business.POPULATION GROWTHFirstly, there is no doubt we are in a period of rapid population growth and this brings both challenges and opportunities, particularly for water utilitiesMelbourne is experiencing net migration from other states, many people want to live here.So I think everyone knows now that Melbournes population is set to double by 2050, in fact at current rates we will be bigger than Sydney by the 2030s is that a good thing? I guess it dependsSome big questions:As we grow, We have more hard surfaces and our green spaces are under threat and in the Millennium drought we learned of the Heat Island effect Heat is Australias silent killer the number of record hot days has doubled in Australia since the 1950s. According to PWC, Heatwaves kill more Australians than any other natural disaster. In the Heatwave of January 2009, it was estimated by DHS there was over 300 excess deaths as a result of the cumulative effects of an intensive heatwave, the same occurred in the heatwave of januray 2014 with over 200 heat related deaths and a 20 fold increase in ambulance call outs.

In 2009 at the height of the drought 374 Victorians list their lives due to heat stress (higher than the road toll) thats in addition to the tragic loss of life from the Black Saturday bushfires.What kind of city are designing, how do we want to live? We spend the majority of our infrastructure funds on roads than anything else, what does that say?CLIMATE CHANGEI guess it would be easy to be lulled into a false sense of security given the weather were having this winter, but lets not forget what May was like very dry.Our water fault volumes of bursts and leaks and sewer blockages tracks the weather, and the last year weve had nearly 20% more jobs.And how many times in the last 10 years have broken records? Scientists are 99% sure this year will be the hottest on recordAll of this of course the drying climate but also the storm events, have increased the complexity around providing our services but there is a silver lining it has also brought about new ways of thinking that I believe will lead to significant innovation in our sectorCHANGING DEMOGRAPHICSOur service area extend from Broadmeadows to Warburton, as far North as Wallan and everything in between with a population of nearly 2MOur customers are tremendously diverse, and of course as all of you would know expectations are changingAs an example, far more informed and empowered than ever before, especially through the internet and what that has enabled in terms of social media and the likeRAPID TECHNOLOGICAL CHANGEInternet of Things the Digital Age, all points to new ways of working, new ways of providing our services cover some of these opportunities off later in the discussion

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Six Commitments underpin our purpose. By delivering on all six Commitments and their corresponding Outcomes we will become a truly extraordinary organisation.

CUSTOMERS AND THE COMMUNITY AT THE CENTRE OF EVERYTHING WE DO

PROTECTING THE ENVIRONMENT AND ENHANCING MELBOURNES LIVEABILITY - Restorative

DEVELOPING PARTNERSHIPS TO MEET THE CHALLENGES OF THE FUTURE water industry/thriving communitiesWe are developing stronger partnerships to deliver integrated water solutions that will enhance liveability for local communities. Close collaboration with other utilities, DELWP (the Department of Environment, Land, Water and Planning), Councils, developers, and local communities is critical to improving outcomes from whole-of-water-cycle management.

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WATER FOR VICTORIA: POLICY DIRECTION

Some of you may be aware that the State Government has released a Discussion Paper on water policy for the stateI would frame this as learning the lessons from recent experiences, recognising that water contributes in a significant way to the social fabric of communities, the liveability of our cities and towns and the productivity of the State.So consultation on the policy has been carried out and we now await the final direction from the Government I would say its not radical but a logical evolution of water policy.Due for release around September.

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2015 RAINFALL

So lets talk water storages for a moment as Im sure you are all interested in the state of play.A failed filling season and a very dry summer and autumn since then5

WATER CONSUMPTION 1996-2015

Water consumption for the metro area is rising, average l/p/pd creeping up understandably rolling 12 months 168 (162 same time last year). 2010 148 l/p/p/d6

STORAGE INFLOWS 1913-2015

2015 inflows - 20% lower than 13 year average, and the 13 year average is 40% lower than the long term average2015 306GL and demand was 414GLWe dropped by a net 200 GL over 2 years7

MELBOURNES ADAPTIVE WATER SECURITY FRAMEWORK

50 billion litres of desalinated water for 2016/17 to redress storage and secure supply. Medium take action zone triggered

We basically run the system with a view to staying in the green zone, and we take a three year view, looking at different scenariosA number of modelled scenarios had has dropping into the yellow zone, and with a risk that if we took no water this year, even with a full order of 150GL from the Desal plant next year we might still be going southSo the prudent thing to do was make a small order - you are betting on the weather and that is not a straightforward thing to do so a small order means we have minimal risk of spills from the system if we have a very wet winter/spring, and may allow some recovery or at least arrest the declining trend.

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At this stage, anticipating no increase in prices expected (pre desalination order). This includes absorbing CPI. ***

When desalination water received, water usage rates will increase by approx 4.6% (about 15cents /1000 litres).This will be removed on 1 July 2017 if there is no water order for the 2017/18 year.NON RESIDENTIAL PRICES:

Im sure you're interested in what's happening re pricesNo need to adjust your set prices will basically be unchanged, including absorbing CPI this is the first time I or my predecessors have said this. The asterisk - Not finalised as we await the Regulators decision on Melbourne Waters bulk charges to us. But quietly confident. There will be the additional cost of the deal water, which is about $12 over the year on the average residential bill of course for business customers this will be different depending on your water use.9

KEY INITIATIVES

Strengthening relationships start of a long journey. New non-residential Division has made good ground but still work in progress - flushed out process issues - Billing, property data, metering. New proactive approach - Instances where we have been able to contact customers before they contact us. Andrew now trawls through BI reports on a weekly basis to spot billing anomalies and contact the customer direct. An example recently where Andrew as able to call Box Hill Hospital before the bill went out. Turns out they were expecting a higher bill as they had recently added a new wing and had used airconditioning more than usual due to the spell of hot weather.Beginning work on a differentiated contact center service in for high value customers.

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ESC PRICE METHODOLOGY REVIEW:Customers at the centre. Autonomy will be available to water utilities Performance remains a central feature.Simplicity - focused on outcomes.

Our service and price regulator, the Essential Services Commission, has released a discussion paper on a new way of setting prices.They are calling it a game changer we are still getting our heads around itWhat is good is that strengthens our accountability for having an outcome that our customers support

Customers become the centre of attention. Water utilities need to understand customer concerns, priorities and preferences, and then take those matters into account in their pricing proposals. Autonomy will be available to water utilities that propose and clearly justify ambitious outcomes for their customer. Performance remains a central feature. Ongoing monitoring and in-period price adjustments will improve water utility accountability to customers for the delivery of proposals. Simplicity means future price reviews will not revolve around false precision for financial model parameters, instead focussing on customer outcomes.

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PRICE REVIEW

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You're going to hear more about this from Damien later, so I wont go into any detail other than to say our foray into waste to energy is one of the ways we are tackling the challenge of climate change and seeing if we can be a restorative utility, on a commercial basis.These are pictures of our new Waste to Energy facility currently being constructed out at Wollert. Its co-located with our Sewage Treatment Plant and Recycled Water Plant.It will be taking organic waste originally destined for landfill, and using anaerobic processes, create renewable energy to power our treatment plants and either offset our other energy use or export to the grid.The Brand is called Re-waste, and its all about closing the loop. Essentially we will be creating renewable energy, reducing the volume of waste that unnecessarily goes to landfill, and creates a new source of revenue to take pressure of our costs

Facility will accept trucked organic solid and liquid wastes from commercial sources, including market food waste, food processors, dairy wastes, restaurant and catering wastes.The facility will have the capacity to process over 33,000 tonnes of organic waste per year.Peak electricity generating capacity of 1-Megawatt. Facility will process the waste through two anaerobic digesters to produce methane-rich biogas. Single Stage - Mesophilic process.The biogas is fed into 2 combined heat and power engines which supply electricity to both the neighbouring sewage treatment plant, with the surplus going to the electricity grid.

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Vital infrastructure for the north14

Melbournes north is boomingThe northern growth corridor is where its all happening to provide a sense of the scale, its the same distance as CBD to Mitcham Basically we are extending the water and sewerage infrastructure to support this, at a cost of around $1.5BA population the size of CanberraMandated recycled water for over 100,000 homes

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CAPITAL PROJECTSEpping Main Sewer

Amaroo Main Sewer

Lockerbie Main Sewer

Warrandyte North Sewerage Project

Donvale Sewerage Project

Heres an example of whats currently being done

$700M investment over the 5 year planning period.

$100M Amaroo Main Sewer - The Project was approved by the Board in March 2015 and the contract has been awarded to John Holland Group. Construction is on track for completion in 2017Links into Craigieburn Sewage Hub storage facility before transfer to recycled treatment plants and south to the metropolitan system

Epping Sewer Main - We have been able to defer this project with a small temporary pump station and are monitoring the growth in flows to ensure the asset is delivered just in time. We are currently completing the design and final cost estimates and expect to commence construction in 2017 and complete by June 2020

Further north, once Amaroo Sewer is completed we will be looking to start the Lockerbie Main Sewer - We have been able to defer this project as slower than expected growth in the Wallan and Beveridge catchments and an upgrade of the Wallan Sewage Treatment Plant to accept additional flows mean that we can meet developers needs without the Lockerbie Main Sewer for a number of years. The Wallan sewage Treatment Plant upgrade (expected completion in late 2016) replaces a lagoon treatment system; avoiding the risk of odour complaints which has been an ongoing issue and provides high quality source water for the Wallan Recycled Water Treatment Plant. Completion target June 2021

Warrandyte North Sewerage Project - Providing infrastructure enabling sewerage services to 975 houses.Local council planning permit approval process has taken significantly longer than expected. Reticulation work is complete. Properties have a connection point but are unable to connect pending completion of an outlet syphon under the Yarra River and a pumping station. These have been delayed pending the issuing of a planning permit and other regulatory approvals. Expected completion of the project by September 2016.

Donvale Sewerage Project - Providing infrastructure enabling sewerage services to 1,107 houses. The design is complete and construction has commenced. The delay was due to approvals for removal of native vegetation.

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Ensure an integrated approach to urban and water planningPilot project with northern and eastern Councils to develop tailored planning frameworks and funding criteria to deliver better urban amenity outcomes for local communitiesBuild on existing collaborations e.g. Trade Waste ManagementPARTNERING WITH COUNCILS

PARTNERSHIPS WITH COUNCILSWe service 16 CouncilsIn the next year we will be amping up our efforts to engage with our local councils to work collaboratively on planning and ensure an integrated approach to urban and water planning. We will establish a full-time senior position to define the direction and strategy for these partnerships. During 2016-17 we will establish a pilot project with northern and eastern Councils to develop tailored planning frameworks and funding criteria to deliver better outcomes for local communities.

We will continue our successful collaboration with local councils to help food businesses improve their trade waste management, which reduces sewer spills due to fat blockages. Our existing partnership with Maroondah City Council has Environmental Health Officers documenting trade waste management in their inspection reports and referring any concerns to us for follow up. The council also includes our application form in the starterkits they give to new businesses.

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SDGS, UNGC, VALUE CREATION

So Ill finish up now with one last slide I commenced talking this morning about our drivers such as rapid population growth and climate change, and then about some of the things we are doing in response. I think our stand for playing a bigger game is exemplified by our recent signing up to the UN Global Compact -The worlds largest sustainability initiative.

The UN Global Compact commits us to:

1. Ensuring our strategies and policies align with the Compacts Ten Principles, which cover human rights, labour, the environment and anti- corruption.2. Taking action to advance broader societal goals.

Participation in the UN Global Compact Program also requires us to transparently report our efforts to address sustainability issues. Starting in 2016, we will publish our progress in this area alongside our Annual Report.

The Sustainable Development Goals (SDGs) set out a common framework for actions required to strengthen society. During 2015, we have been mapping our activities against the SDGs to identify which are most relevant to us, and where there are opportunities for improvement, additional focus or engagement. The SDGs and their targets are reflected in many of our core commitments under our Strategy.

Through our membership of the Global Compact Network Australia and collaboration with other stakeholders, we will continue to engage with this conversation and contribute to achieving sustainable cities.

Weve never had as much global connectivity as we have now, and our awareness that the planet is under stress is so much greater so seeing ourselves as having a leadership role to play is exactly the right thing to be doing.

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Graham HawkeDeputy Director (Environment and Research)15 June 2016Yarra Valley Water Business BreakfastYarra River, Warrandyte

Image: Yarra River, Warrandyte 13 June 2016 (Graham Hawke)18

Australia has highly variable rainfallWe frequently lurch from drought to flood and back

Photo (bottom): Jacana football ground, near Broadmeadows, Victoria, submerged by flood waters (Mia Schoen)

Australia has the most variable rainfall lurching from drought to flood and backIsland continent with maritime influences, often related to the location of warmer Sea Surface Temperaturescontinent Monsoon to the northSouthern Annual Mode to the southEl Nino Southern Oscillation to the east in the PacificIndian Ocean Dipole in the westThese key forces dictate our rainfallBeing the lowest continent (average of 330 metres) limited physical barriers to break up these key forces that dictate our rainfallGlobal risks water has #1 impact according to Global Risks 2015, 10th Edition, Figure 1www3.weforum.org/docs/WEF_Global_Risks_2015_Report15.pdf

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Australia has highly variable streamflow

Data used for streamflow variation study: McMahon et al. (2007a, b, c) used monthly and annual streamflow data for 1221 rivers across the globe. They used the stations which have data for at least 10 years or longer. They put significant effort to make sure the data is free from errors and not impacted by the major water withdrawal.

On the basis of studies conducted by McMahon et al. (2007a, b, c) on global streamflows, it can be concluded that the variability in streamflow in Australia is very high. The coefficient of variation (CV) of median annual streamflow (along with the 10th and 90th percentile) for various countries are given in Table-1 of McMahon et al. (2007 c).

It is noted that Australia ranked third in terms of variation in streamflows whereas it ranked first in terms of the differences between 10th and 90th percentile. McMahon et al. (2007a, b, c) also concluded that Australia required large reservoirs to supply the reliable draft as the variation in streamflows are high.20

Drying across the southSouthern wet season (April November) rainfall deciles 1996 to 2013

State of the Climate 2014 (BoM & CSIRO)

State of the Climate 2014 (Bureau of Meteorology and CSIRO)21

Managing waterBalancing supply and demandTariffsAllocationsRestrictionsLeak reductionAppliance efficiencyIrrigation technologyInformation campaignsSustainable diversion limitsBuilding sustainability codes

Rainwater tanksStoragesGroundwaterWater tradingWater gridsWastewater recyclingStormwater harvestingSea water desalinationManaged Aquifer StorageIndirect potable reuse

Supply augmentationDemand managementCOMPLEXITYIntelligent water networksEntitlement and trade registersIntegrated Water Cycle Management

Productivity Commission (2011, p XXI)water restrictions are likely to have cost in excess of a billion dollars a year from the lost net value of consumption alone.PC (2011, p XXII)..stage 3a restrictions in Melb is between $420 and $1500 million over a 10 year period.

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Desalination

Annual production capacity (GL)% of total urban supply

* Average of total urban supply volumes 2012-1014% of total urban supply

Average based on total urban supply volumes for 2012-2014Matt Hardy 30 Oct 2015 Desalination plants at cities are now capable of producing between 15% and 60% of annual urban supplies 23

Climate projections and seasonal outlook

Himawari-8, 25 Jan 2015 (Japan Meteorological Agency)

Image: The first true-colour PNG image from Himawari-8 January 25 2015 operated by the Japan Meteorological Agency24

Intensification of the hydrological cycleWarming trend with annual variabilityState of the Climate 2014 (BoM & CSIRO)

The graph shows a warming trend of 0.9 C since 1910 degree (compared to 1961 to 1990) against a background of year-to-year climate variabilityWarming over Australia is also consistent with warming in the surrounding oceans

We have seen more hot days and less cold days.Temperatures will continue to increase over the 21st century.The extent will depend on global emissions of greenhouse gases and aerosols.By late in the century (2090), Australian average temperature is projected to increase by0.6 to 1.7C for a low emission scenario, or 2.8 to 5.1C under a high emission scenario.Hot days are projected to occur more frequently while there will be fewer frost days.

Images from State of the Climate 2014Very warm months (2 std dev) have increased almost five fold. Very warm months that occurred only 2% of the time (1951-1980) occurred nearly 7% of the time (1981-2010) and over 10% of the time over the last 15 yearsAt the same time, there has been an almost halving in the frequency of cool months over the same period

Warmer atmosphere holds more water7% for each 1C increaseincreasing rainfall on average by 23%rainfall likely to be more intense

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Projections of Australian annual temperature

Observed annual temperatureRCP4.5 projected annual temperature

This is the observed Australian annual temperature curve animated in black, over-layed against 13 different climate models (CMIP 5) in orange.

Australia has warmed since 1950.

Note how well the climate models do in capturing mean temperature changes, as well as the spikes of hot years and cold years. The model knows nothing about the real world except for greenhouse gas and aerosol forcing i.e. it is not trained or forced with observations so the spikes do not correspond to the observations (i.e. they do not occur in the same years).

Australias warmest year is the spike seen in 2005 just over 1 degree above 1961-1990 average (1.03).

This translates to a very cool year by 2050.

The last decade has been associated with a high frequency of extreme heat conditions during summer and increased fire weather, as well as loss of snow and frost.

The longer such conditions persist, the more environmental change the country will experience with longer and more frequent heatwaves.

Having these conditions sit at the cooler end of normal in 40 years time is obviously significant, with extreme conditions such as the 2009 Black Saturday heatwave and the 2013 January heatwave becoming the norm (i.e. average) in the second half of the 21st century.

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Heatwaves more prevalentAustralian area-averaged mean temperatures in the top 10% of records

Caption: Number of days each year where the Australian area-averaged daily mean temperature is above the 99th percentile for the period 1910-2015, using ACORN-SAT temperature data. The data are calculated from the number of days above the 99th percentile for each month and then aggregated over the year. This metric reflects the spatial extent of extreme heat across the continent and its frequency. More than half of these events have occurred in the past 21 years

On a daily timescale, over the last 115 years it is clear that intense heat events are occurring more often. The number of days each year when the Australian area-averaged daily mean temperature was in the top percentile was often zero in the early half of the 20th century, however, since the mid-1970s only two such years have occurred. 27

La NiaNeutral phaseEl NioThe El Nio-Southern Oscillation

This is the El Nino-Southern Oscillation . It influences the amount of rainfall falling over Australia, particularly north-eastern Australia. The convection and rainfall follow the warmest water in the Pacific Ocean during a neutral phase, the warm water is piled up in the western Pacific the warm pool. This means it typically rains more over the western pacific (PNG and Indonesia). During a La Nina, this pattern intensifies, with a deeper pool of very warm water in the western Pacific. This intensifies the atmospheric circulation, bringing even higher rainfall to the eastern Pacific. During an El Nino, the trade winds reverse, and the central Pacific warms, taking the rainfall away from the west, and towards the central and eastern Pacific. (ENSO can also be measured by the strength of the atmospheric circulation or Walker Circulation). The thermocline sloshes from one end of the Pacific and back in other words, an event cannot last forever, because the piling up of water on one side of the Pacific cannot last, it wants to slosh back at some point.

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The Indian Ocean Dipole (IOD)

Negative phaseNeutral phasePositive phase

This is a schematic of the Indian Ocean Dipole and how it affect Australias weather. The IOD is essentially the cohort of ENSO in the Indian Ocean. Remembering that atmospheric convection and rainfall tends to follow the warmer water when a temperature gradient is involved.

The gradient in the Indian Ocean is a tricky thing, since we have a permeable boundary to the west- known as the Indonesian through flow region, but typically you get rainfall somewhere to the north of Australia during winter and over northern Australia during summer with neutral conditions.

The negative IOD is an amplification of that pattern with enhanced convection is our region driven by warmer than normal waters off the north-west of Australia. The prevailing movement of weather systems tends to drag this down across the continent.

During the positive phase, the local region is dry, with more action over in east Africa.

The IOD and ENSO act together and it makes a great difference if you have conditions favourable for local rainfall in both basic which is a negative IOD and La Nina. That confluence (or in phase behaviour) really sets up perfect conditions for rainfall across large parts of the continent.

Both EN and +ve IOD were in play from mid-2015

Its effect is largest on Australia in winter and Spring

El Nio evolution

El Nio years

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La Nia evolutionLa Nia years

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La Nia + negative IOD; typical rainfall impacts

Seasonal Outlooks winter 2016

Min. TempMax. TempRainfall

Business application

Christian Uhrig (iStock)

Image: Christian Uhrig (iStock)34

CSIRO found using BoM seasonal forecastsImproved long term returns >$50/haSimilar results for mixed wheat/sheep farmingFor short term decisionsSowing = $10 $100/haLate season disease control = $10 $160/haSo what?22 million ha/year planted to grain in AustraliaPotential benefits of >$1.6 billion/yearCentre of International EconomicsCase study: Managing climate variability in agricultureNitrogen application for grain growing in WA

Wheat harvesting NSW (MDBA)

Image: Wheat Harvesting NSW (MDBA)Climate is the biggest driver of seasonal variability of production in agricultureAgriculture, through the Managing Climate Variability program, has invested over $20M on climate related R&D over the past 10 yearsSeasonal forecasts (multi-week to 6 months) are highly relevant to agricultural production

CASE STUDYOne project looked at the value of using seasonal forecasts on N application in grain production in SW WAEffectiveness of N application is highly related to rainfall.

Economic return from seasonal climate R&DBenefit to Cost Ratio = 6.6:1Internal Rate of Return = 48%

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Case study: retail sales and temperature1 Dec 20131 Jan 20141 Feb 2014

The excessive heat factor shown in the graph is actually the observed value for the index not the forecast value.The key thing to highlight is that the maximum and minimum temperatures alone, whilst very high during the heatwave periods, do not capture the human health impact which drives sales anything like the Excessive Heat Factor does.The Excessive Heat Factor is shown in this study to correlate very well with peak purchasing behaviour.

In the Age, in Business Day on 6 April, While caf, surf wear retailers and outdoor furniture and leisure chains are rejoicing, department stores and speciality clothing and accessory retailers are worrying about cash flows and facing the propsect of having to discount autumn and winter stock unless the weather turns cool in the next few weeks.Australian Retailers Association CEO Russel Zimmerman said "The things that are not selling are the things that should be selling. Retailers are very concerned about it. It has been very slow".

WHAT IF...I quantified the climate influences on my business?I anticipated future climate shocks?I had a weather and climate strategy?

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Case study: retail sales

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Higher resolution seasonal forecastsPowered by a new 1,660 teraflop* supercomputer

250 km resolution 120 gridsObservations60 km resolution 2000 gridsmm/dayAugust mean rainfall simulation* Teraflop = A trillion (1,000,000,000,000) floating point operations per second

New supercomputer will allow improvement in resolution from current ~250 km down to ~60 kmIncreasing from 120 to 2000 grid pointsStep change enhancement in model skill expected

New system better represents Tas. and even the climatological rainfall differences between east and west Tas.It also represents the enhanced rainfall associated with the great dividing rangeThe increased resolution will facilitate use of the forecasts at the regional level.

Finer model detail, more localised. More outlook periods updated weekly. Higher outlook skill by ~10%

Can also forecast other parameters: evaporation, humidity, wind

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Climate monitoring and seasonal outlooksInforming through mobile, video and TV

www.bom.gov.au/climate/outlooks/#/overview/video

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Conclusion

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Science and technology innovationEnvironmental Intelligence to guide decisions

TemperatureEvaporationHumidityWindRainfall

Design rainfall

Streamflow

Storages

Soil moisture

Groundwater

As production systems become more sophisticated they will draw on our forecasts even more than todayThey will be incentivised to do so because the skill of those forecasts will have improved.These are very weather and climate sensitive industries and the intensification of the hydrologic cycle via climate change means they will be even more so in the future

How will technology change the way that weather and climate forecasts are developed and utilised by businesses?More machine to machine transfer of information. Forecasts will start going directly into decision support systems.Higher resolution models and richer observational data will result in more skilful forecasts.Ensemble information will come to the fore, allowing parameterisation of uncertainty and a risk based approach.There will be richer verification products to build confidence and enhance adoption even further.Information delivery will be greatly diversified, coming in avariety of forms. Desktop, mobile, wearables, consoles in vehicles, videos, etc, stimulating evenfurther uptake.

APIs: Application Programming Interface41

Thank [email protected] Road retarding basin, 15 Feb 2011

Image: Middleborough retarding basin in flood 4 February 2011 (by Graham Hawke)

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Yarra Valley Water June 2016

Yarra Valley Water 2016

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What worries you?Family Issues?

Friend issues?

Work Issues?

Social issues?

Yarra Valley Water 2016

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What worries you?Every day, 6,000 children die of water-related diseases (4 a minute).

Social issues for me its water

Australia the worlds driest populated continentHow do we grow and feed our population in 2050I wont be around but my granddaughters will.

Yarra Valley Water 2016

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What worries you?Social issues WaterWhat we do today impacts tomorrow.

What are we doing at Simplot?What are you doing

Yarra Valley Water 2016

47Simplot Australia

The company behind many different brands.

Employing approximately 3,000 people across Australia.

Head Office in Melbourne6 Manufacturing facilities across NSW, VIC, TAS

Wholly owned subsidiary of JR Simplot Boise Idaho.

Water and Energy Two common ingredients!Water- Paddock to WasteIrrigation and crop growthCleaning raw materialsConveyingAn energy sourceIngredientHeatingCoolingCleaning / plant hygieneWaste water

Yarra Valley Water 2016

48Similar to cooking at home

Sending water down the drain costs!

Water and Energy Two common ingredients!Irrigation Peas, Beans, Carrots, Potatos, Corn, Broccoli, Sprouts, Cauli, Onions, Zucchinis

Yarra Valley Water 2016

49Variable irrigation

-Pivot irrigation vs. sprinkler type irrigationRight amount of water for right areas.Not over irrigating

Infrared mapping-Ensuring crop growth is consistent, not overwatering

Crop varieties-Different varieties require different amounts of water per hectare.

Controlled Variable Rate Irrigation = Even Plant Growth=Even Fruit= Consistent Quality=Efficient Processing=Low Waste

Water and Energy Two common ingredients!Vegetable Cleaning Most of our vegetables come straight to the plants from farmsCleaning and preparation requires water.

We recycle cleaning water where we can.Our focus is on plant reliability- the more reliable our plants the better our water intensity KL/ tonne processed.

Opportunities to clean in paddock and use water for irrigation

Yarra Valley Water 2016

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Potato washing

Water and Energy Two common ingredients!Conveying

The products we handle can be fragile and damage easy (every gram counts).

Water is a good conveyor and where we use water we recycle as much as possible.

Yarra Valley Water 2016

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Peas being conveyed from process to process

Water and Energy Two common ingredients!Process energy

We use water and its force at some sites as part of the process.

Where we can water is recycled

Yarra Valley Water 2016

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Potato slicing die

Water and Energy Two common ingredients!Ingredient

Water is an ingredient.Brines for canned product.A component of sauces and other meals.Used in batter mixes.

Yarra Valley Water 2016

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Leggos processing

Water and Energy Two common ingredients!Heating / Cooking

We either direct inject or heat through kettles, heat exchangers or like.

Condensate recovered and reused.

Recipes and heating times scrutinized- overcooking wastes both energy and water.

Yarra Valley Water 2016

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In line heat exchangers- Leggos

Water and Energy Two common ingredients!CoolingProduct- retorting, kettles, heat exchangersServices

Focus on process and only cooling to what we require

Yarra Valley Water 2016

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Retorts cooling towers and cooling tunnel

Water and Energy Two common ingredients!Cleaning / plant hygiene

Hand washing and sanitising a mustHand held cleaning and hosing a real water waster if not controlled.Automated CIP systems reduce waste and eliminate manual waste.Clean design absolutely critical reduces labour cost, consumables, energy and water use.Engineers key to success.

Yarra Valley Water 2016

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Water and Energy Two common ingredients!Trade Waste

Local utility charges going up across sitesBiological discharge loads tighteningFocus is on activity/ technology to improve waste water discharge levels.Focus is always to reduce water use in first instance

Yarra Valley Water 2016

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Issues58Yarra Valley Water 2016

Water cost increases

Trade waste agreements charges increasing at a time we are working to reduce costs.

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Activities59Yarra Water 2016

Our focus is on plant reliability- the more reliable our plants the better our Water Intensity (WI) KL/ tonne processed.

Continuous improvement teams have and do focus on water savings.

New equipment has to be more water & energy efficient Engineers key.

Measure and manage reporting high level water usage at daily and monthly meetingsintroducing local meters across plant areas.Water mapping our sites

Working with farmers to be more water efficient.

Reviewing what we can do to improve / reuse trade waste water

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Activities60Yarra Valley Water 2016

We have a WI target reduction program and plant competition the Water Cup.Plant with the best yearly improvement gets rewarded with a meal for all employees

Want to make water as prominent as our corporate energy programHave appointed a Sustainability EngineerWill work with consultants and internal team to develop an enhance strategic water strategy with enhanced targets.

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REWASTEReuse, Repurpose, Revive

As Pat mentioned earlier, we are presently under construction of our new WTE facility co-located at our Aurora STP in Woolert.The facility will be branded as ReWaste which encompasses the values we are looking to achieve from such a venture: Reuse, Repurpose, Revive.

This morning I would like to talk about the journey so far, the drivers behind the project and the facility itself.

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4 years of investigation, planning and design.Feasibility studyBusiness caseImported technology adapted to meet Australian standardsBenefits of existing large buffer zone around the facility from residential and commercial premises, close to organic waste generators and with great transport links.LONG TERM COMMITMENT

For anyone who has attended a business breakfast previously, you would be aware that the project has been a long time in the making. This has been by design rather than by default. We are entering for all intents and purpose a new market and accordingly this required extensive research and consideration.

Feasibility study identified that the imported organic waste digestion process has been successfully used around the world, particularly in Europe and the US.

Business case for such facilities in the Australian context differed greatly to that of Europe and the US. Unlike in Victoria, internationally landfill is at a premium.

One of the biggest design challenges we have faced was in using imported technology not usually used by an Australian utility provider, and adapting it to meet Australian standards along with water industry expectations in terms of safety and environmental regulations.

Consideration needed to be given to where we located such a facility and this was why Woolert was chosen. Benefits of existing large buffer zone around the facility from residential and commercial premises, close to organic waste generators and with great transport links.

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STRATEGIC PARTNERSAquatec MaxconAustralian leader industrial scale plants (40 years). ResponsibilityDesign management Integration with existing STPConstruction oversightO&M Contract 2 yrs.

Weltec BiopowerWorldwide leader renewable systems (more then 300 plants to date). Represented in 32 countries.ResponsibilityDesign oversight and review Feedstock ReviewTraining of operators

I've just touched on the technology aspects of the process and this was a key consideration when choosing the Construction and design partners in this project.A/M the successful tenderer was able to bring to the table not only extensive experience in water industry but critically they were able to provide a total suite solution around the technology component of the design by partnering with Weltec Biopower.This provided the business with confidence in their ability to deliver on the project and added a level of de-risk to the project.

Acknowledge Anthony Davey & George Mitic

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OUR DRIVERS FOR RENEWABLE ENERGY..

Renewable Energy buzz phrase.but what does it mean?

Increased electricity costs associated with STPs and provision of recycled water has meant an increase in costs to the business. So how do we look to balance these costs in line with our company strategy?

Lets consider some factsfood loss and waste generates about 8 per cent of global greenhouse gas emissions.estimated that around 7.5m tonnes of food is wasted in the municipal, commercial and industrial waste streams every year across Australia. approximately 60% of all waste sent to landfill is organicfood waste contains nutrients and energy value which is lost when disposed of at landfillfeeding Melbourne generates more than 900,000 tonnes of edible food waste every year.Vic Govt announced Take 2 reduce global tempt rises by 2 deg and reduce emissions

Pat spoke before about our Strategy 2020 - long-term direction and vision for the organisation and the 6 commitments that underpin this..

2 of these: We work in harmony with the environment and we make every cent count, provide us with the drivers to explore such opportunities as WTE.

With this in mind we looked at more cost effective solutions to reduce our cost and offer improved services to you our customers.

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Need to ensure we comply with Victorian Govt Competitive Neutrality Provision.Income from incoming wasteElectricity generated offsets power at adjoining STPPotential opportunities for leftover Digestate.COMMERCIAL CONSIDERATIONS

Unlike any other area of the business this is a commercial venture and as such requires a different approach to delivering the project.

A new business, separate from our regulated businessMust make stand-alone profitOrganic wastes hard to dispose of, therefore high value for those who can process them.Electricity offsets more valuable than export due to energy market structureDifferent revenue opportunities

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REWASTEReuse, Repurpose, Revive

Lets look at the facility and its processes.

Accept 140 tonnes per day of trucked commercial food wastes. 100 Tonnes per day processed.Mix of Solids & Liquids. Single source feedstock has been chosen to provide the best outcomes in terms of biogas and Digestate production.

Waste accepted into bays, visually inspected before loaded into hoppers macerated and fed into digester tanks.Bacteria in the tanks break down the waste and produces methane.

This is then turned into electricity via 2 x 500kw CHP engines.The site will be able to produce at peak capacity 1mw/h. 30% of this will be used to power the facility and the neighbouring Aurora plant. The remainder will be exported back to the grid.Electricity will power the equivalent of 1500 homes

Remainder of the waste from the process is to be reused in an environmentally friendly manner. High in nutrients and we are exploring a variety of outcomes for this product.66

ANAEROBIC DIGESTION OPPORTUNITIES

Adjoining existing Sewage Treatment Plant.Best practice noise and odour assessment and control.The site will house a waste processing building along with 2 x 3.5Megalitre digester tanks and a 4.5ml Digestate tank.Close to CBD with Freeway access.Benefits of existing large buffer zone around the facility from residential and commercial premises, close to organic waste generators and with great transport links.67

Construction well advanced and is on track to be completed by late August.68

Once completed we will commence a 12 week commissioning phase. This will be completed by late October. Facility will commence accepting waste from November up until we are operational in March 2017.69

REWASTEReuse, Repurpose, Revive

WE WANT YOUR WASTE. Fats, oils and grease (e.g. grease trap waste) Food process waste (including animal wastes) Food waste (restaurant wastes & vegetable scraps) Dairy wastes including cheese whey Animal processing wastes DAF sludge De-packaged spoilt liquids Process upset wastes

So what's in it for you our customers?

The opportunity present is not only for YVW to reduce costs and provide more sustainable outcomes, but these same opportunities exist for you in your businesses.The waste streams that we will except may be generated from the types of manufacturing that you conduct in your business.

The cost of landfill disposal is ever increasing and we will be offering competitive gate fees for these waste streams listed.

This sustainable focus on diversion from landfill will allow your businesses to provide more environmentally focused outcomes whilst offering a way to reduce costs of operation.

This is a way to extend the recycling of organic food wastes that are currently being sent to landfill.

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YearTemperature Anomaly

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tas_Aus m_output_in_spreadsheetCMIP5 data is historical + rcp45 with starting year as in obs.Data is Australia annual mean temperature 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