SeawaterDesalforTexasThursday,September21

CanTexasbethelowestcostproducerofDesalinatedseawaterintheWorld?

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1. FirstwherearesomeofthelowestcostDesalplantsintheworld?

2. WhatmakesupthecostofaDesalplant?

Agenda

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ProjectExamples– SWRO

WateReuse,WhitePaper“SeawaterDesalinationCosts”RevisedJanuary2012

WhatMakesuptheCostofaDesalPlant?• Scope - 25MGDseawaterreverseosmosis(SWRO)desalinationplantfullturn-keywithanopenintake,DAF,mediafiltration/ultrafiltration,cartridgefiltrationaspre-treatment,building,post-treatment,storageanddischargepiping.

• Energyconsumption – 3.5kWh/m3or13.23kWh/1,000• Energycost - $0.035/kWh

1. ERCOTreported“Average“ERCOTHubAverage345kVHub”SettlementPointPriceinReal-Time($/MWh)”– 2016Avg.$23.51($0.0235/kWh)

2. ERCOTreported“Average“ERCOTHubAverage345kVHub”SettlementPointPriceinDay-AheadMarket($/MWh)”– 2016Avg.$24.56($0.02456/kWh)

• CAPEX- $181M(WDRcomparisonofarecenttenderinSaudiforcomparablesizedplant,36MGD)• OPEX - For1st year$9.5M(basedonindustryinformation)• OtherAssumptions:

• Costofleaseofland,permittingandlegalisnotincluded• Capitalrecovery1/3,power1/6($0.035/kWh),directstaff1/12,maintenance,includingchemicals,consumables1/4,misc.1/6(basedonindustryinformation).

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Summary– CostAnalysisCost

Capex(costper1,000gal)* $1.22Opex(costper1,000gal) $1.04Power(costper1,000gal) $0.46

Totals $2.72/1,000gal

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• Usingasimplemortgagecalculatortodevelopthepaybackofthecapitalcostovera30yearterm*

• Ratesused– 4.5%• TWDBSwiftFunds– 3%

HybridfinancingthroughaP3orP4

Conclusion

TexascanbethelowestcostproducerofDesalinatedSeawaterby:

• Managingandmitigatingriskbyusingexperiencedandknowledgeableteamsthathaveatrackrecordofdeveloping,permitting,designing,constructing,financingandoperatingsimilarDesalfacilities.• ThiscanbedonebyusingaP3/P4modelandhavingtheselectedteamput“skininthegame”.• Engageanownersengineeringcompanythathasexperienceinmanagingteamsinconstructingcomparablefacilities.• Don’tbuildtheTajMahaloraTrumpTower!• Don’ttakeariskontheprocesstrain.Gowitharobustprovenandpiloteddesign.• Useamixofprivateandpublicfundstofinancetheproject.

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