On 2 March 2022, the Danube Water Program held a KnowNow webinar that dealt with the impact of exploding energy costs and available mitigation measures for utilities. Spoiler: When striving for efficiency, cutting down non-revenue water is a double whammy.

The Danube Water Program KnowNow webinars focus on timely topics that impact the water sector in the Danube region, and the recent steep increases in energy tariffs cause serious pain for water and wastewater utilities, with electricity costs for water production, distribution, and treatment accounting for up to 80% of their non-labor operating costs.

Exploding costs

Moderator Christian Hasenleithner, General Manager of ENERGIE AG Bohemia, started the event with two graphs showing the development of electricity and gas prices in Central Europe. Since January 1^st, both had shown an upward trend not seen at any time in the last decade, followed by an explosion to +430% and +670% at the onset of the Russian invasion in Ukraine.

“It gets harder every day to look at the screen,” he remarked, handing the stage to World Bank Senior Water Supply & Sanitation Specialist Kristoffer Welsien who is currently leading the first World Bank team that deals systematically with energy efficiency.

A way out

His message is that energy efficiency starts with tackling non-revenue water, because water lost in networks does not earn money, and the related pressure drops drive up the energy consumption of pump systems.

Therefore investments in energy efficiency have an amazingly short simple payback of between two months and five years: Modernizing pumps and pumping system operations, introducing water-loss management technologies, smart pumps and SCADA systems, and implementing efficiency-improving technologies in wastewater treatment plants pays quickly, and reductions of between 20% and 50% are there for the taking.

Enormous investments needed

There is a huge “if”, though: The investments needed to bring all water and wastewater utilities in Eastern Europe and Central Asia to the desired level of energy efficient operation add up to a volume between 3 and 11 billion USD. Raising this enormous amount of money will necessaryily involve partnerships with the private sector, and Mr. Welsien's team has run a pilot case in Uzbekistan, where a pump manufacturer entered into a 5-year ESCO contract with the Samarkand water utility.

The producer shouldered the investment of 5.4 milllion Euro for a modernization program that succeeded in reducing energy consumption by 45%, and the utility used the energy cost savings to pay the investment without stressing its budget.

“Advanced technologies are out there, promising good returns on investment”, said Kristoffer Welsien at the end of his presentation. “But we need to change our mentality from water engineering to financial engineering. That’s where the sector as a whole has a gap to cover.”

Improve at all costs

Confirming the urgency of the issue, Sokol Xhafa, Acting CEO of the Regional Water Company of Pristina, Kosovo, took the stage, reporting on the reality of everyday operations in a water network where the oldest pumps date back to 1965 and the latest updates happened around 2000 to repair war damages.

The energy bill eats up 20% of his company's total revenue, making up 50% of the non-labor operating costs. Rising energy fees make it harder and harder to cover the operating costs, let alone investing in energy-saving upgrades like installing photovoltaics and replacing aging 800 kW pumps: “That is a huge investment”, Mr. Xhafa said. “But we have to go through it.”

Bosnia and Herzegovina (BiH) faces a similar situation, according to the next speaker: Vesna Muslic, is President of the AQUASAN Network and Committee Council Chair of the Danube Learning Partnership. BiH wrestles with an outdated infrastructure, improperly designed, partly undersized and partly oversized water systems and 49% non-revenue water.

Exacerbating the situation is a widespread lack of awareness of the economic impacts of these water losses: “Most utilities lack the necessary skills to collect and process data and to independently carry out energy audits”, remarked Ms. Muslic, stressing the importance of capacity building through the D-LeaP program.

A marketplace for investments?

The ensuing Q&A session was exceptionally lively, with a large part dedicated to decision-making problems. “My impression is that everywhere in the water sector, experts in utilities are wrestling to improve things, but often fail to make an impact, because other problems are more pressing at the time, or because decision-makers are reluctant and have doubts in the merits of project proposals,” remarked one panelist. “Often private investors are not comfortable with the creditworthiness of utilities, and I also think few of us want to include the private sector at scale, but looking at the size of the problem, we don't really have a choice”, said another.

Moderator Christian Hasenleithener wrapped it up in his closing statement, saying, “We as utilities have to use all available tools to solve the energy issue. Creating a marketplace for investments in pumps, biogas, photovoltaic, hydro power, all the improvements that are locally possible, might be a future role for the Danube Water Program.”  

To learn more about the recent DWP KnowNow webinar, to review the full summary, browse the presentations and watch the recodings, please consult the link below.