Evaluating the Feasibility of Reducing Water Use in the Power Sector: A Case Study of ERCOT

Abstract

The State of Texas faces considerable challenges meeting increasing water and power demands due to population and economic growth within the context of a hot and drought-prone climate. In its year 2012 State Water Plan, the Texas Water Development Board recommends investing more than $53 billion in traditional water supply projects to meet demands through 2060. While a significant fraction of the state's water supplies are used to produce electricity, water conservation schemes through changes in the power sector are not considered in the state's water plans. This study estimates the generation costs, water withdrawals, and water consumption from meeting Texas' 2011 electricity demands under three scenarios: minimizing (1) water withdrawals, (2) water consumption, and (3) marginal generation costs. To conduct the study, we use a dispatch model of the ERCOT power grid in a sample historical year (2011) to quantify the potential water savings and economic costs that might be incurred by optimizing power generation in Texas. Under current grid operations (minimizing marginal generation costs), Texas' year 2011 electricity demands cost $8.2 billion to generate, withdrew 4,600 billion gallons of water, and consumed 101 billion gallons of water. If electricity was produced to minimize water withdrawals (instead of minimizing generation cost), we estimate withdrawals would reduce by an order of magnitude, consumption would reduce by 30%-40%, and generation costs would increase by 25%. Minimizing for water consumption, we estimate water consumption is reduced by 40%-50%, withdrawals increase by up to 75%, and generation costs increase by 25%. Minimizing water consumption in the power sector promotes generation from once-through, open-cooled plants, which withdraw relatively more water but consume relatively less. The total water supplied by projects in the state's current water plan is around 4,600 billion gallons by 2060. We estimate the feasible reductions in water withdrawn and consumed by Texas' current power grid is around 4,000 - 6,000 billion gallons and 40-60 billion gallons, respectively, depending on the price of natural gas. While our analysis demonstrates increases in generation costs from reducing water consumption in the power sector, those costs are lower per gallon of water than many other water supply projects identified in Texas' State Water Plan. These results suggest that water planners should consider water saving opportunities in the power sector as one potentially cost-effective option.