Jo Nova has posted on the flagrant waste of money involved in the new Desalination Plant to serve the people of Melbourne. Here is my comment

Remember Topher, with his excellent “Forbidden History” video? Well, his earlier videos were on the problems of water shortage in Melbourne, and the Labour Government’s attempts to solve this problem. In his “Unpopular View #3” made in 2010, he looks at a magic solution. Rather than build a 150GL desalination plant, the Victorian Government could have spent $2.6bn on a pipeline from Tasmania producing 350GL of water. Topher further argues it would have helped Tasmanians. Why? the water is currently used for Hydro. Sold as water to the Victorians, the Tasmanians would make loads more money than they get from the electricity. This in turn could
Yet, in a huge report published, the authorities ignored this win-win solution, despite having four submissions that mentioned it.
Spend 15 minutes, and check it out for yourself.

Now for a bit of beancounting.

On these projects, the more you dig, the worse it gets.

Comparing Topher’s costs of the Tasmanian pipe-line (TPL) with your Shiny Desalination Plant (SDP).

Capital Cost – TPL $2.6bn, SDP $3.5bn (+$1.0bn?)

Annual costs – TPL $0.11bn (+up to $0.04bn running/maint costs?), SDP ($1.0bn)

Increase in Victorian Water Bills – TPL <5% (my estimate), SDP 34% (Herald Sun).

But it does not end there. The Tasmanian Pipeline would have nil power to deliver 350GL of water down a 2.5m pipe, as it would be gravity fed. The SDP requires massive amounts of power. The capital cost of wind generators to meet that power (as the project is committed to do) is estimated at $1.2bn. However, to be properly carbon neutral in operation, like the TPL, the desalination plant would require an estimated investment of approximately $6.0bn (See appendix)

Even though there is already at least $3.5bn already spent, there is a serious economic case for mothballing the desalination plant – and still building the Tasmanian Pipe-Line. In finance, one should only look forward, and let bygones-be-bygones. In politics, it is different. There are five possible scenarios.

1. Mothball the desalination plant, and build the Tasmanian Pipe-line. Additional investment and damages might be $10bn, but is carbon neutral. Over 24 years it will pay around $2.5bn to Tasmania (paying for additional water infrastructure and/or protecting the wilderness), but with huge economic benefits for Victorian farmers with plentiful water supplies. Would require first voting out the Victorian Labor administration. Could recover $1m or so by suing the Labor administration of Victoria for gross negligence. (Financially not worthwhile, but would prevent others from doing similar mad schemes for a generation)
   
2. Go ahead with the desalination plant and make it properly carbon neutral. Additional investment, and damages might be $7bn, but with around $10-$24bn of running costs, this “Green and honest” policy is expensive and electoral suicide.
   
3. Go ahead with the desalination plant and pretend to carbon neutral by using actual capacity of wind farms. Additional investment, and damages might be $2.2bn, but with around $10-$24bn of running costs, this “Green and pretending to be honest” policy is expensive and would enough votes to guarantee an election would be lost.
   
4. Go ahead with the desalination plant and pretend to carbon neutral by using nameplate capacity of wind farms. Additional investment for 100MW is $240m, and damages might be $1.0bn, but with around $10-$24bn of running costs, this “proclaiming to be honest” policy is expensive, but would lose votes for throwing money away.
   
5. Go ahead with the desalination plant and forget about the green commitments. Additional investment is nil, and damages might be $1.0bn, but with around $10-$24bn of running costs, and this “ducking the issue” policy is expensive, but would lose less votes than being honest. However, the carbon tax at $10MWH, equates to $360,000 per annum if 150GL is produced. That is a trivial amount on the water bills and when it rises year-on-year, will hardly be noticed in the much bigger costs of the desalination plant.
   

So, in the interests of Melbourne and Tasmanian citizens, the best policy is to vote out the Labor Administration both nationally and locally. What will actually happen is the worst of options. Politicians will duck the issue, lumbering the Melbourne population with huge extra costs for a generation, going against national Labor policy on the environment, and failing to provide income to Tasmania, that could help Tasmanian farmers and finance the protection of the Tasmanian wilderness.

Appendix – Carbon Offsetting the Desalination Plant

The SDP will require 90-120MW to operate. Further, says Wikipedia, “additional energy will be required to pump the desalinated water from Wonthaggi to Cardinia Reservoir in Melbourne” To make the SDP carbon neutral, I will assume usage of wind power, as it is most popular type of renewable at present. To make the numbers easy I will assume 100MW is required (see below). The most popular type of renewable is wind power at present. Two such recent plants in the State of Victoria are the 192MW Waubra Wind Farm, which cost $600m, and 195MW Portland Wind Farm, projected to cost $330m. So that is $3.1m or $1.7m per megawatt plate capacity. That averages at $2.4m Wind turbines only have, however, an output of around 20% of nameplate. So to produce the average of 100MW, requires 500MW of capacity. However, if you want to be properly carbon neutral in Victoria, you need to allow for the coal-fired power stations running as back-up. True abatement levels are around 4% of nameplate. So for the SDP to be properly carbon neutral in Victoria, to offset the 100MW will require 2500MW of nameplate capacity wind farms To produce the required electricity from wind farms will mean investing $2.4m times 500 = $1.2bn. To be properly carbon neutral means investing $2.4m times 2500 = $6.0bn

Note – Power Requirements.

The figure of 100MW is calculated as follows. To produce 150GL of water assumes the plant is operating at 410 megalites per day 365 days a year. This gives the 90MW usage in normal operation. The extended capacity of 550 megalites per day is extended operation needs 120MW, which will be needed to allow some maintenance downtime. Let us assume 30 days normal downtime. So to produce 150GL in 335 days requires running the plant at 90MW for 224 days and 120MW for 91 days. Assume pumping adds around 10% to this gives and annual requirement of 36168 MWH, or a load of 99MW. Rounded is 100MW. 

Kevin Marshall