Thirsty Energy: Water-Smart Energy Planning in South Africa

Energy and water security are crucial to human and economic development. Significant amounts of water are needed in almost all energy generation-processes, from generating hydropower, to cooling and other purposes in thermal power plants (see Figure 1), to extracting and processing fuels. However, current energy planning often fails to account for existing and future water constraints. Water scarcity can threaten the long-term viability of energy projects and, conversely, energy processes can impact water resources and limit the water available for other users. Therefore, understanding the water–energy interrelationship is critical to building more resilient and sustainable energy systems. Not taking water insecurity into account in planning can – apart from affecting a country’s economic growth - also lead to fragility and conflict.

Figure 1. Thirsty Energy Infographic: Why does the energy sector need water?

Understanding the Water–Energy Nexus in South Africa

The water–energy challenges in South Africa are complex. They include:

1. aging infrastructure struggling to achieve an ambitious development agenda without compromising natural resources and the environment;
2. water scarcity with stressed basins and strict water-allocation regimes, with most of the country’s water already allocated;
3. pressure to move away from a coal-based economy, which currently accounts for 80% of the primary energy supply;
4. ongoing electricity crisis leading to power shortages that impact economic activity; and
5. uncertainties caused by climate change.

As a first step to understanding the water–energy nexus in South Africa, the World Bank has partnered with the Energy Research Center of the University of Cape Town (UCT) through the Thirsty Energy Initiative to incorporate water constraints into its energy-planning model and foster a more sustainable system. The development of the water-smart energy model and the initiative’s main conclusions are documented in the report “Modeling the Water–Energy Nexus: How Do Water Constraints Affect Energy Planning in South Africa?” The research incorporated a representation of water supply and infrastructure costs into the energy model SATIM to better reflect the interdependence of water and energy in South Africa and the water supply challenges facing the energy system.

The Lethaba Power Station, South Africa. Photo Credit: John Hogg / World Bank

Considering the Energy Sector’s Water Needs

The report’s most important message is that accounting for the regional vari­ability of water supply and the associated costs of water supply infrastructure can significantly impact energy planning, especially in a water-scarce country like South Africa. The case study highlights the importance of the spatial component of energy and water resources—particularly in countries where water availability varies widely from region to region—and its potential impacts on the overall cost of differ­ent energy technologies. For example, when taking water supply infrastructure costs into account, the energy model chooses dry cooling for most power plants. Thus, dry cooling makes economic sense in South Africa even if it decreases power plant’s efficiency and has higher capital costs. This has huge implications for the energy sector’s water needs. After incorporating the true cost of water supply into the energy model, the power sector’s water intensity drops to a quarter of the “no water cost” 2050 level (see Figure 2). In contrast, omitting water costs in the energy model, results in an increase of water consumption for the power sector by 77% and for the whole energy system by 58% since the model chooses technologies that are more water intense. Summarizing, if water has no cost, the model chooses to use more of it to develop energy resources. Once the costs of water are reflected in the model, technologies that are less water intense and that initially seemed more costly become more competitive. This finding is important because it shows that looking at a system as a whole (including water), results in different energy choices than if we just optimize for energy resource development alone. 

Figure 2. Results from the report “Modeling the Water–Energy Nexus: How Do Water Constraints Affect Energy Planning in South Africa?”

Planning Energy Policies in a More Integrated Manner

One contribution of the new model is its ability to represent the energy sector’s water needs by region, and to understand which type of water infrastructure will be required to supply the sector. Given that virtually all water in South Africa is already allocated, any future increased demand for water in the energy sector will require new water infrastructure. However, planning, designing, and building infrastructure require long-term engagement. So, the results from this exercise can help ensure the timely planning of investments for the delivery of water to the energy sector and avoid future financial losses.

The analysis explored several relevant policy scenarios in South Africa and found that energy sector policies can have significant implications for investments in water supply infrastructure and can lead to stranded water supply assets—and vice versa. However, by planning in a more integrated manner, decision makers can ensure the water supply’s robustness for energy and other users, thus maximizing the value of both energy and water infrastructure investments.

The report presents a proof of concept for the integration of water constraints into an energy-planning tool to support decision making. The results highlight the type of tools that can be used to examine the water–energy nexus in the context of a country’s development, and the insights that can be gained from water-smart energy planning.

This is the first case study of the Thirsty Energy Initiative. More case studies will be documented and shared, so countries facing similar challenges can address water–energy issues and enhance sustainable development.