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Desalination Technical Analysis 2021-221.75 MB 2021/22 Desalinated Water Order Advice Technical Analysis March 2021 Melbourne Water is owned by the Victorian Government. We manage Melbourne’s water supply catchments, remove and treat most of Melbourne’s sewage, and manage rivers and creeks and major drainage systems throughout the Port Phillip and Westernport region. Table of contents Purpose ...................................................................................................................... 3 Context ....................................................................................................................... 3 Technical analysis inputs and assumptions .............................................................. 10 Technical analysis results ......................................................................................... 13 Other considerations ................................................................................................ 16 Technical outcomes .................................................................................................. 18 Conclusion ................................................................................................................ 18 2 2021/22 Desalinated Water Order Advice | Technical Analysis Purpose 1. This report provides technical analysis supporting the 2021/22 desalinated water order advice. Context Background 2. The Melbourne water supply system includes 10 major reservoirs and associated catchments that are used to harvest and store water, and the network of pipelines, pump stations, and tanks that are used to supply water to households and businesses across Melbourne and the surrounding region. The total system storage capacity of the 10 major reservoirs is 1,812 gigalitres1 (GL). The Victorian Desalination Project (VDP) is connected by an 84 kilometre underground transfer pipeline to Cardinia Reservoir in the Melbourne water supply system. The VDP is operated by AquaSure, and can supply up to 150 GL/year, or around one third of current annual water demand. Bulk Entitlements to water from the VDP are owned by the retail water businesses (City West Water, South East Water and Yarra Valley Water). 3. Melbourne’s water storages supply water to the metropolitan retail water businesses of City West Water, South East Water and Yarra Valley Water, as well as regional water businesses including Barwon Water, Western Water, Westernport Water, Gippsland Water and South Gippsland Water; the Victorian Environmental Water Holder (VEWH) on behalf of the environment; and Southern Rural Water’s irrigation customers. This means that not all water in Melbourne’s water storages is available to supply the metropolitan retail water businesses. During severe drought years such as 2006/07, storage volumes can decline by as much as 20% of total system storage capacity in order to supply these needs. Water ordered from the VDP can only meet a proportion of Melbourne’s total water demand in any year (up to a third at most), and during drought periods water security is dependent on the volume of water already in storage at the start of these periods. 4. The aim of water supply system planning and operations is to maintain a buffer of water in storage, while providing bill stability and balancing short and long term pricing impacts, to be able to supply demand while rainfall and reservoir inflows vary from year to year. A sufficient storage buffer is especially critical during severe drought periods. These periods could last for more than a decade, as experienced in the 1997-2009 Millennium Drought. Thomson Reservoir, which provides around 60% of total system storage capacity, is Melbourne’s drought reserve and was last full in November 1996, immediately prior to the Millennium Drought. 5. Since the VDP was completed in 2012, desalinated water has been ordered each financial year by the Victorian Government commencing from 2016/17. A total of approximately 278 GL of desalinated water has been delivered from 2017 up to 1 January 2021, with the remainder of 2020/21 order to be delivered by 30 June 2021. 6. Figure 1 shows historical water storage levels since 2012. 1 1 gigalitre = 1 billion litres (the equivalent of around 400 Olympic swimming pools). In recent years, Melburnians have used around 450 GL of water per year. 3 2021/22 Desalinated Water Order Advice | Technical Analysis Figure 1: Historical water storage levels 7. Figure 1 shows that: • Melbourne’s water storages were approximately 75.1% full (1,361 GL) on 1 January 2021 – 221 GL higher than the same time in the previous year. Thomson Reservoir, Melbourne’s drought reserve, held 786 GL (73.6% of its capacity) at 1 January 2021, 187 GL more than on 1 January 2020. • Storages on 1 January 2021 are at their highest since February 2015, due to higher than average rainfall and inflows into storages during 2020, higher desalinated water orders, and ongoing water efficiency and conservation programs. • As at 1 January 2021, the 278 GL of desalinated water delivered since 2017 has contributed the equivalent of 15.3% to current storage. Without this delivery, water storages would have fallen by around 47 GL/year on average over the last eight years. 8. The declining water storage volumes and water security for the greater Melbourne area, illustrated in Figure 1, have been driven by lower streamflows and increased water demand in recent years. Over the past eight years: • Average annual streamflows into Melbourne’s four major harvesting storages (Thomson, Upper Yarra, O’Shannassy and Maroondah Reservoirs) have been approximately 439 GL/year, which is only 17% higher than average annual streamflow during the 1997-2009 Millennium Drought (376 GL/year) and is around 29% lower than the pre-1997 long-term average back to 1913 (615 GL/year), when streamflow began to be reliably recorded. • Population in Melbourne supplied by the three retail water businesses has grown to a total population of approximately 5 million people. • Average daily residential water use has decreased slightly from 160 litres per person per day in 2013/14 to 157 litres per person per day in 2019/20. 4 2021/22 Desalinated Water Order Advice | Technical Analysis • Primarily due to population growth, Melbourne’s water demand has grown by approximately 7%, from 394 GL/year in 2013/14 to 422 GL/year in 2019/20. Melbourne Water System Strategy 9. In 2017, Melbourne Water published the Melbourne Water System Strategy, which presents a system view of water resource management across Melbourne and the surrounding region over the following 50 years. The Melbourne Water System Strategy includes long-term water supply outlooks for each of the four streamflow scenarios described in the Department of Environment, Land, Water, and Planning (DELWP) Guidelines for Assessing the Impact of Climate Change on Water Supplies in Victoria. These long-term water supply outlooks suggest that under climate change impacts the reliable yield of the water supply system throughout an extended drought sequence will continue to decline over time, and is currently estimated to be around 525 to 575 GL/year, including the operation of the VDP at its full capacity of 150 GL/year. Without the VDP, the reliable yield of the water supply system from the surface water catchments falls below the projected 2021/22 demands for the retail and regional water businesses of around 466 GL (see paragraph 25). This highlights the increasingly important role of the VDP in the Melbourne water supply system in meeting the ongoing water needs of greater Melbourne and in managing the impacts of changing climate conditions and a growing population. Since the timing and severity of future extended drought sequences is uncertain, it is important to ensure preparedness for such an event by planning and operating the water supply system to maintain a buffer of water in storage, subject to pricing impacts. 10. Figure 2 shows projected long-term water supply and demand trends for Melbourne that were developed when preparing the Melbourne Water System Strategy. The water supply projections in Figure 2 assume full use of the VDP, noting that there will be variability in specific years. The projections indicate that under a high demand and a high climate change scenario, water resource shortfalls could begin to emerge by 2028. Under this scenario, without significant water efficiency gains or high volumes from diverse source options, water resource shortfalls may be difficult to manage without further investment in major augmentations of the water supply system. It is therefore important to optimise the value provided by the existing water supply system, including utilisation of the VDP, before shortfalls begin to emerge. 5 2021/22 Desalinated Water Order Advice | Technical Analysis Figure 2: Long-term water supply and demand (Source: Water for a Future-Thriving Melbourne, 2017) Desalinated water order advice 11. The State of Victoria is required to place a desalinated water order with AquaSure by 1 April each year under the Project Deed between the two parties. Prior to this, the Water Interface Agreement between the Minister for Water, Melbourne Water, and the Secretary of DELWP requires Melbourne Water to provide the State of Victoria (represented by DELWP) with the following desalinated water order advice by 1 March: a) Its opinion of the volume of desalinated water required for the next financial year (i.e. 2021/22). b) Its opinion of the constrained months2 (if any) that it considers should be subject to a constrained month cap and
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