Water for Energy: Addressing the Nexus between Electricity Generation and Water Resources

Water and electricity generation are inextricably linked—much of the nation’s power generation is dependent on water to operate while water systems require a stable supply of electricity for treatment and delivery. Since electricity generation accounts for approximately 45 percent of water withdrawals in the U.S., identifying ways to decrease water use while making sure it is available during shortages, can help create a resilient electric grid while freeing up water for other important societal uses. Population shifts, a rapidly changing electricity mix, as well as drought and other risks to freshwater availability, are critical factors affecting state planners and policymakers as they work to ensure water can sustainably meet electricity generation and other needs for decades to come. This document explores these issues and provides state lawmakers, energy officials and other stakeholders with an array of options they can consider when crafting policies to address energy-water nexus issues. 

As state policymakers work to ensure that freshwater supplies can meet the needs of a growing population and a changing electric generation mix, more are considering how policies and plans can be coordinated to reflect the interdependent nature of water and energy systems. 

The U.S. Constitution, federal and state legislation, judicial decisions and common law allocate authority over water resources between federal, tribal, state and local governments. Water management is primarily a state and local responsibility, and states take a variety of approaches regarding water rights. Although much of the authority for water rights allocation and permitting lies with states, federal laws also influence water management.

While the nexus between water and energy is clear, decision-making in the energy-water nexus landscape is fragmented and complex. The numerous state entities involved in planning the electric grid seldom coordinate their plans with those responsible for water resource planning and development. The many stakeholders, laws and policies involved in energy and water systems make crafting effective approaches challenging. The disjointed nature of energy-water nexus decision-making raises a number of concerns for state policymakers, such as how the process can be better coordinated, streamlined and integrated into state planning processes. This document seeks to help answer these questions. 

Water use for electricity generation should be considered in relation to increasing demands for water from other sectors, shifts in population and the increasing threat of drought. As the population grows, water needs for agriculture and other uses are forecast to grow as well. Temperatures are predicted to continue increasing through the end of the century and are likely to intensify the strain on freshwater resources by increasing evaporation, drought risk and air conditioning needs. Rapid population growth in the arid West, combined with extended drought, has highlighted just how important energy-water nexus issues can be. 

The concerns vary by region, shifting with water use patterns and the energy resource mix. In the West, agricultural irrigation is the largest water user while in the East, a combination of municipal, industrial and thermoelectric uses account for most withdrawals. Challenges to freshwater availability are increasing in some regions and several states have already confronted constrained water supplies, where drought has led to power plant curtailments or reductions in hydropower electricity production. 

While the rapid growth of natural gas, solar photovoltaic and wind generation—driven by state policies as well as economics—is increasing the water efficiency of our generation fleet, water-saving cooling technologies can further decrease the power sector’s water needs. 

The focused missions and compartmentalized nature of the state agencies that influence water and energy policy can produce disjointed decision-making, inefficiency and additional compliance costs. Recognizing this, states are investigating ways to integrate water and energy into comprehensive planning processes. In Arizona, the state Department of Water Resources has committed to educating water and wastewater facility owners and operators about energy- and water-saving opportunities. In New Mexico, the comprehensive state energy plan recommended including energy-water nexus issues as part of its Office of State Engineers regional water planning discussions.

Diverse state approaches have led to a range of water-conserving energy policies across the country. Cooling system requirements imposed by a number of states have decreased the volume of water withdrawn. In addition, state renewable portfolio standards, efficiency standards and a variety of federal tax incentives are among the numerous actions that have promoted the growth of water-efficient generation technologies while transforming the U.S. power sector.

This document discusses state actions and presents a variety of options that states may wish to consider when crafting policies that address energy-water nexus issues. These include: incorporating energy-water issues into state planning approaches; promoting water-efficient cooling technologies for electricity generation; exploring alternative water resources; considering electricity generation sources that use little or no water, such as solar, wind and natural gas technologies; and many others. This report is designed to help decision-makers understand the interconnections between energy and water, and explore potential solutions as states plan for their future.

Since many power plants require large amounts of water to operate, water access is a critical component of electricity generation. As the nation and the economy have grown, so too have power and water needs. Rising energy demand over the past 70 years has made electricity generation one of the largest water users. 

Growing energy demands resulted in steady increases in water withdrawals for thermoelectric plants between 1950 and 1980. In more recent decades, energy demand growth has slowed and the amount of water withdrawn for thermoelectric power has actually decreased, in part due to the transition from once-through cooling to recirculating cooling technologies since the 1980s. In the coming decades, population growth and increased energy demand—along with a changing generation mix, forecasted regional climatic changes, and competing uses for water from agriculture and other sectors—remains the major variables that are likely to affect water availability for electric generation. 

According to the U.S. Geological Survey (USGS), in 2010, thermoelectric power accounted for 45 percent of total water withdrawals while irrigation accounted for 38 percent. By 2015, thermoelectric power accounted for just 41 percent of total withdrawals—an average of 133 billion gallons per day. The last time the U.S. withdrew that little water for electricity generation was in 1965.

Figure 2 below illustrates changes in water withdrawals for different sectors. Despite population growth, total public water withdrawal and use are decreasing due to demand management, new plumbing codes, water-efficient appliances, efficiency improvement programs and pricing strategies. 

Water-Consumption vs. Withdrawal

Water use can be divided into two general categories: withdrawal and consumption. Water withdrawal is measured as the total amount of water removed from a source, even if some of it is returned in a short time to the same or nearby location. Water consumption, when referring to power plant use, is the total amount of water removed that evaporates during the cooling process and is not directly returned to the source. For electric generation, water intensity is designated as the amount of water withdrawn or consumed per MWh of electricity generated.                                                                                  The figure above demonstrates how much water energy generation withdraws relative to other sectors. While thermoelectric power accounted for around 41 percent of total daily withdrawals in 2015, its share of consumption was far lower—in the single digits. The U.S. Geological Survey reported thermoelectric consumptive use for the first time in two decades in its release of 2015 data. According to the USGS report, around 3 percent of thermoelectric withdrawals were consumptive. Despite withdrawing more water, thermoelectric power only consumed around one-twentieth the amount of water as agriculture.

The makeup of our electricity supply is shifting rapidly, with strong implications for water use. Even while electricity demand is expected to rise, the current market favors generators that are relatively less water-intensive. 

In 2015, thermoelectric power was responsible for withdrawing around 95 billion gallons of freshwater per day.

Although coal power plants, which are typically very water-intensive, provided more than half of the nation’s electricity in 2005, coal’s share of the electric mix dropped to approximately 30 percent in 2017. Much of that capacity has been replaced by more water-efficient natural gas power plants, which met 31 percent of U.S. electricity needs in 2017. Figure 4 illustrates how dramatically the nation’s generation mix has shifted in the last few decades, and these trends are expected to continue. Amid these changes, nuclear power and hydropower have remained steady, around 20 percent and 7 percent, respectively. Non-hydro renewable power—such as solar photovoltaics (PV) and wind, which use little or no water—has risen from 4 percent of generation in 2010 to nearly 8 percent in 2017.

Between 2005 and 2010, thermoelectric water withdrawals declined by around 20 percent. They declined another 18 percent between 2010 and 2015. On average, 15 gallons of water was used per megawatt-hour (MWh) of electricity generated in 2015, while 19 gallons per MWh was used in 2010.

The USGS, which tracks this data, attributes this reduction largely to the increasing number of power plants that have been built or converted to use more efficient cooling systems, as will be discussed later in this report. This trend has been furthered in recent years with the retirement of many water-intensive coal units, which have been replaced by more water-efficient natural gas combined cycle plants.

State policies that promote certain resources can affect water demand. Since natural gas combined cycle plants generate much of their power with combustion turbines, which require no cooling, they use less water. They withdraw approximately one-third as much water as nuclear or coal plants for each megawatt-hour of electricity generated, while wind and solar PV use little or no water. 

In all, six states accounted for two-thirds of the water reductions seen between 2010 and 2015—a combination of policy and market developments. Those states are California, Illinois, North Carolina, Ohio, Pennsylvania and Texas.
 

The water intensity of electric generators depends on several factors, including the type of fuel, the age of the plant and the cooling system design. While other factors affect water intensity—such as the design and operational efficiency, along with ambient air and water temperatures—fuel and cooling systems are the most influential. 

Of the widely deployed resources, nuclear and coal plants have the highest average water intensity. Biomass power, though less common, can be just as water-intensive. Natural gas combined cycle systems have greater thermal-to-electric efficiencies and generally use anywhere from half (simple cycle plants) to one-third (combined cycle plants) the amount of water that coal and nuclear plants do. Non-thermoelectric technologies, such as solar PV and wind, have water intensities that are near zero. Figure 5 below graphically compares the water intensities of these and other energy resources. 

Due to growing concerns about water intensity, along with requirements imposed by the U.S. Environmental Protection Agency (EPA) to limit withdrawal rates, there has been a recent transition to more water-efficient cooling systems. In 2010, there were 763 units with once-through cooling—systems that require the largest withdrawals of water. By 2016, there were only 463 such units, reflecting a retirement of once-through cooled units and a shift to less water-intensive generation and cooling technologies. As a result, the volume of water withdrawn declined by more than 10 percent between 2014 and 2016, while the volume of water discharged declined by more than 17 percent.

While a once-through nuclear plant may consume around 300 gallons per MWh, a closed-loop system will consume twice that while also substantially reducing withdrawals. For context, consumption is considered in the hundreds of gallons per MWh while withdrawals are considered in the tens of thousands of gallons per MWh. And while thermoelectric power may have accounted for 41 percent of total water withdrawals, it only accounted for 3 percent of total water consumption in 2015.

Dry cooling technologies have the potential to eliminate water from the cooling process almost entirely and are viewed as a potential solution to further reducing water requirements, particularly helpful for some arid regions. 

Power Plant Cooling Technologies

There are two basic types of thermoelectric cooling systems: systems that use water for cooling and those that use air. Wet systems can be subdivided into two primary categories: once-through systems and closed-loop (also known as “recirculating”) systems. 

Once-through cooling systems are the most water-intensive, withdrawing anywhere from 10 to 100 times more than other types of cooling systems. In once-through systems, the water directly absorbs heat as it flows through a condenser, and large volumes of water are essential to keeping the water temperature to a manageable level to protect aquatic organisms. However, very little of this withdrawal is consumed and more than 99 percent is returned to the source. The temperature at which the water is returned is higher than when the water was withdrawn, and federal regulations have been established and implemented within state permitting requirements to ensure the discharge temperature does not harm wildlife. Regulators have forced power plants to curtail operations on numerous occasions in recent years when discharge temperatures were too high, and at least one nuclear plant had to curtail operations because intake water temperatures were higher than its design permitted.

Since 2010, the number of once-through cooling systems operating in the U.S. has dropped by around 40 percent and the remaining plants currently account for less than a third of U.S. thermoelectric capacity. 

Closed-loop systems rely on a cooling tower or pond to recirculate water and remove excess heat. Cooling towers or ponds allow a portion of the water to evaporate, cooling the remaining water, which is recirculated back through the system. While these systems require significantly less water to be withdrawn, they consume more water than once-through systems. Closed-loop systems typically withdraw around 2 percent as much water as once-through systems but consume around 2.5 times more. In addition, closed-loop systems are more energy-intensive and can require 1 percent of a plant’s output to run them.

Closed-loop systems account for nearly two-thirds of U.S. thermoelectric capacity—around 800 units have cooling towers and over 150 have cooling ponds. Most power plants built today are designed with closed-loop systems.

Dry cooling systems withdraw and consume negligible amounts of water, relying on ambient air and large fans to condense the steam. However, the benefits come at a cost, as the systems tend to be more expensive than available wet-cooling options while reducing efficiency and output. They can be three to four times the cost of a recirculating wet cooling system and can reduce operating efficiency from 1 percent in a natural gas combined cycle plant to around 7 percent in nuclear, coal and natural gas simple cycle plants.

The reliance on ambient air is especially limiting in warmer regions. Not only is airless efficient at removing heat than water, but warm air is less efficient than cold air. This means that summer months can lead to a 10 to 15 percent efficiency drop in certain regions. However, efficiency losses can be reduced by using hybrid systems that employ towers with both wet and dry components, allowing a power plant to use dry cooling during most of the lower temperature days and wet cooling to compensate for efficiency losses as temperatures rise.

The technology has been more widely deployed over the past decade, especially in arid regions, like Texas and the western U.S., in addition to the Northeast. Close to 70 units were outfitted with dry cooling systems, while another four plants had hybrid systems in operation in 2015. 

In most cases, wet cooling systems are the least expensive and result in the highest plant output and efficiency. Developers must consider the benefits of increased water conservation attained through dry cooling systems against the added costs, loss of plant efficiency and output, as well as the long-term costs against long-term water savings. Choosing dry cooling for a 500-megawatt (MW) coal steam plant could eliminate the need for around 2.4 billion gallons of water each year, saving the plant up to $10 million each year, depending on the site.

With an annual cost of between $11 million and $18 million—when factoring in the capital costs, performance penalties and other operational costs—dry cooling systems may only make sense in certain situations. A hybrid system’s annual costs range from $9.8 million to $13.5 million, while a wet system would cost around $3.5 million each year.

While it may be a similar story for most nuclear plants, gas-fired plants present a different dynamic. Not only are the capital costs significantly less—anywhere from half to one-third the costs for a coal steam plant—but the performance penalties are less severe. Annual costs for natural gas plant dry cooling system range from $6.4 million to $9 million, and $4.9 million to $6.9 million for hybrid systems. A closed-loop wet-cooled system has annual costs of a little over $1.5 million.

Hydroelectric Power 

While operators of thermoelectric power plants can reduce water use through some of the previously discussed methods, continued access to water is vital to the nation’s hydroelectric power plants, which account for approximately 6 percent of U.S. net electricity generation. The U.S. has nearly 80 gigawatts (GW) of hydroelectric generation capacity installed, equivalent to about 7 percent of total installed generation capacity in the U.S. At least 15 states have more than 1 GW of installed hydropower capacity, and all but two states—Delaware and Mississippi—use hydropower to fulfill a portion of electricity needs.

Due to hydrology and, in part, to federal efforts, such as the construction of the Grand Coulee Dam across the Columbia River in the 1930s, the Northwest hosts the greatest hydroelectric generating capacity—accounting for more than 40 percent of the nation’s hydropower. Washington leads in hydropower capacity with more than 21 GW of capacity installed, followed by California and Oregon. In three states—Washington, Idaho and Oregon—hydropower accounts for more than 50 percent of in-state generation.

Most dams were not built for hydroelectric needs and instead serve other functions, including flood management, irrigation, recreation, navigation, fish and wildlife needs, and drinking water supply. Those that do generate electricity must meet both power and non-power needs, creating a complex interplay and requiring coordination in planning and facility design. 

Extreme weather can result in additional challenges for hydropower production. Due to increased droughts and flooding, as well as the resulting effects on streamflow, hydropower production may fluctuate significantly in the coming years. The California drought, which began in 2011, caused significant declines in hydropower generation, dropping from 20 percent of state generation before 2011, to approximately 6 percent in 2014. By contrast, increased rainfall in California during the winter of 2017 led to bountiful hydroelectric conditions. That year, California’s hydroelectric generation significantly exceeded 2016 levels, generating more than 45,000 gigawatt-hours (GWh) of electricity, compared to 31,000 GWh in 2016.
 

Population shifts, coupled with climate trends, changes in demand for other water uses, and changes in electricity consumption, are likely to affect how the nation uses water for electric generation in the coming decades. Water use for electricity generation should be considered in the context of potentially increasing demand for water from other sectors, such as agriculture.

While the U.S. has diversified its energy resources in recent years, most electricity is still generated by power plants that use water as a coolant. According to the U.S. Energy Information Administration (EIA), two-thirds of the electricity in the U.S. comes from sources that require water for cooling.

Population Growth and Electricity Demand

According to the U.S. Census Bureau, the U.S. population is expected to grow nearly 20 percent by 2050—a significant increase in the number of people who will require access to electricity and water.

In some areas, like the western U.S., where water resources are already scarce, the population is expected to increase significantly. Utah has projected large population increases for the state and lawmakers and government officials are trying to reconcile how to provide the necessary services for this region.

The water risk posed by these demographic shifts and changes in weather patterns is illustrated in Figure 6 for the year 2050. These risks are based on local precipitation, water development, susceptibility to drought, projected increases in water use, groundwater dependence and other factors. Image (b) of Figure 6 illustrates the potential effects of climate change on water supply, while image (a) does not consider climatic changes. 

The demand for electricity is also expected to increase, as data centers, desalination plants, and other energy-intensive technologies proliferate. However, demand is expected to rise slowly as efficiency increases to appliances and other electricity-using equipment, as well as the growth of distributed energy resources, are projected to partially offset growth in demand. 

Water Rights

The cost and difficulty of appropriating water can influence utility decisions regarding the type of generation, location of the plant and the choice of cooling technology, particularly for prior appropriation states, as explained below. The way states approach regulation can determine how power plants use water, and states with more restrictive surface water rights may see higher groundwater withdrawals. In western states, a higher percentage of groundwater and recycled water is used for power plant cooling systems, likely due to the relative scarcity of surface water.

States in the eastern U.S., which traditionally have had more abundant water supply, have developed water law based on riparian rights, which reflects this abundance. Western states have implemented a different approach, called prior appropriation, due to the scarcity of water resources in this region. 

• Riparian rights are common in the eastern half of the U.S. and allow persons owning property adjacent to a body of water to use as much water as they need, as long as the need is considered “reasonable” and does not interfere with another owner’s needs. Power plants in water-rich riparian areas have less difficulty finding water and tend to use lower-cost cooling approaches that withdraw more water, such as once-through cooling, which improves power generation efficiency. 
• Prior Appropriation. Most western states, as well as Texas, follow the prior appropriation doctrine, which is based on a first-come, first-serve approach rather than land ownership or being adjacent to a water source. Water rights are transferred through a variety of mechanisms and markets. The details of prior appropriation systems vary from state to state, and, as with the riparian doctrine, have been modified by state legislatures. Water rights sales and leasing markets have arisen in western states as a way to efficiently value and transfer rights. 
   

While most states base their water law on one of these two approaches, they have implemented them in different ways, with a variety of approaches and enforcement mechanisms, as demonstrated by the water governance policy map in Figure 7. Below are a few examples of how a state’s water code can affect power generation. 

Water rights availability was a major concern when Xcel Energy, a large investor-owned utility operating in eight states—Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin—planned its new Comanche Station Unit 3 near Pueblo, Colo. The Comanche Station, which is coal-fired, is the largest power plant in Colorado. The utility decided to include a more expensive water-efficient hybrid water- and air-cooled condensing system, which consumes about half as much water as traditional closed-loop cooling, rather than undertake the effort and cost of buying local farmers’ agricultural water rights. The transfer of water rights in Colorado, which follows the prior appropriation doctrine, can only take place if there will be no adverse effects on other senior or junior water rights holders, meaning that only the amount of water used historically can be transferred. While the specifics of trading markets and transfer of rights vary from state to state, the effort and cost required to obtain water rights in prior appropriation states make water reduction strategies and alternative sources more attractive. 

Depending on state legal code, water rights may be suspended in certain cases, such as extreme water shortages. The Texas Legislature passed House Bill 2694 in 2011, which changed the state’s water code to allow the temporary suspension or adjustment of water rights during a drought or other emergency. During the Texas drought in that same year, the Texas Commission on Environmental Quality chose to suspend or curtail over 1,200 water rights. They did not suspend junior water rights for power generation needs due to electric reliability concerns. California has also curtailed water rights during droughts in 1976, 1987 and 2016.

Groundwater

Groundwater accounts for less than 1 percent of the total thermoelectric power plant withdrawals. 

Just under 600 million gallons of groundwater was withdrawn each day by thermoelectric power plants in 2015, a reduction of more than 100 million gallons each day from 2010. And while most states used some amount of groundwater for thermoelectric power, only four states—Arizona, California, Florida and Nevada—withdrew more than 50 million gallons per day. 

States have varied approaches when it comes to groundwater rights—some have no limit on the amount a landowner can withdraw, regardless of environmental impacts or effects on other uses. California, for instance, traditionally has allowed landowners to drill water wells as often and as deeply as they wish and not be required to report how much they withdraw. Due to the growing problem of overdrawn and declining aquifers, the state passed the Sustainable Groundwater Management Act in 2014, which, starting in 2020, will require groundwater planning and regulate withdrawals more closely. 

Changes in climate, precipitation and evaporation are expected to affect groundwater recharge rates in certain regions. Extended droughts can drain groundwater resources, which take many years to recharge. The resulting increase in groundwater withdrawals caused by the California drought depleted aquifers and caused land subsidence, reducing aquifers’ ability to recharge to their previous levels. Furthermore, saltwater intrusion presents a growing threat to groundwater and can affect the quantity and quality of freshwater in coastal aquifers. As sea levels are projected to rise, areas including the Southeast and the Hawaiian Islands are expected to face increasing concerns with saltwater intrusion, which could create increasing desalination needs.

Regionality 

Along with water rights, regional differences in water resources and climate, as well as natural variations in weather patterns and seasonal changes, affect the water resources available. These conditions dictate which water sources can be drawn from to meet water needs. Regions of the country that are rich in freshwater supplies—including most of the nation east of the Rocky Mountains and the Pacific Northwest—are able to rely on rivers, lakes and reservoirs for much of their water needs. However, arid parts of the country rely more heavily on groundwater and treated municipal wastewater.

Power plants on the coasts may be less concerned with access to sufficient amounts of water, given that they may have easy access to the ocean for cooling purposes, although increased environmental regulations can make it difficult to site new plants. Thermoelectric facilities accounted for 97 percent of total saltwater surface withdrawals in 2015. While saltwater can be used for cooling, it can decrease cooling efficiency and requires plants to use corrosion-resistant materials. The larger cooling tower and special materials necessary for a power plant using saltwater can increase cooling tower costs by 35 percent to 50 percent.

The map in Figure 8 indicates the variation in water withdrawals for thermal electricity generation by region, demonstrating that water withdrawal for coal, natural gas and nuclear generation can vary significantly based on the region.

Although much of the country does not rely on groundwater for thermoelectric uses—it makes up just 1 percent of total thermoelectric withdrawals—a number of western states do. Groundwater accounted for around 67 percent of thermoelectric water withdrawals in Utah, 69 percent in Arizona and nearly 98 percent in Nevada in 2015. And while those figures appear high, all represent volumetric decreases from 2010. 

One reason for this may be that USGS doesn’t factor treated municipal wastewater into its total withdrawals, because this water has already been withdrawn for public supply. Factoring in treated municipal wastewater does shift the math when considering total thermoelectric withdrawals for cooling water, especially in western states. However, states are not required to report that data, and in 2015, only half of states did so—although this is a large improvement over 2010 when only Arizona and California did so.  

When factoring in this data, Arizona’s thermoelectric withdrawals were: 38 percent groundwater, 45 percent treated municipal wastewater and 17 percent surface water.61 California, Florida and Texas all use significant amounts of treated municipal wastewater as well, although this accounts for a small fraction of 1 percent of total withdrawals. However, it is now state policy in California to use municipal wastewater where feasible and to prioritize the use of freshwater for other public uses.

Over the past century, the U.S. has experienced changes in the water cycle, which have affected water supply and availability. Observed changes vary by region and include increased amounts of rain falling during heavy precipitation events, increased rain in place of snow during the winter due to warming temperatures, earlier snowmelt, reduced rainfall, increased temperatures, and increased severity and length of droughts. 

Extreme weather events, such as flooding, droughts and severe storms, are expected to increase in various regions of the country, affecting water quality and quantity. Decreased precipitation may reduce surface and groundwater supplies, while heavy rains can lead to flooding and diminished water quality due to high sediment and contaminant concentrations. Extended droughts can affect groundwater recharge rates and saltwater intrusion can affect the quantity and quality of freshwater in coastal aquifers. These extreme changes in the water supply have varying consequences for thermoelectric generation. For example, in 2007, droughts in the Southeast caused thermal generators, including Brown’s Ferry nuclear plant in Alabama, to experience shutdowns and curtailments due to water shortages that caused high discharge temperatures. In contrast, record flooding of the Mississippi River basin in 2011 caused substations in Nebraska to shut down. More examples are included in the “Water Scarcity Strains Generation in the Southeast” textbox.

Some areas in Oklahoma and Texas are projected to see longer dry spells and several states, including Arizona, California, Colorado, Nevada and Utah, are expected to experience more frequent, severe and longer-lasting droughts. Western states are likely to see reduced winter precipitation, decreased snowpack and earlier snowmelt, which are expected to affect water availability. In 2015, California saw the lowest April snowpack in the last 65 years, holding only 5 percent of the water it typically holds at that time of year. Similarly, in 2015, Washington experienced decreased snowpack and early snowmelt. In April, the U.S. Department of Agriculture’s Natural Resources Conservation Service reported that nearly 75 percent of its long-term monitoring sites in Washington had set new record-low snowpack. Like other states, California and Washington rely on mountain snowpack to store water for spring and summer use, and lower snowpack levels generally require the state to build additional reservoirs to capture and store rainwater.  

Increasing air temperatures will also affect many aspects of the energy-water equation. Higher temperatures can drive energy consumption, reduce the efficiency of power plant cooling technologies and lessen the amount of surface water available by lowering snowpack and increasing evaporation rates. 

The number of cooling degree days is expected to increase significantly, depending on the region, which is likely to increase the summer strain on the electric grid. An increase in temperatures of 1.8 degrees Fahrenheit, for example, raises electricity demand for air conditioning between 5 percent to 20 percent, potentially increasing water demand for electricity generation. The National Academy of Sciences forecasts that rising temperatures will increase average electricity demand and average peak electricity demand in nearly every region of the U.S. through the end of the century. 

Certain regions are likely to see larger temperature variations, which may have varying effects on electricity demand, and several regions have already encountered challenges related to temperature increases. The Pacific Northwest experienced record-breaking heat waves in August 2017, leading several electricity balancing authorities to report record-high summer electricity demand on their systems. Similarly, in the summer of 2013, the Northeast experienced a severe heat wave, leading to strains on the electric systems in New England, New York and across the mid-Atlantic. Due to the heat and increased air conditioning use, in July, the New York Independent System Operator (NYISO) reported record-breaking electricity demand, which reached an hourly average peak load of 33,955 MW. Texas’ grid (ERCOT) has also experienced several peak records associated with heat waves in recent years, and the state had 80 days above 100 degrees during the 2011 drought. The combination of increased air temperatures and higher air conditioning loads threatened the reliability of Texas’ electricity grid. Water resources were severely strained and the grid operator warned that extended drought conditions could force power plants offline, resulting in a loss of several thousand megawatts of generating capacity. During this drought, only one small, 24-MW power plant had to curtail production due to a lack of sufficient water. However, a handful of other plants had to import water from new sources and one coal plant was required to add additional pumps to accommodate lower reservoir levels and reach new water supplies to keep the plant running.

Hotter temperatures also affect the efficiency of thermoelectric power plants. The colder the water, the more effective the cooling system and the more efficient the plant operations. Higher ambient air temperatures raise the temperature of surface water, which means that it takes more water to remove the same amount of waste heat. 

High air temperatures can force power plants to run at reduced capacities, lowering the electricity output. A 2003 heat wave in France, which caused record-high temperatures in rivers due to warm discharged water used to cool the country’s nuclear plants, resulted in curtailed electric generation, making 4,000 megawatts of electricity unavailable—the equivalent loss of four nuclear plants. Higher summer temperatures can cause a confluence of power system challenges by increasing electricity demand for cooling while concurrently reducing output and lowering the carrying capacity of power lines. Similarly, in the late 2000s, several states in the southeast experienced droughts that affected power plant operations, as discussed in more detail in the box below.

Water Scarcity Strains Generation in the Southeast

From 2007 through 2009, the southeastern states experienced a drought that caused water shortages, threatened drinking water supply and affected power plant operations. The G.G. Allen and Riverbend coal plants in North Carolina were forced to cut output due to water scarcity while Duke Energy struggled to keep the McGuire nuclear plant water intake system submerged. The Browns Ferry nuclear plant in Alabama was forced to decrease its output to keep the temperature of discharge water within the permitted limit. Several power plants in the region rely on the lakes for water resources, including the Joseph M. Farley nuclear plant in Alabama. Due to reduced water flow past the plant, one of the plant’s two generators was taken offline for maintenance in late 2007.  It is important to note that fewer plants in the East were designed with cooling technologies to accommodate low water levels and tend to withdraw more water than those in the West, potentially making them more susceptible to drought. In Virginia, North Carolina, Michigan and Missouri, freshwater withdrawal intensity was 41 to 55 times greater compared to that in Utah, Nevada and California. Georgia, North Carolina, South Carolina and Virginia withdraw a total of 22.5 billion gallons of fresh water daily, 39 percent of which is used in thermoelectric generation.  Despite the water supply concerns that stemmed from the 2007-2009 drought, the drought event was no more severe than other recent droughts in the region, and the water crisis that occurred during those years has been attributed to population growth and increases in water demand. Continuing population growth and drier conditions are expected to decrease future freshwater availability. Furthermore, saltwater intrusion resulting from rising seas may affect the quantity and quality of freshwater in coastal aquifers, particularly in the Southeast. Several plants in the southeastern region have taken steps to address drought by developing contingency plans and modifying intake systems. During the 2007 drought, Georgia’s McIntosh Plant employed its contingency plan because of low water levels. The plant later installed a permanent auxiliary pump at a lower depth in the Savannah River, after the river’s water level during the drought nearly fell below the plant’s intake pipes. Other strategies being considered to include more efficient cooling technologies, using diverse water sources and developing more robust, long-term water conservation plans.

 

To address the growing water demand of energy generation and the decreases in freshwater availability, power plants can consider several technologies, including cooling technology retrofits and alternative water resources. These approaches and the associated trade-offs are detailed in this section. 

Cooling Technology Retrofits 

Retrofitting a once-through to a closed-loop plant can reduce its water withdrawals by 98 percent, greatly decreasing the water required for a plant to operate, even if water consumption increases. However, these retrofits can be very costly and are often pursued in order to meet regulatory requirements. The Oyster Creek nuclear plant in New Jersey decided to shut down early, in part due to the higher operating costs that it would have experienced had it complied with requirements to convert its once-through system to a closed-loop system. The economics become even more difficult when retrofitting from a once-through system to a dry cooling system because, depending on the location, it often cannot satisfy cost-benefit analyses. For this reason, full conversion to dry cooling is rarely done, and hybrid wet-dry systems are more commonly considered.

A study that focused on coal- and natural gas-fired power plants in Texas found that conversions of coal plants with once-through systems to closed-loop systems resulted in the best savings—reducing water withdrawal by 98 percent while costing around 0.12 cents for every gallon of water not withdrawn. This is due, in part, to the fact that natural gas-fired plants are already more water-efficient than coal plants. To eliminate 100 percent of cooling withdrawals with a dry cooling system for those same coal plants, it would cost around 0.67 cents per gallon on average—five times more than it cost to eliminate 98 percent of the withdrawals.

While it may not be technically feasible for some plants to convert to dry cooling, water scarcity can be a significant selling point. The developer of the Ivanpah concentrating solar power (CSP) facility in California’s Mojave Desert has eliminated 90 percent of the water consumption of the typical CSP facility using dry cooling, while two developers of small modular nuclear reactors (SMRs) have proposed systems that can use dry cooling technologies.

Energy Efficiency, Emissions and Water Efficiency 

The choice of cooling technologies involves a trade-off between water efficiency, pollutant emissions and energy efficiency. While the difference in generating efficiency is minimal between once-through and closed-loop systems, dry cooling can significantly reduce plant efficiency. This results in a higher amount of pollution generated per megawatt-hour for fossil fuel-fired power plants because less electricity is generated from burning the same amount of fuel. Not only can this increase a plant’s carbon emissions, but it also affects the power plant’s bottom line by requiring it to purchase more fuel to create the same amount of electricity. 

For the typical pulverized coal plant, carbon emissions increase or decrease 2.7 percent for every 1 percent of efficiency lost or gained, respectively.

Alternative Water Resources

With all the competing interest in water resources, some areas of the country have sought alternative water supplies. Especially in regions with less abundant water supplies, scarce freshwater resources must be allocated to supply agriculture, municipal systems, energy generation and other competing uses. Many power plant operators in these areas have reduced their reliance on freshwater by using alternative water resources. These sources include treated municipal wastewater, mine pool water, stormwater, water from oil and gas operations, and low-quality groundwater. 

Due in part to its availability and consistent supply, treated municipal wastewater is the most common alternative water resource used by power plants in the U.S. Sixty-four of the 8,080 power plants in the U.S.—just under 1 percent—use recycled water, generally in recirculating cooling systems, while research suggests that around 50 percent of the coal-fired capacity was located within 10 miles of sufficient quantities of recycled water. Recycled water is regulated to ensure quality by state and regional entities. This provides it with an advantage over other alternative water sources, which may be acidic or contain high concentrations of dissolved solids and can often require further treatment to satisfy discharge limitations. In some states, like California, recycled water used in power plants with cooling towers must undergo additional treatment, and Florida and Texas have also developed standards for its use by power plants.

Half of U.S. states reported the use of treated wastewater to USGS in 2015, while only two had reported that information five years earlier. While the use of this alternative water appears to be increasing, it still accounts for a small fraction of all water used in thermoelectric power plants—just over 200 million gallons per day, or around 0.1 percent of all water use. Only four states—Arizona, California, Florida and Texas—used over 15 million gallons per day of treated wastewater in 2015. And in only three states—Arizona, Colorado and Oklahoma—did treated wastewater account for over 10 percent of total water use by power plants. 

In both cases, Arizona was the clear leader, with an average withdrawal of nearly 70 million gallons of treated wastewater daily, accounting for 45 percent of total power plant withdrawals. Much of this is used by the Palo Verde nuclear plant.

The use of recycled water or other alternative water sources brings with it additional challenges that can cause delays and increase costs. Arizona Public Service, the state’s largest utility, commented on this issue in its most recent integrated resource plan (IRP), stating, “The use of alternative water supplies, such as effluent and alternative cooling technologies to reduce potable water usage comes with an additional cost in terms of capital investment and O&M costs, and may have an impact on unit efficiency.” 

Regardless of the challenges it poses, California has moved to make recycled water the cooling water of choice for the state’s new thermoelectric plants. In 2003, the California Energy Commission established a new policy to minimize the use of freshwater in thermoelectric power plants in order to make the system and the state more resilient to future droughts. The policy encourages new plants to either reduce freshwater use through dry cooling technologies or by sourcing recycled water. As illustrated in Figure 9, the policy has been highly successful in transitioning the state away from using freshwater resources for power plant cooling. For the plants that do rely on freshwater, a number provide offsets by funding local water conservation efforts.

Case Study: Palo Verde Nuclear Generating Station

The Palo Verde nuclear plant in Arizona is the largest power plant of any kind in the country, with three nuclear reactors and a capacity of nearly 4,000 MW. Yet it sits in the middle of the desert, without access to a major body of water. At peak operations, the plant withdraws approximately 80 million gallons of water per day—close to 850 gallons per MWh. It uses nine cooling towers and has a retention pond in its closed-loop system. While other Arizona electric generators draw heavily from its groundwater supplies, the Palo Verde plant has entered into an agreement with five cities to use treated wastewater for its cooling systems. The 40-year agreement allows the plant access up to 26 billion gallons of treated municipal wastewater each year while providing these cities with up to $1 billion in revenue.  Two power plants near Amarillo, Texas, have engaged in a similar approach. The Harrington Station coal plant and the nearby Nichols Station natural gas plant use around 15 million gallons of Amarillo wastewater per day.

 

A variety of stakeholders are involved in state-level decision-making on water and electricity. Water law and the interactions between these stakeholders guide water use within a state and region. The following section details the functions of these stakeholders and how they influence policy decisions around water use.

State Agencies

State agencies responsible for water policy decisions can include state departments of natural resources, public health, environment, consumer affairs and licensing, or state geological surveys. For those that wish to acquire water rights for energy generation, the most important agency is the one that issues water use permits and water rights. Often these decisions are made by the state’s division of water, which issues permits to water consumers, including power plants. 

Water commissions and water boards are bodies whose members are appointed by the governor and who advise in formulating water policy, conduct drought planning, and may also identify priority water rights holders in water scarcity situations. Such priority holders could include those who play a role in operating critical infrastructure, such as power plants. State water departments can also provide financial or technical assistance for stakeholders, as well as provide visibility for related causes and/or successful projects. 

Electric Utilities and Power Plant Owners

The relationship that investor-owned utilities, electric cooperatives and municipally owned utilities have with state agencies can influence how they approach water use and power generation choices. The approach that utilities take in designing their integrated resource plans, and the energy mix that results from these plans, play a significant role in determining how much of a state’s water is consumed for electricity generation. 

State Legislatures

State legislators are responsible for setting the budgets for state agency operations, setting the direction of agencies, and directing research on energy and water. They also set energy policies that influence the growth of renewable energy, natural gas, coal and energy efficiency, which can play a pivotal role in determining the water intensity of a state’s energy portfolio. In addition, the legislature creates the framework that shapes the administration, function and sale of water rights. 
Legislatures often play a central role in water planning efforts, setting guidelines and direction for state water commissions in developing water resource plans. North Dakota enacted legislation in 2017 directing the state water commission to develop a biennial comprehensive water development plan. It also designates who shall sit on the water commission and what the commission’s aims will be. Tasks of the commission include, “to provide water for the generation of electric power and for mining and manufacturing purposes.” 

Special Purpose Entities

State and locally created entities may also play a role in water-based decisions. State environmental infrastructure banks, funded through EPA’s Clean Water State Revolving Fund (CWSRF), provide low-interest loans for water infrastructure projects, so their decisions may affect water scarcity and availability of water rights for power plants. Also, water brokers, both public and private, facilitate transfers of water and/or water rights, which can affect the availability of water rights and water infrastructure development patterns. 

Grid operators can also affect the role of water availability in power plant planning. In 2013, the Electric Reliability Council of Texas, which operates most of the state’s electric grid, began requiring new generators to provide proof of water rights before being included in grid planning models. The council also requires existing plants to submit estimates on the amount of electricity they can generate during the year—the amount of available water during droughts is important to this assessment.

State Courts

The state judiciary system can affect the use of water and energy through the decisions made with regard to water rights disputes and other case decisions. For example, in 2016 the Utah Court of Appeals affirmed an earlier court ruling allowing planning for the Green River nuclear plant to continue. The decision upheld a district court’s 2013 ruling that the plant’s diversion of river water to cool the nuclear reactors would not compromise the river. 

In another case, a Texas court’s 2013 ruling found that the Texas Commission on Environmental Quality could not give cities or power generators special treatment over more “senior” water rights holders—even if the state finds it necessary to protect the “public health, safety and welfare.” During an unsuccessful appeal, the court recognized the commission’s authority to regulate water resources but stated its authority cannot exceed its explicit legislative mandate. 

Tribal Governments

Tribal governments are responsible for making energy and water decisions on tribal lands. Although tribes have inherent sovereign authority and jurisdiction over their lands, the federal government exercises a significant degree of control and jurisdiction, and tribes are still subject to federal laws and authority. Tribes may also have interests, treaty rights and other authorities that may apply beyond tribal lands. In addition, tribal rights are generally recognized as being senior rights, which adds complexity to the decision-making landscape of the energy-water nexus.

The Supreme Court determined, in Winters v. United States, that the federal government, in establishing reservation lands for tribes, also reserved access to water to fulfill the purpose of the reservation. Tribes can rely on the federal government to represent their interests, intervene in water adjudication proceedings or negotiate their water rights outside of these proceedings. Tribal governments oversee water system utilities or utility boards and play a role in ensuring that their public water systems comply with federal laws, such as the Safe Drinking Water Act and the Clean Water Act.

Public Utility Commissions

Public utility commissions (PUCs), also called public service commissions, regulate utilities, including electric and water utilities. PUCs ensure that utility operations are safe and reliable, determine rates, issue permits for constructing energy infrastructure and facilities, and more. Public utility commissioners are nominated by a state governor, confirmed by the state legislature or in some states are elected. State legislatures can assign responsibilities to PUCs, such as soliciting bids for long-term energy contracts, conducting studies or implementing renewable energy programs. 

With regulatory authority over investor-owned water and electric utilities, PUCs can shape how utilities address the energy-water nexus. For example, PUCs can require electric utilities to report annual water withdrawal and consumption data, adopt water and electricity rates that encourage conservation, facilitate partnerships between energy and water utilities, and conduct studies of alternative, less-water intensive energy sources. 

Data Warehouses

Data on energy and water generation, transportation and consumption patterns is essential to effective state policy and planning in both sectors; organizations that collect and analyze energy and water use data inform state policy decision-making. The USGS provides real-time and historical surface and groundwater quality and use data, as well as analysis of said data, for states and individual projects. State PUCs may also keep track of energy and water data through their collection of utility reports and commissioned research and studies. Electric utilities report data on electricity sales and generation mix to PUCs through rate cases and compliance reports for renewable and efficiency standards. Water utilities report water consumption statistics in their rate cases for those PUCs that regulate them. Data.gov provides aggregated data from government agencies on both energy and water as well as a host of other sectors
 

The decision-making landscape for energy and water issues is somewhat fragmented and complex, with the U.S. Constitution, federal and state legislation, judicial decisions and common law allocating authority over water resources between federal, tribal, state and local governments. Although much of the authority for water rights allocation and permitting lies with states, several federal laws influence water management, including the Clean Water Act (CWA), the Safe Drinking Water Act, the Federal Power Act and the Endangered Species Act.

Federal energy law only considers water use in a few specific instances, including the permitting of hydropower facilities under the Federal Energy Regulatory Commission (FERC) and the permitting of nuclear power plants under the Nuclear Regulatory Commission (NRC). 

While several federal laws govern aspects of water, in many cases, federal entities lack authority over water use decisions. Instead, states have most of the water allocation authority and usually have full administrative rights over the water flowing within their borders. The federal government is authorized to develop and manage waters for commercial navigation and flood control, however, and there are several federal laws that guide national water management in ways that affect energy development. These laws include the Clean Water Act, the Endangered Species Act and the Federal Power Act. 

In addition to the laws discussed below, the Clean Air Act also has a significant impact on electricity generation and water use for generation. For example, the EPA’s Mercury and Air Toxics Standards (MATS) finalized standards to reduce air pollution from coal and oil-fired power plants under sections 111 and 112 of the 1990 Clean Air Act Amendments. Issuing MATS caused a number of older coal-fired plants to shut down and be replaced by generation plants with a lower water-use intensity. 

The Clean Water Act

Power plants that discharge water into rivers, lakes or streams during once-through cooling cycles, where less than 3 percent of water is consumed, are subject to CWA, which governs the temperature of discharged water. The act establishes the basic structure for regulating discharges of pollutants into the waters of the U.S. and regulating quality standards for surface water (rivers, lakes, streams, ponds and tributaries). It determines ambient water quality standards, provides financial support for municipal wastewater treatment facilities and manages polluted waters.

The term “waters of the U.S.” currently means any navigable waterways or interstate waters. The EPA has refined this definition to account for recent decisions by the U.S. Supreme Court as to what constitutes “waters of the U.S.”, but this definition is on hold while facing challenges in the courts. 

The EPA publishes guidelines around wastewater and runs voluntary programs like Energy Star and WaterSense, which all affect state energy and water use. These policies are discussed in more detail in the Federal Law section below. 

National Pollutant Discharge Elimination System Permitting 

The National Pollutant Discharge Elimination System (NPDES) permitting system enforces effluent discharge and temperature limits for thermoelectric plants. “Point” sources of pollution—such as pipes, facilities or man-made ditches—must receive a permit before releasing pollution into surface water. The NPDES permit defines the amount and type of pollutants that may be discharged with the goal of maintaining water quality at a level that is safe for humans and wildlife.

Permits are usually issued by the state where the facility is located. Under the law, EPA has authorized 46 states to administer the NPDES permitting program through state agencies. In reference to power plant NPDES permits, four states do not currently have EPA-authorized programs: Idaho, Massachusetts, New Hampshire and New Mexico.

Cooling Water Intake Rule

In 2014, the EPA issued a final rule under the CWA which established requirements for existing power plants. The rule addresses water withdrawals and the intake systems employed by many power plants to minimize the potentially harmful effects of cooling water withdrawals on the aquatic environment—in particular, the harmful effects from once-through cooling systems. These systems remove billions of aquatic organisms from U.S. waters every year, according to the rule, which requires power plants with once-through systems to deploy more protective cooling water intake technologies. 

Existing power plants are required to reduce the amount of aquatic life affected by their systems through a variety of methods and to conduct studies to help determine site-specific controls. New units that add capacity to existing facilities are required to include technologies that reduce potential impacts to a level that is equal to closed-loop systems. 

Earlier versions of the rule were issued in 2002 and 2004, which is around the time that recirculating systems saw a dramatic spike in deployment. Several power plants initiated retrofits to follow the regulations, transitioning from once-through systems to recirculating systems. The regulation has made recirculating systems the preferred technology for new power plants going forward.

The final 2014 rule applied to around 544 power plants that each withdraw at least 2 million gallons per day for cooling purposes.

The retrofits required under the rule can be expensive, however. A project to install cooling towers at the Brayton Point Power Station, a four-unit coal plant in Massachusetts, cost more than $600 million. For the Oyster Creek nuclear plant in New Jersey, cost estimates were higher and the plant’s owner, Exelon Corp., decided to close the plant in part due to the estimated compliance costs.

The Endangered Species Act

The Endangered Species Act (ESA) was enacted in 1973 to ensure the conservation of threatened and endangered plants and animals and the habitats in which they are found. Federal agencies are required to consult with the U.S. Fish and Wildlife Service (FWS) and the U.S. National Oceanic and Atmospheric Administration Fisheries Service to ensure that any actions they authorize, fund or carry out are not likely to jeopardize the existence of any ESA-listed species. Additionally, the act makes it illegal to take—defined as harming, wounding or harassing—an endangered species of fish or wildlife. With regard to thermoelectric generation, the ESA may apply to the permitting process for certain facilities. For example, the issuance and maintenance of a federal license for nuclear-generating facilities by the Nuclear Regulatory Commission, such as a construction permit or operating license, is subject to the provisions of the ESA. The provisions of the new CWA 316(b) regulations also require an ESA consult with the services.

The Federal Power Act 

First enacted in 1920, the Federal Power Act (FPA) established regulations for non-federal hydropower projects to support the comprehensive development of rivers for energy generation while preserving them for water supply, flood control, recreation and fish and wildlife. Subsequent amendments added requirements that incorporated fish and wildlife concerns into licensing, relicensing and exemption procedures. The act also granted FERC legal authority to regulate hydroelectric dam licensing and safety. 

The Federal Power Act also includes emergency authority—in section 202(c)—that allows the energy secretary to order temporary connections of facilities, and generation, delivery, interchange or transmission of electricity as the Secretary determines will best meet the emergency and serve the public interest. Emergency conditions include U.S. engagement in wars and sudden increases in electricity demand and electricity shortages, among other conditions. Most notably, water shortages for generating facilities are also considered an emergency under the FPA. Since December 2000, the U.S. Department of Energy has used emergency authority eight times; however, none of these usages was attributed to water shortages for electricity generation.

Renewable Energy Tax Credits

In contrast to some of the other federal laws that regulate various aspects of water use by the electricity sector, the federal tax credits for wind and solar generation have a more indirect effect on water use. The federal government offers two significant tax credits that provide incentives for increasing low-water consumption wind and solar power resources: the Investment Tax Credit (ITC) and the Renewable Electricity Production Tax Credit (PTC). These tax incentives have been instrumental to the growth of renewable energy technologies, with solar installations growing more than 1,600 percent since the ITC’s implementation in 2006. The PTC has helped wind experience a 140 percent growth rate over the past five years.

Reports 

The federal government has taken several actions related to the energy-water nexus, including producing reports and creating incentives for renewable energy. Congress has also introduced several bills with provisions related to the energy-water nexus; however, no substantial legislation has been enacted as of April 2019.

Several government agencies have completed studies or produced reports on the energy-water nexus, including the U.S. Government Accountability Office, the Congressional Research Service and the U.S. Department of Energy (DOE). Other agencies, such as the EPA, provide resources on this topic. 

The U.S. Government Accountability Office has issued six reports discussing the energy-water nexus since 2009, covering the need for improved federal water use data, key energy-water nexus issues that Congress and federal agencies should consider when developing and implementing national policies for energy and water resources, and other issues.

The Congressional Research Service, several national laboratories and DOE have also issued reports, which are listed in the Resources section. Among them is DOE’s 2014 energy-water nexus report that provides background on the topic, identifies current trends and summarizes available energy-water data, data gaps and energy-water nexus policies.
 

State governments have an assortment of options available to address energy-water nexus issues, including commissioning in-depth studies to develop a greater understanding of state needs and appropriate management actions. These options are considered against the backdrop of federal energy and water policy, which can have a major influence on state options and actions. 

Commission Research and Form Working Groups

Often, the state agencies that oversee energy issues do not work in coordination with state agencies that oversee water use, resulting in lack of information on energy-water nexus issues in general. However, some states are working to increase coordination and develop a better knowledge base as demonstrated by the case studies that follow. 

Arizona

Former Arizona Governor Jan Brewer established a Blue-Ribbon Panel on Water Sustainability in 2009. The panel was formed to improve the long-term sustainability of Arizona’s water supplies and was tasked with identifying obstacles to increasing water sustainability and potential strategies to overcome these obstacles. The panel is divided into five working groups, one of which is the Conservation/Recycling/Efficiency/Energy Nexus group. This group was directed to make recommendations on statutes, rules, policies and strategies for reducing the water cost of energy and the energy cost of water. 

A primary goal identified by the panel was to reduce the amount of water required by Arizona power generators to provide energy. In November 2010, the panel released its final report, which included 18 sets of recommendations to improve water sustainability in Arizona, several of which were designed to address the energy-water nexus. These recommendations encompassed five broad categories—education and outreach, standards, information development and research agenda, regulatory improvements and incentives—and included improvements to the state’s existing “toolbox” of water management, education and research capabilities. 

Of the 18 recommendations made by the panel, roughly half made some degree of progress toward completion by December 2016. These include several recommendations related to matching alternative water supplies to appropriate end uses, developing comprehensive reclaimed water infrastructure standards, facilitating indirect potable water reuse, and encouraging the use of alternative water supplies. The remaining half of the recommendations, including those to develop incentives for using alternative water supplies, had not been started or had an unknown status.

Governor Doug Ducey created a Water Augmentation Council in 2015. The Council includes energy and water state agencies, agricultural stakeholders and municipal utilities. It was originally tasked with investigating opportunities to increase water conservation and reduce the energy-intensive impact of water treatment. Upon request, the Water Augmentation Council provides direction to the director of the Arizona Department of Water Resources (ADWR) on any issues determined to affect water management. The council focuses on implementing water conservation measures in all water use sectors and makes recommendations to the ADWR on water conservation. 

The Arizona Corporation Commission (ACC), known as a public utility commission in other states, has also conducted research and adopted policy related to the energy-water nexus. In May 2017, ACC Commissioner Andy Tobin requested an investigation into how to improve ACC’s water loss policy. The ACC held two workshops on the topic of water conservation and Tobin drafted a policy statement to address the need for an updated and more collaborative approach to water loss methodology by the commission. The statement includes a section related to addressing the energy-water nexus. The ACC adopted the policy on Sept. 12, 2017. A subsequent decision was issued on Sept. 19, 2017, that directed ACC staff to establish the Water Reform Working Group (WRWG). The group was charged with overseeing the ACC’s efforts to coordinate data collection and reporting processes. It also required ACC staff to file a progress report on the establishment, roster and meeting schedule of the WRWG within 60 days of the order’s effective date.
 

California

Former Governor Arnold Schwarzenegger addressed the energy-water nexus issue in 2005 through Executive Order S-3-05, creating a Climate Action Team (CAT) to coordinate statewide greenhouse gas emission reduction efforts and the state’s Climate Adaption Strategy. The original mandate for the team was to develop proposed measures to meet the emission reduction targets set forth in the executive order. Since then, CAT has expanded to encompass 11 working groups that coordinate policies among the state agencies and departments involved. 

One of these working groups is the Water-Energy Team (WET-CAT), which works to identify opportunities for large energy and water efficiencies. The team, which includes members from 11 state agencies, has overarching goals to achieve large water and energy savings and efficiencies, reduce greenhouse gas emissions, and reduce or eliminate risks from changing hydrological and ocean conditions. WET-CAT integrates regulation with state and federal agency support for planning, research, data analysis, technical tools and funding to leverage regional projects and programs. The team also works to strengthen interagency coordination through information sharing to inform actions that can reduce the energy intensity of water use. 

Texas

After the 2011 drought, the Electric Reliability Council of Texas (ERCOT) performed a study, using a legally required biennial study of transmission and generation capacity, to research how the electric system responded under extreme drought.135 The study concluded that “most generators were prepared for or had contingency plans for a single-year severe drought such as experienced in 2011. The more complex issue for generators in Texas appears to be a multi-year drought when water storage is further diminished.” 

Include Water in Integrated Resource Plans

On a regular basis, electric utilities in most states must submit integrated resource plans (IRPs) to state regulators, which outline how they plan to meet forecasted annual peak demand with supply- or demand-side resources. The basic components of an IRP—including what data needs to be provided, how often they need to be prepared, and what timeframe they need to cover—are usually outlined in state law or regulation, as is the requirement that the state public utilities commission review and approve the plan.

The rules and requirements of IRPs often reflect the concerns of policymakers, and they have developed and changed substantially over time to touch on issues like fuel prices and price volatility, greenhouse gas emissions and market conditions. “Water, in particular, is a resource that has not been given much consideration in utility integrated resource planning in past decades,” notes a report from the Regulatory Assistance Project. However, that has started to change.

Arizona

Every two years, the ACC requires utilities to submit IRPs that cover the next 15 years and can require utilities to provide information on past practices and future plans. The ACC has constitutional and statutory authority to engage in rulemaking, including rules that pertain to IRP requirements. In 2010, the ACC revised its IRP requirements touching on water use in a way it previously had not, requiring that IRPs include data on air emissions and water consumption. As a result, Arizona Public Service (APS), the state’s largest utility, now tracks water costs and usage as a metric for consideration in its IRPs. While the ACC does not prohibit water-intensive generation, it does require utilities to consider alternatives.

In its most recent IRP, APS’s plan for reducing water consumption includes: considering alternative cooling technologies and alternative water resources for new power plants; improving the efficiency of water use; retiring existing power plants that consume large amounts of water; reducing the amount of non-renewable groundwater consumed; and increasing the utility’s reliance on energy efficiency and renewable energy resources. APS states that the goal is to reduce groundwater’s share of total water usage from 13 percent to 6.5 percent between 2016 and 2026. The utility expects the portion of total water usage supplied by reclaimed water to increase by 3 percentage points in the next 10 years. In addition, while the utility anticipates significant growth in electricity demand due to population increases, the combination of renewable generation and energy efficiency will help reduce the utility’s “water intensity,” which it measures based on gallons per MWh. By 2032, the utility expects to reduce its water intensity from 444 gallons per MWh to 314 gallons per MWh. The greatest reductions in water consumption will come from transitioning from wet-cooling to dry-cooling systems.

Another of Arizona’s largest utilities, the Salt River Project (SRP), also considers water in its electric planning. SRP provides water and electricity to Phoenix and its surrounding areas. When evaluating its resource portfolios, SRP includes water use as a key planning metric. In its IRP, the utility prioritizes resource portfolios that reduce water intensity and states that changes to SRP’s current generation resource mix are required to lower the utility’s water intensity. During 2016, SRP reported avoiding using more than 1.9 billion gallons of water as a result of sustainable resources—including energy efficiency, renewables and hydropower—in its portfolio. This year, 3 percent of the utility’s energy generation came from renewable energy sources and 2 percent from hydropower.

Colorado

Other water-constrained states have also started to implement water-inclusive IRPs. In Colorado, the Public Utilities Commission made changes to IRP requirements in 2010 after the state legislature passed HB 1365, known as the Clean Air-Clean Jobs Act. The legislation required utilities to file an emissions-reduction plan that would reduce emissions from coal-fired power plants, either through emissions control technologies, conversion to natural gas or retirement. Due to the changes in statute, the PUC modified its IRP process to include annual water withdrawal and consumption data for new generators, along with the overall water intensity of each generating system. 

In addition, many municipal water utilities engage in a similar process for water resource planning. Integrated water resource plans (IWRPs) evaluate the issue from another perspective—largely ensuring municipal access to quality water supplies. Requirements for statewide or regional plans that integrate the water and energy components into the same process could be considered.

Reduce Water Use Through Renewable Energy and Efficiency Mandates

Twenty-nine states, the District of Columbia and three territories have adopted renewable portfolio standards, which require utilities to sell a specified percentage or amount of renewable electricity. An additional eight states and one territory have set renewable energy goals. Since most solar and wind installations use very small amounts of water to generate electricity, state actions that provide incentives for, or mandate, the adoption of renewable resources, in effect mandate the adoption of low-water energy generation. The Lawrence Berkeley National Lab (LBNL) and the National Renewable Energy Laboratory (NREL) reported that renewable generation used to meet 2013 renewable portfolio standard compliance obligations reduced national water withdrawals by approximately 830 billion gallons and consumption by an estimated 27 billion gallons. These reductions are equivalent to approximately 2 percent of total 2013 power-sector water withdrawals and consumption. Wind power capacity has increased by more than a third while solar has tripled since that time, making current water savings much higher. 

 

California offers an example of how RPS policies can decrease water use for energy generation. California’s RPS policy requires that 60 percent of energy must come from renewable sources, such as wind and solar, by 2030. This mandate has led to decreases in water consumption, and wind energy alone reduced the state’s water withdrawals for energy production by 2.5 billion gallons in 2014.

Energy efficiency policies can also conserve water by reducing power plant fuel consumption and cooling needs while helping states avoid the construction of costly new generation resources that could draw from a state’s water supply. Twenty-seven states have implemented energy efficiency resource standards (EERS), which require a percentage of energy demand to be met with efficiency.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

While reducing water intensity of energy generation is a byproduct, and not the specific goal of these policies, some states do consider their water-saving benefits. A Colorado statute to promote utility-scale solar mentions “minimizing water use for electric generation” as a benefit of the law. The statute instructs the PUC to consider whether the acquisition of utility-scale solar resources is in the public interest and to consider whether solar projects “could reduce the consumption of water for electric generation.”

Colorado’s Water Plan highlights the smaller quantity of water required by renewable energy when compared to thermal generation as well as the policy goal outlined in the state’s Renewable Electricity Standard to minimize water use for electricity generation.

In several western states, including Arizona, Colorado and Texas, river authorities are given powers to restrict and manage access to water in certain cases. In Texas, the Legislature granted river authorities the power to initiate or participate in programs intended to encourage more efficient use of water and electricity or reduce overall use of water and electricity.

In addition to these policies, states can encourage deployment of less water-intensive renewable energy sources through financial incentives, including tax credits and direct cash incentives. Tax incentives are the most common type of financial incentive and include personal and corporate investment tax incentives, property tax incentives and sales tax incentives. Personal and corporate investment tax incentives provide a direct reduction in a taxpayer’s liability for a portion of the cost of purchasing and installing a renewable energy system. More than a dozen states offer personal and/or corporate investment tax credits. States have created other incentives, including grants, performance-based standards and feed-in tariffs.

Establish Cooling System Requirements

Other policy options include power plant cooling system requirements. In California, the state has embarked on a “Once-Through Cooling Phase-Out” in response to EPA’s cooling water intake ruling under the Clean Water Act. The policy authorized the state’s water boards—including the State Water Resources Control Board and Regional Water Quality Control Boards—to regulate power plants with once-through cooling systems. The approach offered two compliance options: One, a power plant could reduce its water withdrawals to a level consistent with closed-loop systems—which would require the power plant to retrofit its cooling system to be closed-loop or dry cooled. Or two, it could reduce fish impingement mortality and entrapment by 90 percent using operational or structural controls. While the regulation’s intended focus was primarily temperature and entrapment of aquatic life, it also addressed water quantity issues by mandating cooling systems that significantly reduce water withdrawals. 

When it was approved in 2010, this policy applied to 49 generation units at 19 power plants, which were required to submit their compliance plans in 2011. Based on the submitted plans, around two-thirds of those units will be retired by 2020 and 16 will continue long-term operations. Half of those units will be replaced with new units using dry cooling technologies, while another six will be repowered. Two units will achieve flow-reduction and impingement compliance through operational controls and the installation of technological controls. In all, water withdrawals from the fleet will have been cut in half by around 2020. While cooling system requirements may have played a role in some plant decisions to shut down, operators faced other pressures—including low-cost natural gas and renewable energy as well as other environmental regulations. 

In addition, a 2003 California Energy Commission policy established significant restrictions on the use of freshwater for thermoelectric power plant cooling. The policy directs new power plant developers to propose plants that either use dry cooling technologies or rely on recycled wastewater for cooling. The California Energy Commission is working with power plant developers to make these alternatives work. 

Since 2004, the state has seen close to 9,000 MW of combined-cycle projects built, with nearly 85 percent of that operating capacity relying on dry cooling systems or recycled water, significantly reducing freshwater demand. Combined with the once-through cooling system phase-out, these policies have significantly reduced the amount of freshwater used in California’s electricity sector.

Include Energy in State Water Planning

State water planning efforts involve a collaborative planning process to develop short- and long-range plans for managing water resources and ensuring adequate supplies. Plans vary depending on the state’s endowment of water, experiences with shortages, and the ways in which water is used in a state. Some may emphasize conservation and management, while others focus on water rights and specific uses, such as agriculture or hydropower. Some, such as New Mexico’s, concentrate on drought management, while others, such as Utah’s, focus on water resource development. Many water plans consider federal requirements of the Endangered Species Act and Wild and Scenic Rivers Act, including stream flow and habitat preservation.

Kentucky

Kentucky’s water plan recommends assessing drought risks and developing a process to assess vulnerabilities related to water needs for electricity production. The plan also recommends establishing the Kentucky Drought Mitigation Team, which includes a representative from the Kentucky Department of Energy, to create a coordinated approach for drought response. 

Colorado 

In addition to considering water use in integrated resource planning, Colorado also incorporates energy into state water planning. Former Governor John Hickenlooper directed the Colorado Water Conservation Board (CWCB) to develop Colorado’s Water Plan in 2013. The plan was created to be a road map to guide the state to a more collaborative and cooperative path to manage its water. In creating the plan, the CWCB was directed to work with other agencies and stakeholders, including the Colorado Energy Office. The resulting 2016 Colorado Water Plan was completed in November 2015 and included sections discussing the energy-water nexus and water use in energy production. Additionally, the Colorado Climate Plan discusses the energy-water nexus and summarizes actions the state is taking to address it, such as the state’s Renewable Energy Standard and its potential to reduce water use for electricity generation, and conservation measures that water utilities are implementing.

Connecticut

The final draft of Connecticut’s State Water Plan, released in early 2018, incorporates several energy considerations. The plan is designed to help planners, regulators and lawmakers make informed decisions about managing the state’s water resources in a consistent manner. It encompasses scientific information, policy recommendations and forward-looking steps that create a framework for future water management laws and regulations. The plan includes several provisions related to the energy-water nexus, including a requirement to establish guidelines or incentives for water conservation that include energy efficiency. The plan recommends several near-term steps to take toward its implementation, one of which is to consider topics including the energy-water nexus and how to harmonize energy priorities with stewardship of the state’s water resources. The proposed future water management options discussed in the plan include using non-potable water and flood control impoundments for power generation facilities, among other uses. The plan also recommends incorporating existing local and state plans, such as energy plans, into water management.

Texas 

Texas, which has a restructured, competitive energy market, does not tend to employ centralized energy planning and has left decisions about water use for energy generation up to the energy market. Nonetheless, the state is trending toward more water efficient generation approaches due to the growth of natural gas and renewables. Also, since generators need to acquire and pay for water rights or purchase municipal water, they are choosing low water generation technologies since they are subject to more flexible siting requirements. Due to the competitive prices for wind, and now solar power, Texas has seen rapid expansion of these generation sources, which do not require water to operate. 

The state has also seen rapid growth in natural gas combined cycle units, which have much lower water requirements than the coal or nuclear plants they are displacing. Texas has also been adding water-efficient fast-response natural gas reciprocating engines and energy storage to help integrate variable wind and solar generation. Since this electric generation technology uses almost no water, it can be located where the plant is optimized for location and need, rather than based on where water resources are located.  

Create Environmental Permitting Requirements for Power Plants 

States may address water protection and conservation by requiring consideration or analysis of the facility’s potential effects on the environment, including water sources, habitats and wildlife. Most states consider environmental impacts in the permitting or approval process for generation facilities. For example, in South Dakota, the state’s Public Utilities Commission is authorized to prepare or require the preparation of an environmental impact statement prior to issuing a permit.

Several states require permitting authorities to consider the effects of the proposed facility on water resources and aquatic species and their habitats. New Hampshire requires certain facilities to receive a Certificate of Site and Facility from the Site Evaluation Committee. Approval is contingent on permit applicants demonstrating that facilities will comply with state environmental, fish and wildlife standards, among others. The committee is required to review the proposed facility’s impacts on fisheries, wildlife habitats and endangered species.

Similarly, in Arizona, the state permitting authority is required to review environmental concerns when certifying proposed power plants. The authority has denied at least one power plant its Certificate of Environmental Compatibility due to the potential for groundwater depletion and the loss of habitat for an endangered species.

Washington requires generation facilities with a capacity of 350 MW or greater to obtain approval from the Washington Energy Facility Site Evaluation Council. Before recommending approval of the Site Certification Agreement to the governor, the council must determine that constructing and operating the facility will have minimal adverse effects on the environment and ecology of the state waters and aquatic life.

New Mexico generating plants with a capacity of 300 MW or larger are required to obtain a siting permit and the state’s Public Regulation Committee requires these facilities to obtain several other permits before it issues a siting permit. Power plants that impound water and/or discharge to groundwater must also apply for a groundwater discharge permit. 
 

As states begin to address energy-water nexus issues, they confront a complex task due to the many stakeholders involved in the water and energy sectors, the lack of coordinated planning between these sectors, and the variety of options that can be considered when approaching this challenge. The purpose of this report is to raise awareness and inspire discussion about where states stand when it comes to addressing the link between energy and water, ultimately promoting efforts to improve planning around these interconnections. 

The diversity of state approaches to energy and water management means there is no single policy or suite of policies that will work across all states. Regional differences in water and energy resource availability, state energy policy and state water policy all play significant roles in determining which path a state might wish to take when addressing energy-water nexus issues. 

One starting point that several states have considered is creating a council or working group to bring together stakeholders and experts that can study the issue and contemplate policies and strategies that can address the energy-water nexus challenge. A working group can help chart a path for increasing communication, collaboration and coordination across state government and between agencies and stakeholders. Incorporating water considerations into integrated resource plans and energy considerations into water planning is another broad approach among states that have taken action. For these efforts to be successful and actionable, resources must be set aside, and tangible outcomes and next steps likely need to be set in the directive or legislation. 

Actions taken in some states have reduced the water intensity of energy generation and increased coordination between water and energy stakeholders. These include: incorporating water into integrated resource plans; reducing water use through state goals and requirements for renewable energy and efficiency; establishing water-efficient cooling system requirements; including energy in state water plans; and addressing water quality in environmental permitting for power plants.

Due to the focused missions and compartmentalized nature of the state agencies that influence water and energy policy, efforts to address energy-water nexus issues can experience disjointed decision-making, inefficiency and additional compliance costs. In recognition of this, states are investigating ways to integrate water considerations into more comprehensive planning processes. In Arizona, the state energy office has committed to educate water and wastewater facility owners and operators about energy and water savings opportunities. In New Mexico’s comprehensive state energy plan, the state recommended including energy-water nexus issues as part of its Office of State Engineers’ regional water planning discussions.

Although the complexity of the challenge is significant, ensuring coordinated planning around energy generation and water resources is of growing importance, particularly in regions that are experiencing population growth and freshwater resource challenges. This report will serve as a resource for policymakers who wish to take the first steps toward confronting their state’s energy and water interdependency challenges.

• Closed-loop cooling – A method of thermoelectric cooling in which a cooling tower or pond is used to recirculate water and remove excess heat. Cooling towers or ponds allow a portion of the water to evaporate, cooling the remaining water, which is then recirculated back through the system. While these systems require significantly less water to be withdrawn, they consume more water than once-through systems.
• Dry cooling – A method of thermoelectric cooling which relies on ambient air and large fans to condense steam. These systems withdraw and consume negligible amounts of water, but tend to be more expensive than available wet-cooling options while reducing efficiency and output.
• Gigawatt-hour (GWh) – The continuous delivery of one gigawatt of electricity (equal to 1,000 megawatts) over the course of one hour.
• Groundwater – Water existing underneath the Earth’s surface in aquifers and other underground reservoirs.
• Integrated resource plan – A plan designed by an electric utility that outlines how it plans to meet forecasted annual peak demand with supply- or demand-side resources.
• Megawatt-hour (MWh) – The continuous delivery of one megawatt of electricity (equal to 1,000 kilowatts) over the course of one hour. 
• Once-through cooling – A method of thermoelectric cooling in which water directly absorbs heat as it flows through a condenser, requiring large volumes of water to be continuously pumped through the system prior to being discharged at or near the source of withdrawal.
• Pumped storage – A system of energy storage in which power is used to pump water to a higher-elevation reservoir or water source when electricity demand is low. Electric power is recovered when water is allowed to flow through a hydro-turbine down to a lower-elevation reservoir or water body when electricity demand is high. 
• Renewable portfolio standard (RPS) – Also known as a Renewable Energy Standard (RES), requires utility companies and other electricity suppliers to source a certain amount of energy they sell from designated renewable and clean energy sources.
• Surface water – Fresh, brackish or salt water on the Earth’s surface in the form of lakes, rivers, ponds, streams, oceans and other water bodies as either water sources or receiving bodies for effluents. This can include all forms of both potable and nonpotable waters, including drinking water, recycled water and wastewater.
• Thermoelectric generation – Electric power generated from a heat source, such as burning fossil fuels or through nuclear fission, which produces steam that drives turbines. These generators also require significant amounts of water in their cooling systems, which maintain power plant equipment at manageable temperatures.
• Treated municipal wastewater – Municipal wastewater, or effluent, that undergoes treatment prior to beneficial reuse, such as for power plant cooling operations. This is sometimes known as recycled or reclaimed wastewater.
• Water consumption – Measured as the total amount of water removed from a source that is not directly returned to the source. In terms of power plants, consumed water is the water withdrawn from a source that is lost to evaporation.
• Water intensity – How much water is required to operate certain electric generation resources in relation to the amount of electricity generated.
• Water withdrawals – Measured as the total amount of water removed from a source, even if most of it is returned in a short time to the same or nearby location.

 

Government Accountability Office Reports

• “Energy-Water Nexus: Improvements of Federal Water Use Data Would Increase Understanding of Trends in Power Plant Water Use,” October 16, 2009. 
• “Energy-Water Nexus: Many Uncertainties Remain about National and Regional Effects of Increased Biofuel Production on Water Resources,” November 30, 2009. 
•  “Energy-Water Nexus: A Better and Coordinated Understanding of Water Resources Could Help Mitigate the Impacts of Potential Oil Shale Development,” October 29, 2010.  
•  “Energy-Water Nexus: Amount of Energy Needed to Supply, Use, and Treat Water is Location-Specific and Can be Reduced by Certain Technologies and Approaches,” March 23, 2011. 
•  “Energy-Water Nexus: Information on the Quantity, Quality, and Management of Water Produced during Oil and Gas Production,” January 9, 2012. 
• “Energy-Water Nexus: Coordinated Federal Approach Needed to Better Manage Energy and Water Tradeoffs,” September 2012. 

Congressional Research Service Reports

•  “Energy-Water Nexus: The Energy Sector’s Water Use,” August 30, 2013. 
•  “Energy-Water Nexus: The Water Sector’s Energy Use,” January 23, 2017. 

Department of Energy and National Lab Reports

• U.S. Department of Energy, “The Energy-water Nexus: Challenges and Opportunities,” July 2014. 

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