Building in Water Assurance
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There is a significant movement towards recovery and reuse of waste water fuelled by growing environmental concerns coupled with stronger legislation and increasing scarce water supplies. Recycle and recovery are being seen as a way to achieve environmental norms while at the same time to supplement fresh water sources that are becoming scarce.
Unfortunately most projects view waste management as an end-of-pipe solution and do not look at reduction in effluent, reduction in water usage, reduction in operating costs, process improvements and sustainability. Significant advantages accrue with a holistic approach that controls waste generation, segregation, and treatment at the points of generation, improves process efficiencies, reduces water consumption, eliminates wastages etc. These could help in meeting basic process goals while at the same time improving water efficiencies. Needless to say, rainwater harvesting and other naturally available sources should also be a part of this holistic approach.
This Q&A discusses some of the possible ways in which an industry can actually work on a strategic path to achieve the goals pf waste minimisation and recovery.
How do we ensure that a holistic view is taken when embarking on a waste recovery programme?
The point of start would be a complete appraisal of the water balance in the entire plant by a qualified expert. Once the entire water usage is accounted for, engineers will study each unit operation where water is used, to look at ways of reducing consumption and/or recycle of every stream at the points of generation. These studies will ensure significant emphasis is placed on the consumption of water at each unit process. It may also be worthwhile to do a cost-benefit analysis of upgrading existing process equipment and adding basic water recycling equipment at various process steps and points of generation vis-à-vis better process efficiencies, savings in water bills and associated environmental costs.
What are the steps to be taken to ensure reduction and recovery in an industrial scenario?
There are various steps which are mandatory
Understand the site water envelope
Study and identify the problem areas in the water circuit and take steps to arrest these.
Implement steps for additional savings based on recovery.
Optimise performance of process equipment, improve process efficiencies (using specialty chemicals in paper processing, for example, or increasing cycles of concentration – COC, in cooling towers)
Optimise performance of the water treatment plant
Implement recovery options at points of generation.
Aim for zero discharge with a recycle of other waste streams.
What would be the first step of working towards a programme like this?
The best way to start would be work jointly with a consultant or a water management company that has an overall perspective and capability.
A detailed study of the water requirements at various process units as well as the effluents expected to be generated from various points along with their quality and quantity will enable the water management expert to carry out a study on the water balance with the target of minimising the specific consumption for that industry. The expert’s report will normally have recommendations backed by extensive workings and evaluation of various options.
For example, in a grassroots integrated steel complex, the evaluation may include comparison between a centralised utility facility catering to various mills as opposed to independent treatment units at the mill itself. All these workings will have a capex estimate and an apex estimate and optimum choices needed to be made based on payback and operation flexibility.
What should a water audit report ideally contain?
What are examples of reducing water consumption without investment?
Reduction of water consumption could be achieved by simple measures like improving process efficiencies by the use of specialty chemicals in some cases. In such cases the evaluation should draw an optimum between ROI, improved product quality / improved process efficiency and waste generation. Other simpler measures could be to stop leakages, improve performance of utility equipment by timely servicing, etc.
An example is improving the cooling water chemistry and thereby improving the cycles COC in the cooling circuit, thus bringing down the make up water needs by implementing a well designed and superior cooling water (and boiler water) treatment programme with specialty formulations.
How can one reduce water consumption with investments? Will there be an ROI apart from meeting environmental standards?
By this time hopefully, a well implemented water management programme would have achieved two advantages:
Typical examples of such changes include the reuse of cooling tower blowdown to the process, the reuse of treated sewage/domestic waste as a make up for industry, the modification of water treatment equipment to improve efficiency, reduce waste generation and improve quality of water, the recycle of white water in a paper mill etc.
In many cases, the project also provides a healthy ROI and benefits apart from the obvious ones of reduction of waste generation and recovery of waste water.
In such cases a water management company can actually implement the project with its own investment on behalf of the client.
What are the areas where point of discharge recovery can be implemented?
Recovery of cooling tower blow down is one example where the recovered water can be reused as cooling tower make up or alternatively as feed to the water treatment system.
Increasing the COC by using specialty chemical treatment programmes will lead to higher efficiencies and lowered blow down quantities which can then be recovered as already explained. However while increasing COC it is always important to find an optimum between ROI, increased TDS to waste stream, process performance and operation.
Similarly in industries that generate waste streams laden with oil, these can be treated locally at the points of generation by separation of oil and water and return both to the process/reuse.
Another example would be the recycling of white water from the paper mills with a simple filtration process which can remove the fibre for recovery and at the same time return treated water back to process. While many mills have used "save alls" and dissolved air flotation devices, this process can be easily enough accomplished with the continuous sand filter. Such equipment is best suited because it operates continuously, does not require a stoppage for backwashing and can effectively handle large quantities of fibre which a conventional filter may not be able to handle.
Other examples of point of generation recycle (especially in the water circuit) include:
What are the benefits of embarking on a programme for waste recovery?
Apart from meeting environmental standards and providing another water source, advantages of costs savings and improving the overall ROI of the programme as well as the competitiveness of the industry could be “
Infrastructure facilities and public utilities play a very important role in the development of the nation’s economy and social welfare, and were traditionally undertaken exclusively by Government through public sector enterprises. In the recent past, however, the world over, execution of infrastructure projects is being increasingly entrusted to private entities. With the substantial involvement of the private sector in the construction and funding of public infrastructure works, there has also been a paradigm shift to the use of the BOT (Build-Operate-Transfer) approach as a way to delivering such infrastructure projects. Moreover, the BOT approach is being increasingly extended to projects in the industrial sector, particularly utilities and other non-core areas.
What are BOT projects?
BOT (Build, Own / Operate, Transfer) projects are typically projects in which one entity – which maybe a single organization, or more commonly a consortium or a Special Purpose Vehicle(SPV), of various parties, develops, finances, constructs and operates a particular project. This entity is normally called the concessionaire and the period for which the contract runs is called the concession period.
In small and medium industrial projects (as compared to infrastructure projects) the BOT structure is very simple and just adds structured financing to the overall scope of design engineering construction (EPC) and O&M of projects.
What are the advantages of BOT contracts?
The client/user gets the benefit of utilising the services of specialists in the field to design build and finance the asset and also to operate it over a long term leaving the client/ user to focus on their core business areas.
For example in an industrial scenario, the complete utilities can be financed, designed, built and operated by the concessionaire (BOT company) say for example Ion Exchange. The client could focus on expertise in the core areas of business while Ion Exchange would bring in specialist expertise for building and managing the water management project (water treatment/waste water treatment/ recycling etc) as well as associated utilities.
This would give the BOT company the opportunity to study requirements, suggest and design the best process with the most innovative and tested technologies which will value add to the client’s processes through reduction in operating expenses, smaller environmental footprint etc. The client would get the benefit of having a specialist “in- house” for their utility needs at an assured price for the life of the asset/plant.
This can also be adapted in existing industrial projects where an expansion need can be met with this structure of financing.
Alternatively, a client’s process could be improved by Ion Exchange, as the BOT company, investing in new technologies to modernise the existing facility and then taking on the operation and maintenance of the new completed facility. The savings accrued by virtue of the new investment are shared between the BOT company and the client.
How are these contracts structured?
In a BOT arrangement, the concessionaire organisation/consortium/SPV designs and builds the infrastructure / plant, finances its construction and owns, operates and maintains it over a period (the “concession” period), often for as long as 20 or 30 years. Normally, such projects provide for the infrastructure to be transferred to the client/user at the end of the concession period.
Who are the key players in a BOT project?
The key players in a typical BOT contract would be the main concessionaire. The other key players are the EPC contractor, the O&M contractor and the financial partner.
In some cases (especially in medium sized industrial projects) all the above roles may be carried out by a single company like Ion Exchange. But in large projects especially in the infrastructure area, one company may not be able to provide all the requirements of the contact and hence the coming together of organisations with specific experience in the required areas to form an SPV.
What are the roles of the various parties in a BOT project?
The concessionaire is usually a consortium of interested groups typically including a construction company, an operator and a financing institution. This entity prepares the proposal to construct, operate and finance a particular project. The concessionaire may take a form of a SPV (special purpose vehicle) company.
The EPC contractor carries the responsibility of designing and constructing the project and is responsible for meeting the guarantees on various parameters expected from the plant/machinery constructed.
The construction contractor takes the responsibility (and hence the risk) of completing the project on schedule and within budget and ensures that the project delivers results as committed. Any shortfall in these will affect the revenue later and in turn the viability of the project and its repayment.
This contractor is responsible for taking on the O&M of the completed plant that has been constructed and commissioned by the EPC contractor. In large contracts the O&M operator also may have an equity stake in the project.
In smaller contracts the EPC and the O&M contractors may be the same company.
This entity takes the lead in funding the project. This can be single organization or in large contracts this is likely to be a syndicate of banks or financial institutions providing the debt funds to the BOT operation.
The funding agency will require a first security over the infrastructure created.
How are the contracts financed and what does the lender look for in deciding financing?
In an infrastructure project (typically large government projects), the lenders to the project look primarily at the earnings of the project as the source from which loan repayments will be made. Their credit assessment is based on the project, not on the credit worthiness of the borrowing entity.
In an industrial scenario when an organisation is funding a plant or an asset, the user industry’s financial strength as well as the bankability of the project will be evaluated.
The security taken by the lenders is largely confined to the project assets. As such, project financing is often referred to as "limited recourse" financing because lenders are given only a limited recourse against the borrower.
What are the agreements that are required in such a contract?
While the concession agreement/BOT contract will be the umbrella document, two crucial agreements which will be apart of this are the offtake agreement and the Operations agreement.
The offtake agreement is normally the key document in a project of this nature. It is the agreement between the user / purchaser / government agency and the BOT Vendor / concessionaire under which the agency agrees to purchase the output of the project (treated water, services etc.) at agreed prices and volume.
Operating & Maintenance (O&M) Agreement
The O&M agreement is a long term contract. The main contractual obligation of the Operator is to operate and maintain the Facility for the period of the Operation and Maintenance Agreement.
What are the critical factors in these agreements?
The critical element of the offtake agreement from the buyer’s perspective is the performance warranties to be given by the BOT vendor. The performance warranties normally provide for the quality and quantity of the output from the project as well as the time when the output us required by the agency.
The viability of the project and in particular its "bankability" will depend upon the reliability of the cashflow under the offtake agreement, and the buying agency / client and the BOT company performing their respective obligations.
The payment to be made by the user to the BOT company will normally be broken into two heads. One will be the fixed charges or the availability fee. This will be the fee to be paid by the user irrespective of the usage from the project/plant infrastructure created. This will normally cover the fixed charges of capital repayment and manpower which will have to be serviced even when the asset is not used.
The second portion is the variable fee or the usage fee which is linked to the actual production or usage from the asset/plant created.
Escalation of Tariff
The offtake agreement will also provide for a part of the revenue stream to escalate during the life of the contract. The base tariff is normally indexed to an agreed formula to provide for such escalations which are bound to happen during the life of the contract (which may be anything from 5 to 20 or more years). Further, there will also be provisions made to account for changes in tax structure etc which will have a bearing on the BOT price.
In many parts of the world, water has become a limiting factor particularly for industrial development. Water resources planners are continuously looking for additional sources of water to supplement the inadequate resources available to their region. Source substitution appears to be the most suitable alternative to meet the growing water demand especially for industrial use. Water scarcity, high cost of raw water, growing demand and stricter discharge norms has created an awareness of the benefits of water recycle that has led to its increasing adoption by industry as well as residential and commercial complexes. However this is, in a sense, a particularized or private approach to reuse of water. A water security policy for sustainable development must embrace a much broader, public approach to water recycle as an effective means of creating a new and reliable water supply, and thus an effective water scarcity solution that should form part of sustainable water management.
Fortunately, the emerging trend is to treat municipal waste water for reuse for industrial applications. Currently, in urban and semi-urban areas, municipal waste is partially treated and disposed off. Instead, treating sewage for reuse considerably reduces the pressure on municipal water supply authorities as well as the load on the environment. There are many progressive municipal corporations who have understood this emerging trend and are in process of implementation waste water reclamation. The major influencing factors while considering municipal waste water recycle are legal, technical, economic and political, as well as social and personal prejudices. Recycled water can satisfy most water requirements as long as it is treated to ensure water quality appropriate for the re-use application. Companies like Chennai Petroleum Corporation, GMR Energy and Madras Fertilisers were among the first in India to use treated municipal sewage for industrial use.
Various technological options to treat municipal waste water are available. For small community systems the technologies for low flow include packaged treatment systems, geotextile filtration and membrane filtration. The major benefit of these systems is that the higher quality effluent can be discharged to ground water for indirect use. These systems are generally easy to operate & inexpensive. Apart from small community uses, they can also be used at military camps, large construction sites disaster relief operations etc.. Constructed wetlands with sufficient land area can provide adequate passive treatment. Aerobic & anaerobic conditions of these systems with microorganisms and vegetation & gravel filters provide the majority treatment. Wetland treatment requires minimal skilled labor, gives a natural appearance and consumes very low energy. However only drawback of these systems are requirement of large area.
One of the most efficient technologies is membrane bio-reactor technology. This has been successful and possible due to the greater understanding of the biological treatment so for adopted for municipal sewage treatment and because of advancements in membrane technology especially ultra filtration membranes. The membrane bio-reactor in combination with reverse osmosis (for tertiary treatment) can offer sustainable results. The performance of this membrane based technology has created a very high level of interest among municipal authorities who are now increasingly contemplating the use of treated municipal waste water to augment the water supplies for industrial as well as other non-drinking applications.
Final disinfection is a major challenge as it needs to balance costs and the treatment effectiveness. Pulsed UV light systems are on the forefront of waste water technology for final disinfection because they destroy pathogens more effectively and at higher rate than traditional disinfection & standard UV systems.
Apart from using membrane technologies, processes that treat domestic waste water to a standard that allows them to be used for low end use or for discharge into inland surface sources without damaging them can be adopted. The LUCAS (Lueven University Cyclic Activated Sludge) process, that incorporates all the advantages of the SBR sequential batch reactor (SBR) while eliminating all disadvantages of conventional systems as well as the variable volume SBR systems, are used extensively. This process treats the waste water to a standard higher then the conventional discharge norms along with removal of nitrogen and phosphorus which makes the treated water suitable for discharge to lakes and rivers without hampering the water body. Removal of these nutrients ensures that the health of the receiving water body is preserved.
Recycled water is most commonly used for non-potable purposes, such as agriculture, landscape, public parks and golf course irrigation, toilet flushing, car washing etc.. Other non-potable, high end applications include cooling water and industrial process water. However, the uses of recycled water are expected to expand in order to accommodate the needs of the environment and growing water supply demands. Advances in wastewater treatment technology and health studies of indirect potable reuse may result in planned indirect potable reuse becoming in the not so far future. more common. Such projects would include augmenting surface water reservoirs and recharging ground water aquifers to augment ground water supplies and to provent salt water intrusion into coastal areas.
Apart from helping meet the growing demand for water, recycle of municipal waste water would also yield enormous environmental benefits such as avoiding the discharge of waste water into the surface waters reduces & prevents pollution; and preserving or augmenting ground water resources.
The future outlook for sustainable development and environment protection would be recycle and reuse of municipal waste water. However it requires public participation, better coordination among the various agencies involved, a need for policy and its implementation and application of latest technologies.
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