Home / Newsletter / Proven savings at the energy-water nexus are stepping into the spotlight


NITI Aayog’s Composite Water Management Index (2018) highlights that 75% of households in India lack drinking water on premise and 70% of India’s water is contaminated. Integrating water and energy efficiency in solutions to provide 24×7 clean water and sanitation will help curtail the associated increase in municipal and residential electricity demand. Weston Berg of the American Council for an Energy-Efficient Economy, the premier policy think tank on Energy Efficiency in the US, throws light on integrated approaches to water and energy efficiency in the US.

No discussion of the net benefits of energy efficiency is complete without considering its relationship with water resources, sometimes referred to as the energy-water nexus. While regulators typically place energy and water in separate policy buckets, this siloed approach to resource management ignores the reality that energy and water consumption are tightly intertwined. Energy production and consumption require water, and water transport and treatment need energy. Likewise, policies addressing the water sector are sure to impact the energy sector and vice-versa. In addition, there are a variety of appliances that use both water and energy (e.g.  washing machines and showers). A growing understanding of this relationship has driven an increased recognition in the U.S. of the value of an integrated energy and water management approach. Yet as ACEEE and others have found, while examples of multi-sector resource management continue to pop up, usually yielding significant resource and operational efficiencies, collaboration between energy and water utilities has remained slow to take hold.[i], [ii], [iii]

From energy generation to distribution, and from water treatment, to transport, to wastewater management, the opportunities for joint energy and water savings are abundant. The amount of water used for energy generation is staggering. According to the U.S. Geological Survey, 34% of total freshwater withdrawals in the U.S. in 2015 went towards thermoelectric generation, down from 38% in 2010 but still sizeable.[iv] Likewise, water-related uses account for a huge portion of U.S. energy use, perhaps as high as 12% of national consumption by some estimates.[v] Not to mention the deteriorating state of U.S. water infrastructure, which has been estimated to waste between 14 to 18% of treated water each day due to leaky, aging pipes.[vi] However, given the wide ranging variation in local conditions, hydrologic features (surface versus groundwater), pumping distances, and types of water treatment used, generalizing to the local level is impossible.

Energy utilities and their demand-side management programs are uniquely suited to address the savings potential at the energy-water nexus since the end-use phase of the water-utilization cycle provides large opportunities to save energy and water. Efficiency measures implemented at the end-use stage can achieve savings both upstream (energy generation, drinking water treatment, pumping) and downstream (pumping and wastewater management). In fact, many energy-saving measures offered to customers by energy utilities, such as low-flow showerheads, aerators, and efficient washing machines, dishwashers, and leak detection, are by their very nature water-saving devices. But in terms of valuing energy efficiency, you can only manage what you measure, and a solid understanding of the benefits and avoided costs, such as water savings, are key for making the right decisions regarding investment and incentives for energy efficiency programs.

So how well do energy utilities track and account for water savings from their efficiency programs? According to our research, it’s been a mixed bag.[vii] While efforts to quantify water savings can be notoriously challenging depending on the scope and level of accuracy desired, in most cases avoided water costs do not figure much at all into energy utility thinking and planning around efficiency program portfolios, in effect undervaluing and neglecting the benefits they provide. Among the roughly dozen or more states that do direct their utilities to formally calculate water savings, these valuations tend to be conservative estimates, usually narrowly informed by local average water and sewer rates, which also typically fail to account for the full costs of providing and treating water due to cross-subsidization and inaccurate price signals that fail to encourage efficiency.[viii] Also stymying efforts are a lack of interest, data, and/or funding, lack of guidance, as well as the disjunction in policy levers between energy and water utilities which typically report to different levels of government.

However, clear leaders in the space have also emerged, and their proactive efforts to work with water utilities to understand and manage the total resource value of water are setting strong examples for others. Typically, these efforts have been spurred by a mix of utility commission-level leadership, availability of data, and competition for water resources. This is especially the case in often drought-stricken California, where energy providers and the state utility commission have been tackling the energy-water nexus on multiple fronts, including development of a Water-Energy Cost Effectiveness Calculator to quantify the full embedded energy savings from water-savings measures, such as upstream and downstream energy savings linked with treatment and conveyance to customers.[ix] While the full intended capability of the Calculator―to enable utilities to claim water savings benefits as part of cost-effectiveness screening―has yet to be fulfilled due to persisting technical questions related to attribution methodology, it has nevertheless been instrumental in driving utilities within the state to improve their internal reporting protocols to better understand the volume and embedded energy of the water saved through their efficiency programs.

The same CPUC proceeding that directed development of the Water-Energy Calculator has also helped foster other cost-cutting relationships between energy and water utilities. An award-winning Master Inter-Utility Agreement (MIUA) between SoCal Gas and the Los Angeles Department of Water and Power is a prime example of the other advantages made possible through cross-sector collaboration. The agreement enables the two utilities to jointly offer energy/water efficiency programs through an efficient one-stop shop, helping reduce costs of providing service, while also allowing LADWP customers access to previously unavailable SoCalGas programs. [x] Similar partnerships have emerged elsewhere; some of the best examples have occurred in communities served by municipally-owned energy and water utilities, such as Austin and San Antonio, Texas, in which both utilities are closely aligned and report through the same governance structure.[xi]

The increasing proliferation of smart meters and AMI has also opened up new possibilities for data-driven partnerships to help decipher the relationships between water, electricity, and gas consumption.[xii] For example, several California energy utilities have been engaged in pilot programs with local water providers and data analytics companies to piggyback water meter data on energy utility AMI infrastructure. These projects aim to unlock additional potential customer savings, as well as supply-side savings from water loss reductions and pipeline leak detection, in addition to eliminating redundant networks and reducing costs.  Early results have shown promise, with SoCal Gas reporting that hourly water and gas data have helped to successfully identify a number of anomalous hot water and gas usages and potential leaks.[xiii]

While data limitations, resource shortages, and administrative barriers will likely remain tempting excuses for energy and water providers to stay in their respective lanes, successful examples of new program designs and partnership models to achieve greater savings continue to emerge from forward-thinking utilities and regulators.  However, only by bringing energy and water stakeholders together to recognize their interconnectedness and shared value can they work together to unlock and maximize the mutual savings potential hidden at the energy-water nexus.

With some exceptions, those U.S. localities that have demonstrated the most initiative in seeking to maximize savings at the energy-water nexus have understandably been those with a history of drought and competition for water resources. This has also been the case outside the U.S. in places like Australia which survived the Millennium Drought thanks to a mix of innovative supply- and demand-side conservation strategies, lessons that have proved valuable for California’s own efforts.[xiv] For those on the front lines addressing India’s water and energy challenges, these case studies offer a variety of fruitful ideas and best practices to complement existing efforts.

[i] Rachel Young, Saving Water and Energy Together: Helping Utilities Build Better Programs (Washington DC: ACEEE, 2013). aceee.org/sites/default/files/publications/researchreports/e13h.pdf
[ii] U.S. Department of Energy. The Energy-Water Nexus: A Plan for Collaboration Between the Department of Energy and Water Sector. (Washington, DC: DOE, 2016). waterrf.org/resources/NewsletterStories/DOE-Plan-for-Collaboration.pdf.
[iii] Alliance for Water Efficiency, “AWE-ACEEE Water and Energy Research Group,” allianceforwaterefficiency.org/Water-Energy-Research-Group.aspx.
[iv] U.S. Geological Survey. Estimated Use of Water in the United States in 2015. (Reston, VA: USGS, 2018) pubs.usgs.gov/circ/1441/circ1441.pdf.
[v] Sanders, K., and M. Webber. 2012. “Evaluating the Energy Consumed for Water Use in the United States.” Environmental Research Letters 7 (3): 1–11. iopscience.iop.org/article/10.1088/1748-9326/7/3/034034/meta.
[vi] American Society of Civil Engineers, “2017 Infrastructure Report Card: Drinking Water”, 2017, infrastructurereportcard.org/wp-content/uploads/2017/01/Drinking-Water-Final.pdf.
[vii] Weston Berg and David Ribeiro, Saving Watts to Save Drops: Inclusion of Water Efficiency in Energy Efficiency Programs, (Washington DC: ACEEE, 2018), aceee.org/research-report/u1801.
[viii] Government Accountability Office. 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. GAO-11-225. (Washington, DC: GAO, 2011). gao.gov/assets/320/316893.pdf.
[ix] http://www.cpuc.ca.gov/nexus_calculator/
[x] U.S. Department of Energy. 2013. “Implementation Model: Streamlined Tri-Resource Efficiency Programs—Los Angeles Department of Water & Power.”betterbuildingsinitiative.energy.gov/implementation-models/streamlined-tri-resourceefficiency-programs.
[xi] Brendan Gibbons, “For San Antonio’s Water and Energy Utilities, Collaboration Leads to Conservation,” Rivard Report, October 9, 2018, therivardreport.com/for-san-antonios-water-and-energy-utilities-collaboration-leads-to-conservation/
[xii] Kate Zerrenner and Jaclyn Rambarran, Examining conservation-oriented water pricing and programs through an energy lens, (New York, NY: EDF, 2017) blogs.edf.org/energyexchange/2017/12/14/new-study-better-education-and-data-collection-can-further-water-and-energy-savings/.
[xiii] Southern California Gas Company, (U 904 G) Energy Efficiency Programs 2017 Annual Report. socalgas.com/regulatory/efficiency/docs/SCG_2017_Energy_Efficiency_Annual_Report-Final.pdf
[xiv] Turner, A., White, S., Chong, J., Dickinson, M.A., Cooley, H. and Donnelly, K., 2016. Managing drought: Learning from Australia, prepared by the Alliance for Water Efficiency, the Institute for Sustainable Futures, University of Technology Sydney and the Pacific Institute for the Metropolitan Water District of Southern California, the San Francisco Public Utilities Commission and the Water Research Foundation. https://pacinst.org/wp-content/uploads/2016/07/Managing-Drought-Report-2016-02-23-FINAL-US-Letter.pdf.