PUBLIC WORKS COMMITTEE: ADELAIDE DESALINATION PLANT

Ms CICCARELLO (Norwood) (11:33): I move:

That the 314^th report of the committee, on the Adelaide Desalination Plant, be noted.

Adelaide's water supply has always been considered one of the most secure in Australia. Water is drawn from two major but separate water sources: the Mount Lofty Ranges and the River Murray. However, both sources depend on rainfall and, given the expected effects of climate change over the next 25 to 50 years, it is highly likely that Adelaide will face reduced availability of water.

Given this, the Desalination Working Group was established in March 2007 by the government to investigate the feasibility of a desalination plant for Adelaide. In November 2007, it recommended that a desalination plant be built to increase the security of metropolitan Adelaide's water supply system. The plant is to be built at Port Stanvac, on a site of approximately 30 hectares, and the committee was told that easements would be required from Mobil Refining Australia.

The Adelaide Desalination Plant project comprises the following major components: a desalination plant (including intake and outfall conduits); a transfer pipeline system; construction and operation power supply infrastructure; and cite preparatory works, security and fencing. The reverse osmosis desalination plant and associated transfer pipeline system will have an initial capacity of 150 megalitres of drinking water per day—equivalent to 50 gigalitres per annum. The infrastructure will meet the future 100 gigalitres per annum capacity.

The transfer pipeline system is a critical component of the project. It provides the means to transfer water from the desalination plant at Port Stanvac to the Adelaide water supply system, via the Happy Valley Water Treatment Plant. The power supply capacity of approximately 11 MVA will be required for construction purposes by the end of September 2009 and is critical for the tunnel boring machines and other construction loads. The mains cable to the site will be an underground line. The connections and upgrades required at the Port Stanvac substation will be undertaken by ETSA utilities.

A 60 MVA transformer will be required to meet the needs for the 50 gigalitres per annum plant. This will require upgrades to ETSA's existing transmission system components, as well as a new substation at the plant site. In addition, substantial electrical supply infrastructure will need to be established, involving large transformers, overhead and underground cabling and high-voltage switchgear.

As the project progresses, control points will be established at the boundary entry and exit points to ensure security is maintained at all times. This will be supplemented using closed circuit television cameras which will be monitored through the Police Security Services Branch of the South Australia Police.

The desalination plant is to be carbon neutral. The plant and delivery pipeline will be operated with renewable energy or purchase of carbon permits and/or offsets. Standards for achieving carbon neutrality and voluntary mechanisms will complement the federal government's proposed Carbon Pollution Reduction System.

The desalination plant is a major development in accordance with section 46 of the Development Act 1993. However, the minister's declaration specifically excluded the construction and operation of a small-scale temporary desalination pilot plant, preliminary site works and all interconnection works including pipes, storage tanks and pumping stations required to transfer water from the proposed desalination plant to the Happy Valley water treatment plant. The scope of the environmental impact statement required includes:

Potential impacts of the proposed development on the marine environment in and around Port Stanvac;

A summary of the existing marine habitats or zones;

Detailed consideration of the impact of the development and mitigation strategies for each marine zone;

Development and operation of the desalination plant, in the context of its energy requirements and the government sustainability and climate change initiatives;

Carbon footprint, carbon neutral development and the likely impacts of climate change;

Potential impact on the terrestrial environment in and around Port Stanvac, including groundwater and surface water, native vegetation and native fauna, and mitigation strategies to address these risks;

Indigenous and European cultural heritage and native title;

Likely noise, dust, odour and waste management effects of both the construction and operation of the plant;

The construction and operation effects of the proposed development including the need for and management of excavation, dredging, and stormwater and emissions; and

The planning and environmental legislative and policy context of the plant and an assessment for the development against the provisions of the relevant development plans.

The power supply upgrades are not expected to require removal of native vegetation along the preferred route. The route will comprise a combination of underground cabling and double circuiting existing overhead lines. SA Water has specified that the energy consumption for the desalination plant and marine works should be optimised to use less than 4.5 kWhr per kilolitre of drinking water produced. This is subject to seawater quality being within the specified values. The energy consumption target is challenging and will require innovative strategies to achieve. The energy consumption target is based on national and international benchmark comparisons.

SA Water requires sustainability plans to be prepared and submitted by the contractor. These will address issues of environmental, social and economic concern. Separate plans will be required for the design, construction and operational phases of the plant. During the operations period, the contractor will be required to monitor the work and carry out adequate audits and site inspection to ensure that environmental control measures are in place.

The contractor will also be responsible for landscaping and revegetating the desalination plant site. The boundaries are to minimise the visual impact of the desalination plant on the surrounding area as well as provide habitat for wildlife. The site is about 360 metres from residential properties and adjacent land uses are generally industrial in nature.

The plant will draw in water through an intake structure and release a saline concentrate from the desalination process to the ocean. The concentrate will be discharged through diffusers designed to maximise dilution and dispersion into the water column. The minimum dilution requirements have been informed through investigations to ensure protection of marine biota. The impact on marine communities is expected to be minor, as the intake will be located within areas which are not significant nursery or habitat sources.

The design velocity of the intake stream will be low to allow mobile biota, such as fish, to move away and avoid entrapment or entrainment. The design of the intake and installation of intake screens will also minimise these risks. There is a potential for the saline concentrate to have impact on the water quality and marine environment if not dispersed rapidly. So, a key design consideration has been to ensure that adequate mixing is achieved under all tidal and plant flow conditions to minimise any risk associated with the saline plume settling on the seabed and impacting marine organisms living on or in the sediment.

The results of investigations assessing the effect of exposure to elevated salinity concentrations have determined that the discharge will not have an impact on the marine environment outside a mixing zone. The security offered by the plant in enhancing the supply of drinking water to Adelaide is of major significance, particularly given the key population objective in South Australia's Strategic Plan to increase the state's population to two million people by 2050. If a desalination plant is not built, South Australia will be forced to continue to draw substantial volumes of water from the River Murray and pump the water to Adelaide's reservoirs.

However, given the ongoing drought in the Murray-Darling Basin, the severe effect this has had on storage levels, and the likely length of time required for storages to recover, Adelaide cannot continue to rely solely on the River Murray to supplement its water supply system in periods of drought. Expected outcomes of the desalination project are:

The production of safe, reliable desalinated drinking water by December 2010;

The support of South Australia's Strategic Plan targets;

The improvement of water security;

The maintenance of environmental performance by ensuring that any potential detrimental environmental impacts of the plant are either avoided, mitigated or minimised;

An optimum allocation of risks between SA Water and the private sector;

The accommodation of capacity upgrades of the plant in a cost-effective manner;

An asset that has the flexibility to accommodate innovation and technological improvements in the future; and

An effective knowledge transfer to SA Water in all project aspects including the operations phase.

The site investigation process identified potential locations for the desalination plant along the Adelaide coast of Gulf St Vincent and the South Coast. This assessed locations based on broad environmental and evaluation criteria including:

Proximity to coastline, site size and elevation;

Current land use and zoning;

Offshore marine environment and dispersion rates, and the potential impact of constructing the intake and outfall pipelines and structures;

Environmental issues at the plant site such as site vegetation, known presence of threatened plant and animal species;

Social considerations, such as proximity to residential areas, potential amenity impacts and cultural heritage issues, both Aboriginal and European;

Availability of power; and

Ease of integration with existing water infrastructure.

Three locations were identified for further assessment and they are: Port Stanvac, West Beach (near Adelaide Airport), and Pelican Point (near the existing power station). A nominal water depth of at least 10 metres was identified for the outfall to disperse saline concentrate. This depth is further offshore at sites north of Port Stanvac and requires significantly longer seawater intake and outfall conduits. The sensitivity of marine habitats and water quality considerations were also identified as additional constraints on the sites further north of Port Stanvac due to their proximity to seagrass meadows and sensitive marine nursery areas.

Port Stanvac was preferred based on the relatively deep sea water, superior marine dispersion characteristics, ease of integration to the water supply network, suitable land use zoning and lower life-cycle costs. It also has other desirable features, including secure coastal location, ease of access by sea and road and less disturbance to beach and marine users. The Desalination Working Group also investigated the different technologies available for large-scale desalination. It concluded that reverse osmosis was the most energy efficient and cost-effective technology, and it also becomes more favourable and effective with developments expected in coming years.

The economic impact of the proposed desalination plant on the South Australian economy is significant. While the cost of the proposal is to be borne by water consumers, the impact of the capital expenditure and direct job creation will result in a net benefit to the South Australian GSP. The economic modelling undertaken for the 50 gigalitres per annum plant demonstrates that South Australia's GSP is expected to increase by more than $2.8 billion (or 0.4 per cent GSP) to 2017. Accordingly, the proposed desalination plant is economically sustainable when compared with the base case, which is the economy without the investment into the proposed development.

If the inflows to the River Murray remain low or continue to fall in future years, the sustainable economic benefits of the proposed development will increase further, as it provides even greater water security to the metropolitan population and state economy. The nominal capital cost estimate for the plant, including a project contingency, with associated infrastructure with a capacity of 100 gigalitres per annum, is $1.374 billion. The net nominal operating cost of the 50 gigalitres per annum capacity is estimated to be $81 million per annum in 2015-16, allowing for a gradual increase in maintenance costs after the initial three to four years of operation and as the equipment ages and requires higher maintenance and replacement of moving parts.

The first water is expected to be delivered in December 2010, with full operation by August 2011. Construction commenced two days ago. Based upon the evidence considered, pursuant to section 12C of the Parliamentary Committees Act 1991, the Public Works Committee reports to parliament that it recommends the proposed public work.

Mr PISONI (Unley) (11:48): I take this opportunity to say a few words about the desalination hearing. I must say that it was informative, and I enjoyed it. It was one of the longer hearings we have experienced in the Public Works Committee. However, some points need to be raised that were omitted by the member for Norwood in her report, and there are also a couple of points with which I need to take issue.

During the hearing, it was pointed out to the committee that an extra cost of $79 million was required to speed up the project. If we recall the history of the desalination project, the state Liberal Party called for a desalination plant for South Australia in February 2007. At that time, the Premier was talking about a desalination plant in Spencer Gulf for the mining industry, and he dismissed our call for a desalination plant in Adelaide as a nonsense and something that was not required, and we experienced quite a bit of ridicule by the government for our suggestion.

However, what has now been exposed during the examination of this project in the Public Works Committee was that the government waited another six months before it even thought about a desalination plant for South Australia because it did not want to be in a position where it said, 'The Liberal Party is right: we do need a desalination plant, and we'll get onto it straightaway.' The government waited six months before it said that it would look at a desalination plant here in Adelaide, and the extra cost of that to South Australian taxpayers is $79 million. At the hearing, it was clarified by Mr Ringham that an extra $79 million had been allocated to this project simply to get back the six months the government had lost by playing politics with water, rather than moving forward with the water project.

We also need to remind South Australians that October 2003 was an historic month for South Australia. Two significant things happened that changed South Australia forever: Adelaide went onto water restrictions and the Premier announced a tram to run down King William Street. The house knows that we have our tram, yet, nearly six years later, we are still on water restrictions. According to the Public Works Committee report, it will be March 2011 before we see the benefits of the desalination plant—four years after it was first proposed by the state Liberal Party and ridiculed by the Premier and his cabinet.

Another issue that needs to be raised is that of the ETS, and questions were asked about that. The member for Norwood was at the meeting, but I am not sure that she heard the same thing I did. I have the transcript here and, when I asked a question about estimates of cost and the impact the ETS would have when it was introduced, Mr Ringham said that he could not give us the answer. He said:

We do not have an estimate for that because, at the moment, even industry is struggling to understand the scheme and what it will mean.

The member for Norwood gave the impression that it had been costed and considered in this project, but Mr Ringham did tell the committee that is not the case at all. Mr Ringham could not tell us what the cost of the water would be once a desalination plant was supplying 20 per cent of Adelaide's water.

I made several attempts to extract information in order to get an understanding of what costs would be borne by Adelaide residents—or all South Australian residents actually—once the water system came on board. Mr Ringham did concede that full cost recovery plus more—a profit component—was part of the government's pricing policy but that any pricing of water was a political decision and up to the government of the day. So we are still unclear about the additional cost to householders as a result of the plan.

There was some talk about green power. I was surprised to hear the member for Norwood saying that the plant was going to be run on green power or offsets. When I examined that prospect with Mr Ringham—and I refer members to Hansard—Mr Ringham said that negotiations had not even started for offsetting or green power supply. As a matter of fact, he went onto say that there would be two connections to the grid. It is so important that this plant be connected to the grid that there are two connections to the grid. If there is a problem with one source of supply, a second supply or feed, if you like, from an alternative power source would be provided from Adelaide's power supply—which, as we know, is coal and gas powered—in order to keep producing water at the plant.

I was a little surprised to learn during the examination process that we will still be drawing water from the River Murray when the desalination plant is up and running. Of course, in this budget there is not the money to take pipes from Happy Valley to Hope Valley in order to interconnect and integrate Adelaide's entire water supply with the Port Stanvac production. Water will go into Happy Valley and be distributed to the southern suburbs from Happy Valley because there is nothing in the $1.3 billion cost—and it was confirmed at the hearing—for the interconnection of both Happy Valley and Hope Valley reservoirs. In effect, we will be seeing people in the southern suburbs drinking desalinated water in 2011 but not those in the north of the state, according to the information that we extracted during this process.

Obviously, the Liberal Party is pleased that the government finally took up this policy and agreed to move forward with a desalination project, despite the fact that it ridiculed us when we initially raised the issue in February 2007. I am pleased to see that we are moving forward now. I am very disappointed that it is costing an extra $79 million to play catch-up, simply so the government could spend six months playing politics on this issue.

Motion carried.