**3. Costs**

**Figure 12.** Wind speeds at Massawa over 1 year.

*2.4.1. Wind resource available Massawa*

for each hour of the year, shown in **Figure 12**.

The resulting pressure exchanger BSR RO plant water production profile, at varying input

**Figure 11.** Pressure exchanger BSR RO plant water production profile at varying power and feedwater temperatures.

As was the case in Stage 1, additional solar PV power was added in discrete levels up to (and including) the power required to achieve five times maximum flowrate of each of the RO plants.

Stage 3 modelled the addition of wind power in an attempt to make the renewable powered scenario competent to produce the correct amount of potable water for the Massawa residents.

The monthly average wind speed data at Massawa was taken from monthly average data over 4 years based on local weather reports [5] and applied to HOMER to derive the wind speed

power and feedwater temperatures, is shown in **Figure 11**.

**2.4. Stage 3**

184 Desalination and Water Treatment

Prices are based on exchange rate of \$1–£0.636 as was the case in 2011, when much of the original research was conducted.

#### **3.1. RO plant and reservoir costs**

**Table 2** shows the CAPEX and OPEX costs associated with the unscaled RO plants employed based on [6–10].

Reservoir costing was taken as £82,115,200 based on extrapolation of various reservoir costs from [11] to meet the required holding capacity.

#### *3.1.1. Impacts of intermittency*

Intermittent operation of desalination plants is possible and has already been realised in smaller systems as shown in [12, 13]. According to Rizzuti [14], however, it is understood that for large-scale seawater desalination plants, the plant's lifetime could be reduced by increased scaling, fouling and corrosion.

This said, there is potential for the mechanical wear aspects on the plant to be reduced due to the increased size of the scaled up renewable RO plant, as the components will not experience


**Table 2.** Capital, O&M and total costs over 25 years for RO plants.

the stress of operating at full load for as much of the time. It was considered reasonable to conclude that the impact on RO plant operation and costs will vary based on the power supply intermittency. The degree of this impact is not well understood and is worthy of further investigation, but based on the research conducted, it is considered appropriate to increase O&M costs to acknowledge the impact of intermittency. Therefore, in the light of the lack of information to support accurate estimates, a pessimistic assumption was employed for intermittent operation that annual O&M costs increase by 100% over those of a continuously operated plant on a per m3 of water produced basis increasing the costs as shown in **Table 3**.

#### **3.2. Renewables**

**Table 4** shows the CAPEX and OPEX costs associated with the renewable energy sources employed including the reduction in the price of solar PV between 2010 and 2016.

#### *3.2.1. Reduction in solar PV price in 2016*

**Figure 13**, taken from the National Renewable Energy Laboratory (NREL) report on solar costs [17], shows how costs for solar PV has reduced significantly since 2009.

*3.2.2. Operations and maintenance costs*

lack of a competitive local market.

*3.3.1. Increase in diesel fuel prices in Massawa*

**Installed power costs (£) [19]**

**3.3. Conventional power costs**

[21–23].

Pressure exchanger

The NREL webpage [18] indicates the O&M costs for a PV system between 1 and 10 MW are

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The Operation and Maintenance (O&M) costs for the plant were taken as £16/kW, which assumes that these costs are, once again, at the higher end of the range, due to the expected

**Table 5** shows the CAPEX and OPEX costs associated with the diesel generator power plant

The history of the diesel fuel price is shown in **Table 6** based the following internet sources

**)** 

125,000 22,500 32.8 171 87.5 226

**2010 fuel costs (£×106**

**based on £0.71/l [20]**

No BSR 380,000 40,000 100.2 232 260.1 392 Pelton wheel 160,000 27,500 43.4 205 114.8 276

**Diesel generator costs for 25 years based on 2010 fuel price Diesel generator costs for 25 years** 

**Total scenario costs (including RO plant and reservoir) (£×106**

**)**

**based on 2016 fuel price**

**)** 

**Total scenario costs (including RO plant and reservoir) (£×106**

**)**

**2016 fuel costs (£×106**

**based on £1.75/l**

\$16 +/−\$9/kW, which equates to a high end cost of \$25/kW (£15.90/kW).

**Figure 13.** Residential, commercial and utility scale PV system cost reduction since 2009 [17].

modelled at Massawa, which is based on various sources.

**Fixed O&M costs (£) [19]**

**Table 5.** Capital and O&M conventional power plant scenario costs.

The costs employed for 2017 were based on the 'utility scale PV, fixed tilt (100 MW) as shown on the right hand side of **Figure 13**. \$1.42/W = £903/kW.

This was considered to be an optimistic price due to Massawa's relatively remote location and limited market potential and so the supply chain cannot be relied upon to be developed to a stage where it provides competitive pricing. The NREL webpage [18] shows deviation of +/− \$694/kW about a mean cost of \$2025/kW, which would make the worst case cost \$2719/ kW (£1729/kW).

So for the purpose of this report the CAPEX for the plant was taken as £1700/kW, which assumes that the PV costs are at the higher end of the range.


**Table 3.** Continuous and Intermittent O&M costs for the BSR and no BSR RO plants.


**Table 4.** Capital and O&M costs of renewable energy sources.

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#### *3.2.2. Operations and maintenance costs*

the stress of operating at full load for as much of the time. It was considered reasonable to conclude that the impact on RO plant operation and costs will vary based on the power supply intermittency. The degree of this impact is not well understood and is worthy of further investigation, but based on the research conducted, it is considered appropriate to increase O&M costs to acknowledge the impact of intermittency. Therefore, in the light of the lack of information to support accurate estimates, a pessimistic assumption was employed for intermittent operation that annual O&M costs increase by 100% over those of a continuously

**Table 4** shows the CAPEX and OPEX costs associated with the renewable energy sources

**Figure 13**, taken from the National Renewable Energy Laboratory (NREL) report on solar

The costs employed for 2017 were based on the 'utility scale PV, fixed tilt (100 MW) as shown

This was considered to be an optimistic price due to Massawa's relatively remote location and limited market potential and so the supply chain cannot be relied upon to be developed to a stage where it provides competitive pricing. The NREL webpage [18] shows deviation of +/− \$694/kW about a mean cost of \$2025/kW, which would make the worst case cost \$2719/

So for the purpose of this report the CAPEX for the plant was taken as £1700/kW, which

) 0.62 1.08 0.70

) 1.24 2.16 1.40

) 3.16 5.52 3.58

**(£)**

) 79 138 90

Capital costs (£/kW installed) 3000 1700 1200 O&M costs (£/kW/annum) 15 16 37

employed including the reduction in the price of solar PV between 2010 and 2016.

costs [17], shows how costs for solar PV has reduced significantly since 2009.

of water produced basis increasing the costs as shown in **Table 3**.

**Solar (2010) [15] Solar (2016) Wind [16]**

**Pressure exchanger BSR (£)**

operated plant on a per m3

186 Desalination and Water Treatment

*3.2.1. Reduction in solar PV price in 2016*

on the right hand side of **Figure 13**. \$1.42/W = £903/kW.

assumes that the PV costs are at the higher end of the range.

**Operating cost for No BSR (£) Pelton wheel BSR** 

**Table 3.** Continuous and Intermittent O&M costs for the BSR and no BSR RO plants.

**Table 4.** Capital and O&M costs of renewable energy sources.

**3.2. Renewables**

kW (£1729/kW).

Continuous operation (£/m<sup>3</sup>

Intermittent operation (£/m<sup>3</sup>

Intermittent operation/ year (£x10<sup>6</sup>

Intermittent operation over project life (£x10<sup>6</sup>

The NREL webpage [18] indicates the O&M costs for a PV system between 1 and 10 MW are \$16 +/−\$9/kW, which equates to a high end cost of \$25/kW (£15.90/kW).

The Operation and Maintenance (O&M) costs for the plant were taken as £16/kW, which assumes that these costs are, once again, at the higher end of the range, due to the expected lack of a competitive local market.

#### **3.3. Conventional power costs**

**Table 5** shows the CAPEX and OPEX costs associated with the diesel generator power plant modelled at Massawa, which is based on various sources.

#### *3.3.1. Increase in diesel fuel prices in Massawa*

The history of the diesel fuel price is shown in **Table 6** based the following internet sources [21–23].


**Table 5.** Capital and O&M conventional power plant scenario costs.


**Table 6.** Historic and estimated diesel fuel cost in Eritrea.

As can be seen from **Table 6** the price of diesel fuel in Eritrea has increased 10 fold between 1992 and 2014, the latest date that price information is available from the sources used. 2014 was a relatively high price point when in the UK diesel fuel was around £1.29/l, but by June 2017 the price of diesel fuel in the UK had fallen to £1.18/l, a reduction of 8.5% due, in part, to the fall in crude oil prices. Although the influences in the price of retail diesel fuel are affected by different variables in the UK and Eritrean economies, for the purposes of this research a reduction of 8.5% of the 2014 price has been adopted for the price of diesel in Eritrea to account of the fall in crude oil price. This results in an estimated price for 2017 of \$2.75/l (1.75/l) as shown in **Table 6**.

**5. NPV**

are applied.

• Price of water • Discount rate

**5.1. Price of water**

together. So, NPV is the sum of all the terms:

maintain the power source and RO plant) at time *t.*

The net present value (NPV) is a central tool in discounted cash flow (DCF) analysis, where each cash inflow/outflow is discounted back to its present value (PV). Then they are added

**Table 7.** Technically competent and most financially viable scenarios at Massawa when latest diesel and solar PV prices

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Rt/(1 + i)*<sup>t</sup>* (2)

where *t* - the time of the cash flow; *i* – the discount rate (the return that could be earned on an investment in the financial markets with similar risk.); the opportunity cost of capital; *Rt* the net cash flow (the amount of cash, inflow (value of water sold) minus outflow (the cost to

As part of an informal telephone conversation, Tesfai [24] stated that municipal water in

The next two sections will derive the following to allow the NPV to be calculated.

Eritrea costs less than 5p/l, and bottled drinking water costs less than 10p/l.
