Construction is set to begin on Poseidon's enormous desalination plant in Carlsbad after financing for the project closed this week.
The San Diego County Water Authority announced that project financing for the Seawater Desalination Project closed successfully "bringing with it $734 million in tax-exempt bond financing to build the nation’s largest seawater desalination plant and a related 10-mile pipeline."
Grading on the NRG Energy site is set to begin within days. The facility should be completed and operating in 2016.
The Carlsbad-based facility is expected to produce 50 million gallons a day — surpassing output at plants in Trinidad and Tobago— and is set to supply approximately seven percent of the region's water consumers by 2020.
Building costs for the plant and pipeline — which connects to the Water Authority’s aqueduct in San Marcos — are estimated near $1 billion.
The Associated Press reported in September that a subject-to-approval deal was struck for the San Diego County Water Authority to buy the entire output of what will be the Western hemisphere's largest seawater desalination plant.
The Water Authority’s Board of Directors approved a purchase agreement with Poseidon in November, and earlier this month the Water Authority and private developer Poseidon Resources sold bonds to finance the project at an interest rate of 4.78 percent.
The price of water was then refigured to between $1,917 and $2,165 per acre-foot (original estimates were set at $2,042-2,290 per acre-foot of water, more than twice what the area currently pays to import water, according to AP).
Supporters say being less dependent on outside water is worth the premium. The Los Angeles-based Metropolitan Water District of Southern California supplied almost all of the region's water in the early 1990s. Today it provides nearly half, says AP.
Deemed a blight on coastal landscapes by some, desalination facilities require huge amounts of electricity to operate and have the potential for dangerous environmental impact.
The company was sued in 2010 over concerns that pumping millions of gallons of seawater would kill millions of tiny organisms that contribute to the ocean food chain.
KPCC's Molly Peterson reported that under its government-issued permits, Poseidon is required to do restoration projects elsewhere, to mitigate the fish kill and other impacts. Environmental groups claimed it wasn't enough.
Additionally, the millions of gallons of brine redeposited in the ocean can harm fish and wildlife.
- It's a 30-year purchase agreement.
- Average household water bills will increase to rates comparable with other drinking water sources like treated toilet water or briny groundwater.
- San Diego will buy enough water per year from the plant to supply about 100,000 homes.
- Location: Next to the Encina Power Station in Carlsbad
- Project site owner: NRG Energy
- Developer: Poseidon Resources
- Senior manager/bond underwriter: JP Morgan
- Project adviser: Clean Energy Capital
- Water purchaser: San Diego County Water Authority
- Capacity: Up to 56,000 acre-feet annually
- Water deliveries: Expected in 2016
- Project Website
During the construction of a Tampa plant, Conn.-based Poseidon met with delays, contractor problems and is known to have underestimated costs. San Diego agency's water resources director, Ken Weinberg, said earlier this year he is confident the same trouble will not trickle into Southern California.
Poseidon spokesman Scott Maloni told AP the company learned from the Fla. project and that agency protections are in place for San Diego should the plant fall short of performance expectations.
"In the front of our minds was to Tampa-proof this project," Weinberg said.
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