Water scarcity could have a detrimental impact on energy supplies in the future unless improved levels of coordination and planning are applied to energy projects, the World Energy Council (WEC) has warned.
A 2016 research paper in the Journal Nature has predicted a 40 per cent shortfall of available water across the globe by 2030 and WEC believes that this level of scarcity will have serious implications for energy security and infrastructure resilience.
In a new report, 'The road to resilience - managing the risks of the energy-water-food nexus', WEC has called for immediate action to overcome water scarcity in the energy sector, and has made five recommendations.
"The energy-water-food nexus poses a systemic risk which could impact the robustness of the energy supply and demand over many years to come," said Christoph Frei, Secretary-General of WEC. "Power plants across the world could be affected by changes in precipitation patterns, which are combining with increasing competition between water users to adversely affect the resilience of energy services.
"Clear co-ordination and integrated planning needs to take place now, or we will start to see the effects of water scarcity on energy supplies in the very near future."
WEC's recommendations include a better understanding of the water footprint of energy technologies in order to mitigate the risks of stranded assets, and encouraging policymakers, developers and investors to account for the 'price' of water, particularly in areas of water stress.
WEC also wants investors and other stakeholders to consider a wider range of financial and insurance instruments to hedge short term risks such as adverse weather incidents and associated electricity price volatility, and to incorporate a full risk assessment that includes different climate and hydrological scenarios in financial analyses.
It also says that reliable and transparent regulatory and legal frameworks that takes into account water issues and competing stakeholders' interests should be developed.
"An important issue to tackle is the lack of knowledge about water issues and limited modelling tools, making long term energy infrastructure investment decisions difficult to make," Frei said. "To promote infrastructure resilience, policymakers and investors need to create a framework which provides the incentives for adapted infrastructure design and needed financing mechanisms."
Frei also said that cross-border cooperation was vital as there are over 250 international trans-boundary water basins. "Energy resilience can only be achieved by moving from joint to individual efforts," Frei said.