Cost of Hunter desal plant blows out by $330m

State-owned corporation Hunter Water has put in an application for a permanent desalination plant near Newcastle, saying it will provide water security for the NSW Lower Hunter region.

Darren Cleary

Hunter Water gained approval for a temporary desal plant in 2021, but amended plans seek to extend the life of the plant from 20 years in the original proposal to an operational life of 50 years.

Documents prepared for public exhibition by Hunter Water also show the pricetag of the plant has increased from $200 million to $530 million.

“The initial estimated Capital Investment Value (CIV) for the design and construction of the desalination plant was is approximately $201 million,” Hunter Water’s report says.

“Consistent with the design and methodology modifications, and increases in construction costs, this is now estimated at $530 million.”

The cost blowout will result in an annual increase of around $90 on a typical household bill, Hunter Water says.

Water security

The project, planned for Belmont in the Lake Macquarie LGA south of Newcastle, is part of the NSW government’s Lower Hunter water security plan.

It will add up to 30 million litres per day of drinking water capacity to the system, or about 15 per cent of the region’s average daily needs, Hunter Water says.

Planned location for the Belmont desalination plant (Hunter Water)

“The original design was for a temporary plant designed for emergency drought response. It would’ve been short term infrastructure,” a spokesperson told Government News.

“Now the plant is proposed to be permanent and therefore built to last for many decades.”

Hunter Water Managing Director, Darren Cleary, says the Belmont Desalination Plant will help to provide the water security needed to ensure a sustainable future for the  region and its economy.

“We can’t rely on rain alone anymore,” he said in a statement.

“We know our region’s water storages can fall from typical operating levels to critical levels in less than three years. Should a severe drought continue beyond three years, our region could run out of water. “

Hunter Water’s anticipated $530 million investment includes measures to ensure the desalination plant will be an enduring asset and remain resilient to the impacts of climate change, he said.

It reflected rising construction costs being experienced across many industries, Mr Cleary added.

 “This investment in the region’s future means improved water security for Hunter Water customers,” he said.

Early approval for the plant was issued in July 2021 by the Department of Planning, Industry and Environment for a plant at Belmont to produce drinking water in response to drought.

As well as increasing the life of the plant by 30 years, the modified proposal includes an increase in the building area footprint and height of the lime tower, a relocation and increase in size of the direct ocean intake system.

The project is being delivered for Hunter Water by constructor John Holland and engineers GHD.

Submissions on the amended application can be made until February 24.

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