Funding Water and Wastewater Treatment Plants

Financing solutions like P3s and leasing contracts can remove obstacles when you need new or updated water infrastructure

Providing water and wastewater treatment plants is essential for ensuring that communities have access to clean water and sanitation, which are fundamental to public health, environmental protection, and economic development. The need has been coming to the forefront in the United States as a large percentage of public infrastructure is reaching the end of its planned lifespan.

Because water infrastructure can be costly to construct, operate, and maintain, sourcing funding is often a stumbling block. But it doesn’t have to be. Some of the methods available for funding water and wastewater treatment plants require no upfront capital and are surprisingly cost-effective.

Here are some of the common approaches for financing water infrastructure projects.

Utility Fees and Tariffs

Water and wastewater utilities typically charge customers for the water and services they provide, so an existing water utility or wastewater treatment plant can use the revenue generated through fees and tariffs to fund operations and maintenance, and to invest in infrastructure development and upgrades.

For example, the initial one-time connection fee customers pay to connect the property or development to municipal water and sewer systems can be used to cover the cost of expanding infrastructure to accommodate growth, while the tariffs charged for water usage and wastewater treatment services can be used to cover operational and maintenance costs, with any surplus invested in infrastructure development and upgrades.

Grants and Loans

Governments often offer different financing options to help fund water infrastructure projects. Federal, state, or municipalities may provide grants to support the construction, expansion, or upgrade of water and wastewater treatment facilities, especially in underserved or economically disadvantaged areas. These grants can cover a portion or the entire cost of construction, expansion, or upgrades.

Government agencies such as the U.S. Environmental Protection Agency (EPA) sometimes also offer low-interest loans or loan guarantees to municipalities, utilities, or private entities for financing water infrastructure projects. These loans usually come with favorable terms and repayment schedules.

International organizations such as multilateral development banks (for example, the World Bank), foreign governments, and development agencies of industrialized countries may also offer grants or concessional loans to support water infrastructure projects in partner countries as part of foreign aid programs.

Public-Private Partnerships (P3s)

Governments may partner with private companies to finance, design, build, and operate water and wastewater treatment plants. A public-private partnership (P3) is a long-term infrastructure agreement between a private water treatment company and a public entity such as a municipality or water utility. They are growing in popularity because they deliver key public infrastructure quickly and cost-effectively. With a P3 agreement, the private partner finances and oversees the infrastructure development, bringing a wealth of industry expertise to the table. This reduces the capital burden and project risks the public partner typically has to bear.

A Seven Seas Water-as-a-Service® (WaaS®) partnership allows both public and private entities to gain access to water and wastewater treatment services without having to outlay a huge amount of capital upfront. There are also no ongoing operating or maintenance costs to factor in, freeing up capital and resources that can be used elsewhere. With a Seven Seas WaaS® contract, customers only pay for the volume of water or wastewater treated. We offer a guaranteed reliable supply of water at an agreed-upon rate, with zero hidden costs.

Seven Seas will design, build, own, and operate a new plant, or acquire and upgrade an existing one on behalf of our customers. The responsibility of water and wastewater management rests squarely on the shoulders of our capable team of water professionals, saving our customers the time, expense, and headache associated with operating, maintaining, and repairing expensive equipment.

Build-Own-Operate and Build-Own-Operate-Transfer Contracts

Private entities and the commercial sector may consider similar financing arrangements: BOO and BOOT contracts. These agreements involve a private entity—a water treatment company—designing, building, owning, and operating a water treatment plant for the contractual period before possibly transferring ownership back to the commercial operation under the BOOT model.

Build-Own-Operate (BOO) contracts allow for the long-term operation of a facility by a private company. Under this model, the private company owns and operates the plant with no predetermined end date for transfer of ownership. This arrangement ensures that the facility is built to high standards and maintained effectively, as the operating company retains ownership and the incentive to maximize the efficiency and longevity of the infrastructure.

Build-Own-Operate-Transfer (BOOT) contracts, on the other hand, include an additional component—the transfer of ownership back to the commercial entity after a specified period. Once the transfer is complete, the commercial facility gains full control, benefiting from a well-established, fully operational facility.

Both BOO and BOOT contracts are highly effective in mitigating the risks associated with the construction and operational phases of water infrastructure projects. By leveraging the expertise and financial resources of the private sector, these contractual arrangements help ensure that projects are completed on time and within budget.

Lease Plants

Another method of financing water infrastructure is to lease a water or wastewater treatment plant. A lease agreement gets customers the services they need without a large capital outlay. Seven Seas offers short- and long-term lease agreements according to our customer’s needs, also offering an option to purchase on termination of the lease agreement. A lease plant agreement is a cost-effective solution that is ideal for a project that requires a phased installation, allowing the plant to expand as the community grows and demand increases.

By leveraging these funding sources and mechanisms, governments, utilities, and private sector stakeholders can finance the construction, operation, and maintenance of water treatment and wastewater treatment plants to ensure sustainable access to clean water and sanitation services for communities.

Do you need access to water and wastewater treatment infrastructure or want to upgrade an existing facility, but are facing financial constraints? Contact Seven Seas to learn more about how our lease plant program and Water-as-a-Service® financing solutions can help you get the water infrastructure you need.

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