Sydney Desalination Plant: Investing in Australians’ water security

The investment: In 2012, we acquired 50 per cent of the Sydney Desalination Plant, a key water infrastructure asset in Australia, in a deal that valued the project at about $2.3 billion. In 2020, we increased our stake to 60 per cent.

After a multi-year drought at the start of this century threatened the water supply of Australia’s largest cities, the country adopted an ambitious plan to manage this critical resource. A key element of the strategy involved building large-scale seawater desalination plants to supplement traditional freshwater sources like rainwater. In 2012, we acquired a 50 per cent stake in one of those projects, the Sydney Desalination Plant, after the New South Wales state government moved to privatize it.

The Sydney Desalination Plant has the capacity to supply up to 250 million litres of drinking water a day, enough to satisfy the needs of about 1.5 million residents in Australia’s most populous city (or some 15% of Sydney’s daily needs). Initially envisioned as a form of insurance in times of drought, the plant historically operated when levels in the city’s water-storage dams fell below 60% and then went on long-term standby when water levels improved. (Terms of our operating contract ensured attractive returns even during periods of reduced operations, effectively cost-indifferent if the plant operated or not.)

Recent extreme weather events, however, have prompted the state government to rethink its water-management plans and to request that the plant remain available to ramp up quickly and operate even when dam levels are higher. It’s also eyeing a future in which the population of Greater Sydney is expected to rise by 45% to more than 7 million people over the next two decades.

Sydney isn’t alone in facing challenges around water scarcity. The number of desalination plants around the world has doubled since 2000, to around 20,000 facilities, as climate change threatens water supplies in cities with growing populations. Around 300 million people globally rely on desalinated water, a figure that’s expected to rise.

While desalination plants improve water security, they consume significant amounts of energy and have to return seawater concentrate back to the ocean. We’re particularly proud of our investment partnership with the Sydney Desalination Plant because it was built with a strong focus on the environment, and because it prioritizes ESG concerns, with a third of the site an ecological conservation area that protects native species of flora and fauna. The plant is 100% powered by renewable wind energy. And it works continuously to minimize its environmental impact, including through stringent monitoring of the local marine environment to ensure impacts remain minimal. A six-year university study found no significant impacts on seawater quality or aquatic ecology from the operation of the plant.

As Sydney grows, we’re working with the Sydney Desalination Plant to provide it with reliable and sustainable drinking water. It’s another way Ontario Teachers’ is investing to make a mark.

“OTPP's long-term, socially responsible focus makes it in ideal partner for core infrastructure assets such as the Sydney Desalination Plant. As an increasingly critical component of Sydney's water supply system, which is being challenged more than ever before by the impacts of climate change and extreme weather events, we need to operate, maintain and invest in our assets to ensure we achieve our long-term objectives including reliability and sustainability. We are fortunate to work with the highly capable and supportive team at OTPP that have global exposure, think long-term and who are always thinking ahead about how best to navigate through the challenges of the future.”    

Philip Narezzi, CEO
Sydney Desalination Plant