Electricity is a critical input for delivering municipal water and wastewater services. Electricity costs are usually between 5% - 30% of total operating costs among water and wastewater utilities (WWUs) worldwide. The share is usually higher in developing countries and can go up to 40% or more in some countries (e.g. India and Bangladesh). Such energy costs translate into high and often unsustainable operating costs, which directly affect the financial health of WWUs, puts strains on public/ municipal budgets, and can increase tariffs on their customer base.
In developing countries, WWUs are commonly owned and operated by the government. Many are run by city authorities. As such, electricity used for provision of water and wastewater services can have a significant impact on a municipal governments’ budget and fiscal outlook. In India, for example, water supply was reported to be the largest expenditure item among all municipal services. Programs designed to lead to reductions in WWU operating costs can thus become an attractive proposition for both utilities and their municipal owners, potentially creating fiscal space to grapple with other socioeconomic priorities while also lessening the upward pressure on water and wastewater tarriffs. Improving energy efficiency is at the core of measures to reduce operational cost at WWUs.