Global water scarcity is driving increased reliance on seawater desalination. While desalination offers a seemingly limitless water source, its high energy demands create a complex water-energy nexus. This study examines this nexus in Israel, a country heavily reliant on desalination (providing over 80% of municipal water). The Israeli Electricity Authority employs the Electricity Load Shedding Program (ELSP) during energy shortages, involving large consumers like desalination plants. Existing literature focuses on broader water-energy nexus issues (energy intensities across different water production stages, sectoral water-related energy intensity, and benchmarking energy intensities by water source/technology). However, few studies address short-term energy demand fluctuations from the water sector, especially during peak demand periods. This study aims to fill this gap by analyzing short-term operational dependencies on energy for desalination, the implications of economic incentives within the energy and water sectors, and the role of high-resolution data in revealing imbalances and informing joint management decisions. Israel serves as an ideal case study due to its advanced water management strategies and significant reliance on desalination, which accounts for approximately 3% of national electricity consumption. The study investigates how desalination water production changed in response to load shedding incentives during a 2019 heatwave, exploring the interactions between water production, the national water supply, regulatory systems, and the oversight of energy and water sectors. Data complexities and inter-institutional barriers are acknowledged, but the study aims to highlight the negative implications of current energy policies on the water sector and advocate for improved regulation and joint management.

The literature extensively covers the water-energy nexus, encompassing energy intensities in various water production stages, sectoral water-related energy intensity, and comparisons across water sources and technologies. Studies often rely on national and international databases (e.g., FAO, IEA, EIA). However, a gap exists in addressing short-term energy demand fluctuations from the water sector, particularly during peak demand periods, which may overlook critical lapses in water sector integrity. This study addresses this gap by focusing on short-term operational dependencies and the economic incentives (or disincentives) influencing the decision-making process.

This study utilizes a mixed-methods approach, combining quantitative and qualitative data collection and analysis. Data sources included hourly temperature and humidity from the Israeli Meteorological Service; hourly electricity demand forecasts and historical data from the Electricity Authority; daily water production from natural resources and reservoir volumes from the National Water Company (Mekorot); hourly water production rates from desalination plants (DPs) from the Israeli Water Authority; information on DPs' contracts and pricing mechanisms from the Ministry of Finance and Electricity Authority; and qualitative data obtained through interviews with the Head of the Desalination Division of the Water Authority. The quantitative data analysis involved a system-level analysis, calculating the daily change in water storage using a mass balance approach (Equation 1), accounting for groundwater, surface water, desalination water production, and daily demand. A benefit-cost analysis (Equations 2 and 3) was conducted to evaluate the economic incentives for DPs to participate in ELSPs, considering lost revenue, penalties, saved costs, and energy shedding compensation. The qualitative data provided context and insights into decision-making processes during the extreme heat wave event. The analysis focuses on the period of an extreme heatwave in May 2019, when high temperatures led to peak energy demand and the utilization of the ELSP.

Israel, facing acute water scarcity, relies heavily on desalination, which accounts for a significant portion of its national energy consumption. During a May 2019 heatwave, peak energy demand triggered the Electricity Load Shedding Program (ELSP). Multiple desalination plants (DPs) participated in the ELSP, reducing or halting production. While the DPs received substantial compensation for reduced energy consumption, this resulted in significant water production losses. The analysis revealed that the compensation for energy shedding was 6 to 14 times greater than the economic costs associated with lost water production for DPs. Despite the high water demand during the heatwave, the Water Authority couldn’t prevent the DPs from participating in ELSP because of contractual and legal issues. The resulting imbalance creates an economic incentive for DPs to participate in ELSPs, regardless of the negative impact on the overall water supply. A mass balance analysis of the water system showed that during the heatwave, the system used all available water resources (groundwater, surface water, storage) to meet increased demand, highlighting the vulnerability caused by reduced desalination output. The economic analysis demonstrated a significant imbalance between the economic incentives favoring the energy sector and the negative economic consequences for the water sector.

The study's findings highlight a critical flaw in the current Israeli water-energy management system. The economic incentives within the ELSP disproportionately favor the energy sector at the expense of the water sector. This imbalance stems from a lack of coordination and joint management strategies between the Israeli Water Authority and the Electricity Authority, despite both being governmental entities. The current structure, designed to ensure professional autonomy and limit political interference, inadvertently creates an agency problem, where individual actors' interests diverge from sector-wide objectives. This study emphasizes the need for an integrated water-energy framework, incorporating cross-sectoral synergies and tradeoffs. The analysis demonstrated that short-term events, like extreme heatwaves, can severely impact water security, particularly when desalination plants, crucial for the water supply, reduce production due to ELSP participation. The contrasting economic incentives highlight the necessity for aligned policies that consider both private and sector-wide costs and benefits.

This study demonstrates the crucial need for coordinated water-energy management strategies, especially in desalination-reliant regions facing increasing extreme weather events. The current system, with its imbalanced economic incentives, jeopardizes water security. Future research should focus on developing and implementing joint management mechanisms that align economic incentives and ensure a resilient water-energy system. This might include conditional participation in ELSPs based on water sector indicators or contractual agreements that incorporate incentives for postponing production during peak energy demands. Exploring the use of renewables to power desalination plants may also offer a long-term solution. Finally, addressing data-related challenges, such as standardization, sharing, and documentation of tacit knowledge, is crucial for effective coordinated management.

The study focuses on a single extreme heatwave event in Israel. While this provides valuable insights, the findings may not be generalizable to all contexts. The economic analysis relies on certain assumptions regarding production rates, energy intensity, costs, and compensation rates. Variations in these factors could influence the net benefits of ELSP participation. The study also acknowledges data limitations due to data access restrictions and the absence of a centralized, shared database for relevant data. The qualitative data obtained through interviews provides valuable context but is subject to potential biases.