Capital Investment
Construction Cost Comparison
| Configuration | Total Cost | Per-AF Capacity Cost |
|---|
| Phased Build (single pipeline first) | $8.6 billion | $17,200/AF |
| Dual Pipeline (both Day 1) | $11.15 billion | $22,300/AF |
| Recommended: Dual Build | $11.15 billion | Saves $2–3B lifecycle |
Capital Cost Breakdown
| Component | Cost (millions) |
|---|
| Pipeline materials (dual 96") | $4,000 |
| Trenching and installation | $2,700 |
| Right-of-way acquisition | $400 |
| Pumping stations | $400 |
| Desalination facilities | $2,500 |
| ASR storage systems | $1,100 |
| Engineering and contingency | $2,320 |
| Total | $11,150 |
Multi-Use Corridor Assets
| Asset | Investment | Annual Revenue | Payback |
|---|
| Dark fiber (144-strand) | $35M | $12M | 2.9 years |
| HVDC transmission (4 GW) | $1,600M | $192M | 8.3 years |
Operating Cost Model
| Component | Cost/AF |
|---|
| Desalination operations | $700 |
| Pipeline operations | $200 |
| Pumping energy | $100 |
| ASR operations | $75 |
| Administrative overhead | $75 |
| Total Operating Cost | $1,150/AF |
Operator Margin
Private desalination operators receive: Cost + 8% margin
- Water sales at cost-plus guaranteed margin
- 100% of brine valorization revenue retained
- Cost Stabilization Reserve funded from brine profits
Revenue Model
Pricing Structure
| Tier | Description | Formula |
|---|
| Tier 1 | Desal operator → TBA | Operating cost + 8% |
| Tier 2 | TBA operating costs | Pass-through |
| Tier 3 | TBA → Municipalities | ~$1,400/AF |
5-Year Revenue Projection
| Year | Production (AF) | Municipal Sales | Revenue | Net Surplus |
|---|
| 1 | 150,000 | 100,000 AF | $170M | $3.6M |
| 2 | 175,000 | 130,000 AF | $190M | $3.5M |
| 3 | 200,000 | 155,000 AF | $227M | $14.7M |
| 4 | 200,000 | 165,000 AF | $242M | $21.7M |
| 5 | 200,000 | 170,000 AF | $255M | $28.0M |
Additional Revenue Streams
| Source | Year 5 Annual |
|---|
| Water sales | $280M |
| Fiber leases | $12M |
| HVDC transmission | $192M |
| Brine transport fees | $8–15M |
Funding Sources
State Funding
| Source | Available | Backbone Share |
|---|
| Texas Water Fund | $20 billion | $6–8 billion (30–40%) |
| SWIFT | $6+ billion | Supplemental |
Federal Funding
| Source | Potential |
|---|
| WIFIA (Water Infrastructure Finance and Innovation Act) | Up to 49% of eligible costs (~$5.5B) |
| EPA State Revolving Fund | Variable |
| IRA Clean Water provisions | TBD |
Private Investment
| Component | Investment |
|---|
| Desalination operations | $2.5–3.0B |
| Brine valorization | $0.5–1.0B |
| Transmission JV | $800M–1.0B |
Comparison to Alternatives
| Source | Cost/AF |
|---|
| Edwards Aquifer | $350 |
| Carrizo-Wilcox groundwater | $600 |
| Texas Water Backbone | $1,400 |
| Vista Ridge Pipeline | $2,000+ |
| New reservoir development | $1,800–2,500 |
Why Backbone Pricing Is Competitive
- Vista Ridge (current alternative): $2,000+/AF and rising
- Marvin Nichols (proposed): $1,800+/AF plus 66,000 acres destroyed
- Backbone delivers drought-proof water at lower cost than comparable alternatives
Risk Factors and Mitigation
| Risk | Mitigation |
|---|
| Energy price spike | Cost Stabilization Reserve; hedging required |
| Low municipal uptake | Take-or-pay contracts (80% minimum) |
| Construction cost overrun | Fixed-price contracts; contingency reserves |
| Technology risk | Proven technology; no R&D required |
Financial projections are estimates requiring detailed engineering analysis.
Contact: info@texaswaterbackbone.org | Web: texaswaterbackbone.org