Lessons Learned from Using Alternative Delivery in the Chile SWRO BOOT Desalination Projects

Agenda Introduction Water Risk Desalination Plants trending Alternative Delivery Methods Why use them? Desalination Plants – Current and Future Trending Water Desalination Industry Outlook, Boundless Market focus deck – Desalination and reuse, Slide 33, GWI, 2023 Market focus deck – Desalination and reuse, Slide 7, GWI, 2023 The private entity owns assigned all operating revenue risk and builds, and operates. the asset until the handover to the any surplus revenues public entity Financing – Owner Cash Flow Owner WPA DBO BOOT/BOO Debt SPV Owner Equity Monthly Payments COD COD Debt Construction Spending WPA Loan Repayments Equity Signature O&M Costs DBO Bidding Construction Operation Period BOOT Bidding Construction Operation Period “PPPs are not a “one size fits all” solution and the decision to use one depends on specific goals, operating environment, and risk preferences”, Greer, R. The Chile Case – Seawater Desalination Current Industry Characteristics Customer Type Delivery Method Drinking Water EPC Mining BOOT Industrial (power plants) BOO Multipurpose Location Technology Number & Size Mainly in the north RO: 68% (96%) of the country – Plants in operation > 0. MGPD MVC: 23% (3%) TVC: 9% (1%) – MGPD + MGPD in new projects % by No. (% by capacity) – Increment in size in the last decade 45% > MGPD The Chile Case – Alternative Delivery in SWRO Plants Private entities use alternative delivery approach in Chile (mining) Alternative funding options Allocating project risks and responsibilities that private entities may Desalination BOOT Contract Scheme not have the necessary expertise to perform Owner Alternative Delivery SWRO projects include: Service Sponsor Agreement Agreement Sponsor Loan SPV Lenders Equity Agreement Sponsor O&M EPC(s) Marine Desalination Conveyance Energy Supply O&M subcontract EPC Subcontract Works Plant System System Alternative Delivery SWRO Plants in Chile Tedagua, 2023 IDE Technologies, ALADYR 2023 IDE Technologies, ALADYR 2023 Name: Caitan Name: CODELCO SADDN Name: Aguas Pacífico Location: Mejillones Location: Tocopilla Location: Quintero Delivery: BOOT Delivery: BOOT Delivery: BOO Customer: Mining Customer: Mining Customer: Mining Capacity: 22. MGPD (1000 l/s) Capacity: 19. MGPD (1000 l/s) Capacity: 22. MGPD (1000 l/s) (Phase 1) Treatment: DAF+MMF+RO+Calcite Treatment: UF+RO+Ca(OH) 2 Treatment: MMF+UF+RO+Ca(OH) Status: Operation 2 Status: Construction Status: Construction Lessons Learned: Design and Procurement Product Water Energy Quality Consumption Consider contract – Careful membrane selection guarantees and safety to provide competitive GEC factors – GEC scenarios properly defined for all operating conditions Production Scenarios Reverse Be aware of contract Osmosis requirements, especially if Design multiple scenarios have been considered Membrane Age Membrane – Membrane age definition is Replacement Replacement plan shall key to meeting performance consider compliance with guarantees contract guarantees and – Consider renewal and requirements replacement plan Cristobal del Rio, CDM Smith Chile delrioc@cdmsmith.com Rubén Muñoz, CDM Smith munozrm@cdmsmith.com Nestor Rojas, CDM Smith Chile rojasna@cdmsmith.com Rodrigo Lillo, CDM Smith Chile lillorr@cdmsmith.com.