Sustainable Water

Why is this Important?

Water resources are a critical production factor for power generation, particularly in the operational processes of thermal and hydropower plants. Amidst the challenges posed by Climate Change—which leads to fluctuations in water availability and Water Scarcity—as well as the enforcement of increasingly stringent environmental regulations, these factors present risks that can directly impact operational stability and reliability. Therefore, effective water resource management is a crucial strategic agenda for EGCO Group. It is essential for maintaining Business Continuity, mitigating Water Security risks, and preserving our Social License to Operate by fostering trust and strong relationships with surrounding communities.

EGCO Group is strongly committed to Integrated Water Resource Management, encompassing the entire water lifecycle from withdrawal to wastewater discharge. The Company focuses on optimizing water use efficiency in alignment with Circular Economy principles through Water Recycle and Reuse. We also apply advanced technologies to address challenges related to both water quantity and quality. Furthermore, all power plants conduct comprehensive water risk assessments and closely monitor water situations, alongside preparing backup water sources to ensure resilience during crises. This is undertaken concurrently with transparent Community Engagement to build an accurate understanding and alleviate concerns over shared resource utilization, thereby mitigating regulatory risks and supporting sustainable and stable business growth.

Sustainability Material Topic: Water Management
Stakeholder Impact on Materiality Topics

Community

Management Approach

Sustainable Water Target

Zero freshwater consumption

Reduce freshwater consumption intensity by 2% compared to previous year.

Freshwater consumption intensity was reduced by 10% compared to previous year.

Integrated Water Management

[GRI 303-1 (2018), 303-2 (2018)]

Click to Enlarge

EGCO Group strictly manages internal water resources under its Environmental Policy by applying the 3Rs principle: Reduce (minimizing raw water consumption), Reuse, and Recycle (processing water for reuse). This reflects our strong commitment to sustainable water management. To achieve this goal, the Company conducts a water use assessment to identify opportunities for water efficiency improvements, which subsequently leads to the implementation of concrete actions to reduce water consumption in operational processes. A prominent example is increasing the cycles of concentration in the cooling water system at the EGCO Cogen Power Plant. This initiative not only significantly reduces raw water and chemical consumption but also enhances operational cost control efficiency within the cooling process.

The commitment to reducing raw water consumption is driven in tandem with an effective wastewater management strategy. The Company prioritizes actions to improve wastewater quality through comprehensive wastewater treatment processes. A regular effluent quality monitoring mechanism is in place to ensure that discharged water consistently meets or exceeds the legal standards of the respective operating areas. Furthermore, the Company has initiated the reuse of treated wastewater across multiple operational sites, such as the Klongluang Utilities and EGCO Cogen power plants, utilizing it for watering green areas and site cleaning. This is coupled with the full application of water recycling at the Khanom and Quezon power plants, where treated water is repurposed for maintenance and various internal activities. These practices sustainably mitigate the impacts on local community water sources and reduce overall operational expenses.

Beyond enhancing technologies and operational procedures, EGCO Group places great importance on fostering a corporate culture of sustainability. To achieve this, awareness training is provided to employees on water efficiency management programs across the organization. These training programs integrate knowledge on optimal resource utilization with engineering principles for optimizing water-related machinery, effectively conserving both water and energy simultaneously. These efforts ensure that employees at all levels possess the necessary knowledge and understanding, empowering them to act as a vital driving force behind the Company's genuine commitment to water conservation.

Water Risk Management

Water Risk Assessment and Exposure to Water-Stressed Areas

EGCO Group assesses water risks related to droughts, water scarcity, water quality, and regulatory or water pricing risks that may increase the company’s water procurement costs, using internationally recognized tools, including WWF Water Risk Filter and the AQUEDUCT Water Risk Atlas. The water risk assessment results, which cover all of EGCO Group’s power plants globally, include a basin-level screening of physical water risks for all operational sites.

Based on basin-level screening, 10 EGCO Group assets — SPP2, SPP3, SPP5, Solarco, TWF, CWF, KEGCO, EGCO Cogen, KLU, and Linden — are located in areas classified as water-stressed. Site-specific assessments indicate that these assets have sufficient local water availability, existing water reservoirs, alternative water sources, and mitigation measures in place. Most of the sites are solar power plants, not hydropower plants, and therefore have low operational dependency on water availability. As a result, EGCO Group's water withdrawals in these areas do not create material water scarcity impacts.

Nonetheless, EGCO Group maintains water management programmes at these sites to address operational water dependency, compliance with applicable water-related regulations, and the water-related needs and expectations of surrounding communities and stakeholders. These programmes are guided by EGCO Group's Environmental Policy and grounded in the 3Rs principle — Reduce, Reuse, and Recycle. Key site-level measures include: increasing water reuse cycles in cooling tower systems to minimize freshwater withdrawal; recycling treated wastewater for irrigation, facility cleaning, and operational maintenance; and implementing rainwater harvesting at selected power plants, such as Klongluang Power Plant (KLU). Beyond reuse and recycling, EGCO Group applies advanced wastewater treatment processes — including anaerobic filtration, coagulation-flocculation systems, and neutralizing ponds — prior to discharge into surrounding water bodies.
Impact and Dependency Assessments
WWF Water Risk Filter is used to identify how EGCO Group's operations are potentially affecting water resources and the company's dependence on local water supplies. Managing these risks involves balancing operational needs with sustainable water use practices to mitigate impacts on both the environment and EGCO Group's operations.

Dependency-Related Water Risks
1. Water Scarcity: EGCO's operations face a risk level of 2.6 on a scale of 1–5, indicating minimal concern regarding the availability of water.
2. Management Instruments: The management score of 2.8 suggests moderate effectiveness in managing water resources.
3. Infrastructure & Finance: A score of 1.8 implies low risks related to water infrastructure and financing capabilities.
4. Basin Reputational Risk: A relatively higher score of 2.9 indicates moderate reputational risks linked to water issues in the basin.
5. Cultural Importance: Score of 2.7, which might suggest moderate consideration of cultural aspects in water management.
6. Biodiversity Importance: A score of 2.9, indicating a higher importance of biodiversity which could be impacted by water usage.
Impact-Related Water Risks
1. Water Scarcity Impact: Score of 4 indicates a potential high impact on local water scarcity due to operational activities.
2. Water Conflict: The water conflict risk is low-to-moderate, with a score of 2.7, suggesting localised conflict over water resources at the operational sites.
In 2024, EGCO Group conducted a qualitative assessment on the impacts and dependencies of its business on biodiversity, including an evaluation of risks related to water dependencies and impacts. ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure) was used as the tool for this assessment.

As EGCO Group has direct operations as a power producer, renewable energy power plants and electric utilities operations results in priority impacts on freshwater ecosystem use and water use. The cooling tower systems require large amounts of water, and water withdrawal from public water sources may affect the living organisms in those water sources.

The assessment of dependency across the value chain shows that the EGCO Group’s operations are dependent on surface water, water flow maintenance, climate regulation, and flood and storm protection, all of which are critical inputs to the thermal power generation process.
Future Changes on Water Quantity and Quality

EGCO Group conducts assessment of water quality and projects future changes in water availability at the local level and assessed potential impacts on water demand and water availability up to 2040. Implementing Water Supply Risk Management and integrating drought concerns into Enterprise Risk Management helps assess effects on profit and risk scenarios. While most of EGCO's plants are safeguarded against drought, two hydro plants might face moderate to low impacts, affecting revenues variably. Mitigation strategies include optimizing water and power management, adjusting financial obligations, and reducing operational costs to lessen these environmental impacts on business operations.
Sensitivity Analysis on Water Availability and Quality
EGCO Group reviews all water-related risks and issues before initiating construction or development of new power plants and collects baseline data for all sites. Following the commercial operation date, EGCO Group monitors water levels in the area on a regular basis. EGCO Group consistently assesses physical risks in the area, including water quantity (i.e., water scarcity, climate variability, and droughts) and water quality (i.e., wastewater risks), using the AQUEDUCT risks, through using the AQUEDUCT Water Risk Atlas tool.

EGCO Group assesses potential impacts in different scenarios, including where water supply is reduced by 10%, 30%, and 50%. The analysis accounts for water scarcity during droughts that may be affected by climate change. The following assumptions are used:
1. Water flow is reduced by 35% during January – June from the budget.
2. Forecast water flow during Quarter 2 according to the budget.
3. Reduction impacts on electricity generation and net profits.
EGCO Group assesses risks related to water quantity and quality by considering the likelihood and severity of potential impacts. This assessment revealed that due to the presence of sufficient water supply and existing mitigation measures put in place for water scarcity, the majority of EGCO Group’s power plants have limited to no risks in this area.

Furthermore, EGCO Group has assessed the impacts of different scenarios from established operational plans and has calculated the value of impacts from mitigation scenarios.
Risk Assessment of Regulatory Factors and Potential Impacts on Increased Water Prices

EGCO Group consistently monitors changes in regulations, policies, and water procurement costs in all areas of operations, and assesses potential impacts that may occur from those changes. The Company also forecasts future changes that may affect water procurement costs or standards needed to maintain compliance, such as those relating to water treatment and other licenses as outlined in the Water Resources Act B.E. 2561 (2018) through using the AQUEDUCT Water Risk Atlas tool.
Managing Water-Related Risks and Impacts on Stakeholders

Beyond managing water-related impacts on the organization, EGCO Group gives importance to managing impacts on external stakeholders as well. EGCO Group estimates future potential stakeholder conflicts by implementing a strategic plan to identify the water resources and water stress before constructing new power plants to avoid stakeholder conflicts. To that end, the Company works with surrounding communities to monitor their satisfaction, understand their concerns and challenges, and collaboratively find solutions relating to water issues. Additionally, EGCO Group consistently inspects the water quality of discharged water to ensure that it meets expected standards and does not create adverse impacts on communities living downstream.

EGCO Group organizes meetings with communities at least twice a year. During these meetings, representatives from our power plants join representatives from government agencies and local communities to report the environmental performance of the power plant and take feedback and suggestions from all stakeholder groups.