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Dresden builds mega water plant for TSMC and other chip companies

With the settlement of the chip giant TSMC, it is clear that the water supply in Dresden will not last. That's why a new plant is planned for many millions of euros. The most important questions and answers about the project.
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Chip giant TSMC is building a plant in Dresden, so the water supply in Dresden is to be changed. © TSMC

From Andreas Weller

Dresden. Before the world's largest manufacturer in the chip industry decided to build a plant in Dresden, city and Saxony Energy assumed that 24,000 cubic meters of water per day would be enough for the businesses in Dresden. Now it's clear: industry needs more water.

That's why a completely new plant is to be built, costing many millions of euros and subsidized by the city to the tune of up to 50 million euros. The most important questions and answers about the mega water plant at a glance:

Why the original plan did not work

The original plan was to provide additional water treatment with a service water network in the Ostragehege. But it is now clear that the previous plans do not meet the requirements of the industry. "A direct supply of groundwater and bank filtrate to the industry is not possible due to the quality," a submission from the city administration states in this regard.

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Raw water would have to be processed at great expense, but then only 18,500 cubic meters per day would be available. Since the city council has already decided on the service water network and a subsidiary of Sachsen-Energie has begun planning, the company will be reimbursed for the approximately 262,000 euros already invested.

Why a new plant is needed

The companies Globalfoundries, Infineon and Bosch will soon be joined by TSMC. The Taiwanese company wants to build a semiconductor factory in Dresden for around ten billion euros by 2027. Since Infineon is also upgrading its site in Dresden for around five billion euros, a "secure and stable water supply" must be guaranteed.

Under a concession agreement, Sachsen-Energie is responsible for ensuring the public supply of water in Dresden - for the population, but also for commercial and industrial customers. Last year, around 124,000 cubic meters of water per day were required in Dresden, a third of which was used by industry. Because of new settlements, but also because of climate change, Dresden will need around 235,000 cubic meters of water per day in 20 years, almost double the amount. Half of this will be needed by industry. From 2030, 60,000 cubic meters of water per day will be needed more than at present. According to the city, this amount can currently be provided neither in Dresden nor anywhere else in Saxony.

Where the new waterworks will go

To avoid "normal tariff customers," i.e., Dresden households, sharing the costs for the industry, the water supply is to be strictly separated. Sachsen-Energie currently operates three waterworks in Dresden - in Coschütz, Hosterwitz and Tolkewitz - to produce drinking water. However, the possibilities for expansion are "limited". Only Hosterwitz still has capacity and will be expanded until 2026, to secure the industrial water supply until 2030, "without endangering the drinking water supply," the city emphasizes. After that, however, it will no longer be enough.

Therefore, a new process water supply system is to be built, completely independent of the drinking water distribution network and with treated river water from the Elbe. Therefore, a dedicated river water plant is to be built near the Elbe.

Several sites have already been investigated for this. The one in Kaditz/Übigau is the "only possible option. Specifically, it is an area near the Flügelweg bridge, next to the "Elbaue" service area with the Shell gas station. The river waterworks and a service water distribution system to the north of Dresden are to be built by 2030.

What the new waterworks will cost

The city and Sachsen-Energie expect to spend 247 million euros on the new service water supply system. These costs are to be recouped by 2044, according to the plan. However, only if the rising water costs are quasi-subsidized for industry. For this reason, it was agreed with the chip manufacturers that they would pay around 20 percent more for water in the future, but that this would be less than the expected real cost of the water from the new system.

This would cover around 97 million euros of the 247 million euros in investment costs. This would leave Sachsen-Energie with a gap of around 150 million euros. However, there are no subsidy programs for such projects, and the Saxon Ministry of Economics has no longer been funding water supply and wastewater disposal plants in Dresden and Leipzig since 2022.

However, the state and the city have agreed to find funding because the separation of the systems will guarantee the drinking water supply for Dresden residents and supply the semiconductor industry. If the cabinet agrees, Saxony will provide 100 million euros and the city 50 million euros. 32 million euros have already been earmarked for the "upgrading of the northern area" by 2027, with a further 18 million euros to be approved by the Dresden City Council. To compensate for this, the city's drainage system is to distribute more profits. In return, the daycare center operator would receive fewer subsidies.

These subsidies would effectively be in addition to the billion-dollar subsidy for the new plant, so that the chip plants would have to pay less for the water supply. The city warns: "Significantly rising costs for the supply-critical water infrastructure could lead to a corporate exodus for industrial companies in the future, especially in the semiconductor industry, or to the prevention of further decisions to locate in Dresden as an industrial site." This would significantly reduce the competitiveness of Dresden as a location for industry and its companies, and not reduce global dependencies as planned.

How the new plant will be protected from floods

Three plots of land have to change hands for the construction of the plant and the supply system. Specifically, this involves an area of just under 90,000 square meters in Kaditz, just under 17,000 square meters in Übigau and a good 20,000 square meters in Reick. The site in Reick belongs to Drewag, so it will be transferred within the Sachsen-Energie Group. Sachsen-Energie has to buy the other two plots from the city. This is to be done without a tender at market value.

The properties are partly located in the designated floodplain of the Elbe River, but were not affected by the flood events in 2002 and 2013. It is planned to raise the dikes to protect the area from a hundred-year flood. Nevertheless, development is only possible in a "flood-adapted" manner. Of the land, only certain sub-areas are required for the new system. Other areas are currently used by tradesmen who have rental agreements. However, these are expressly not the areas intended for sale.

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