Ofwat - £2.8bn green recovery investment plans for water sector


Ofwat - £2.8bn green recovery investment plans for water sector

Ofwat, in collaboration with Defra, the Environment Agency, the Drinking Water Inspectorate, and CCW, wrote to water companies last year asking them to bring forward new proposals and accelerating existing ones to deliver an innovative and more resilient future for customers, society and the environment.

The water sector regulator is today setting out plans to support £850 million of new, green investment projects. A further £1.9 billion of future planned environmental projects will be brought forward to contribute to a green recovery.

Severn Trent Water, South Staffs Water, South West Water, Thames Water, and United Utilities have received initial backing from Ofwat for ambitious new proposals collectively worth over £850 million which will benefit the environment and create jobs.

In assessing the new proposals, Ofwat collaborated with Defra, the Environment Agency, the DWI and CCW, and took their views into account. Ofwat will now consult on the draft decisions before making final decisions in mid-July.

As part of the new package of investment, the companies will commit over £157 million to help eliminate harm caused by storm overflows and trial the creation of two new bathing rivers. This is on top of the £1.1 billion that wastewater companies are investing to address the issue during 2020-25, as well as the commitments recently agreed through the Storm Overflows Taskforce3

Environment Minister Rebecca Pow said:

'£850m of new funding shows that water companies have risen to the challenge to help drive this country’s green recovery.

'I am particularly pleased to see increased investment to eliminate the harm from storm overflows, following calls by the Storm Overflows Taskforce to accelerate progress in this area.

The new projects will also see companies collaborating with local partners to reduce the risk of flooding, protect habitats, and cut pollution by investing £89 million in catchment management and nature-based solutions.

There are also innovative improvements in drinking water treatment and supply which will reduce energy and chemical usage and there will be up to £172 million for measures to help customers save water, including in areas that currently abstract water from chalk streams. These proposals will help to restore and create a natural environment that current and future generations can be proud of.

New schemes to be delivered alongside £1.9bn of planned accelerated expenditure

The new schemes will be delivered alongside £1.9 billion of planned expenditure which has been brought forward by twelve water companies across England to further accelerate the green recovery and deliver hundreds of extra environmental schemes. These include measures to improve river quality and protect endangered species.

Several water companies are also accelerating parts of their existing 2020-25 plans, investing hundreds of millions earlier when it matters most for the economic recovery, at no additional cost to customers.

David Black, Interim Chief Executive at Ofwat said:

'Today marks an important step in this country’s green economic recovery with the water sector stepping up to make a difference. As part of these measures, we will see a collective package worth £2.8 billion of new investment and accelerated expenditure to care for the environment, create jobs and support customers and communities to bounce back from the COVID-19 pandemic.

"From tackling the most pressing environmental issues, to providing economic stimulus with the backing of jobs and training, there has never been a more important time to act. These proposals can be of huge benefit for people and the planet when it is needed most.'

Environment Agency chair Emma Howard Boyd commented:

'The green recovery is an opportunity to go further on net zero, nature-based solutions and environmental protection. It is hugely encouraging to see water companies accelerate investment to deliver real and lasting improvements.

'This demonstrates a renewed commitment to reduce pollution incidents and to prepare the country for escalating climate shocks like floods and demand for water during heatwaves. I look forward to seeing the results.'

 Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), added that the broad support the proposed environmental improvements secured from customers reflected people’s eagerness for their water company to play a leading role in reducing pollution in rivers and bathing waters, tackling flooding risks and protecting our water resources.

The companies, along with seven others in England, have also brought forward £1.9 billion worth of additional statutory environment schemes into the 2020-25 period. A number of companies are also accelerating parts of their existing AMP7 2020-25 investment plans

 Overall, the proposed green recovery package results in an additional £2.8 billion of environmental investment, on top of the existing five-year £51 billion PR19 package for 2020-25.

 Ofwat said that customers will not start to pay for the majority of this investment until 2025, when the economy is likely to be stronger.

Deadline to submit responses to Ofwat's consultation on its draft decisions on the proposals is midday on Wednesday 9th June - click here to download the consultation paper.

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