News
Ofwat Innovation Fund Hits £400m To Support Water Transformation
Industry regulator Ofwat has announced that its innovation fund will double to £400 million, with the fund extending for a further five years to 2030 in order to help transform the water sector and address the different challenges it now faces.
These challenges include reducing its environmental impact, encouraging growth, ending the use of storm overflows, reducing water leakage rates and slash greenhouse gas emissions. Furthermore, water suppliers must also work to improve services for customers, provide value and meet the standards that the general public demands – and deserves.
Thus far, the fund has supported 93 different projects through various competitions, including the Innovation in Water Competition, the Water Discovery Challenge and four Water Breakthrough challenges, the fifth of which is now underway, with winners due to be announced this spring.
Previous project winners include seagrass restoration, community adaptation schemes to cope with increased rainfall, robots that identify cracks from inside pipes and new sewage sludge processes to destroy forever chemicals.
As well as further competitions to drive innovation, three new funding streams will be introduced to support the implementation and scaling of successful projects, requiring sector-wide collaboration.
Helen Campbell, senior director for sector performance with Ofwat, explained that there’s no doubt that there are many urgent challenges now facing the water sector and this £400 million commitment will see highly collaborative projects supported to develop and implement appropriate solutions.
“While the first five years championed nascent technologies and new approaches to demonstrate their future potential, the next five years must see them scale and deliver a lasting and beneficial impact for customers, society and the environment,” she added.
And professor Ana Soares from Cranfield University, leader and partner on various fund-winning projects, made further comments, saying: “The programme is inclusive, supporting every stage from the conception of new ideas to their practical implementation.
“It supports ambitious projects that address long-term challenges such as climate change, resource efficiency, and resilience, while embracing inclusivity, leveraging leading-edge technologies and services, and ensuring tangible benefits for customers, communities, and the environment.”
Wider context
This innovation fund is part of a bigger upgrade package of £104 billion that has been set aside for water sector transformation, a package that was announced in December last year.
Under the 2024 Price Review, new investment will be quadrupled over the next five years so that companies have the required funds to improve performance and shore up supplies for future generations, while delivering cleaner rivers and seas.
The investment wave will include £12 billion on reducing storm overflow spills, £6 billion to combat nutrient pollution, £3.3 billion on nature-based solutions and biodiversity improvements, and £456 million in extra funding to increase the rate of water mains replacements.
In order to finance this investment programme, however, bills for customers across England and Wales will climb by 26 per cent from April 2025.
In December, Ofwat chief executive David Black said: “We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers. That is why it is vital that companies are stepping up their support for customers who struggle to pay.
“We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements.
“This has seen us remove £8 billion of unjustified costs compared with companies’ most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8 billion.”
To help low-income households that may be struggling to pay their bills, trade association Water UK recently announced that support will be increased to their highest levels ever, with reduced bills and additional financial support available for more than three million households over the next five years.
WaterSure charges or social tariffs can be accessed to help drive bills down, while other support measures such as payment breaks and debt forgiveness will also be implemented for those finding it hard to make payments.
For businesses, there are many ways that bills can be reduced, but one of the quickest and most effective is to consider switching water supplier. As part of the process, a water audit is carried out so that water usage and consumption habits can be identified and the most appropriate water-saving solutions selected over time.
If you’d like to find out more about switching and how you can save your business money, get in touch with the H2o Building Services team today.