Dŵr Cymru Welsh Water (DCWW) has announced the next stage of its Cwm Taf Water Supply Strategy, the largest infrastructure investment in the company’s history with a current estimated total value of £667.2 million including VAT.

Image: proposed new water treatment works at Dan-y-Castell

The major investment will modernise drinking water services across South Wales by replacing ageing water treatment facilities, increasing water storage capacity and strengthening the resilience of supplies for over 400,000 of Welsh Water’s three million customers.

The Cwm Taf WSS Procurement Scheme has been designated under Ofwat's Direct Procurement for Customers (DPC) programme. The DPC process involves the selection of a Competitively Appointed Provider (CAP) - a third-party entity - to design, build, finance, operate, and maintain major water infrastructure projects.

As part of the next stage of the project, Welsh Water is inviting infrastructure investors, lenders and engineering partners to help shape the commercial and procurement approach before formal procurement begins under Ofwat’s DPC model.

The water company says the market engagement programme will help ensure the project benefits from the strongest possible commercial arrangements, attracts world-class expertise and delivers long-term value for customers, communities and the environment.

Ruud Haket, Interim Chief Asset Officer said:

“The Cwm Taf Water Supply Strategy is a once-in-a-generation investment that will secure resilient drinking water supplies for South Wales for decades to come.

“We’re looking to work with organisations that share our ambition to deliver high-quality infrastructure that benefits our customers, supports our communities and protects the environment.

“This market engagement is an important first step in building those partnerships and ensuring we develop a delivery model that attracts the very best expertise and investment available.”

The Cwm Taf Water Supply Strategy was identified through Welsh Water’s Water Resources Management Plan and is essential to meeting future drinking water quality requirements while improving the long-term resilience of the network.

Image: proposed tpgrades to Llwyn-onn Water Treatment Works

The proposals include:

• Construction of a new water treatment works at Dan-y-Castell Farm, Merthyr Tydfil.
• A new pumping station at the existing Pontsticill Water Treatment Works.
• Upgrades to Llwyn-onn Water Treatment Works.
• Transfer pipelines
• Environmental and mitigation measures
• Treated water storage

The proposals also include the future decommissioning of the existing treatment works at Pontsticill and Cantref, both of which were originally built almost a century ago.

The market engagement programme will take place in two phases.

• Phase 1 is focused on investors, lenders and organisations capable of providing institutional finance, to specifically seek feedback on the emerging commercial model and financing approach This will involve targeted discussions with investors and lenders to test the project’s financeability and bankability.
• Phase 2 will broaden engagement to include Tier 1 delivery partners to validate the proposed commercial and procurement model. In-person Market Engagement events will be open to investors, lenders, contractors, designers and other delivery organisations interested in the Cwm Taf WSS Procurement Scheme.

The engagement will help refine the procurement approach before key governance decisions are taken and ahead of procurement commencing in early 2027.

Following a competitive procurement competition, the CAP contract award is anticipated to be late 2028. The CAP contract will progress the Scheme through detailed design, construction, testing and commissioning activities, including an anticipated 12‑month Reliability and Optimisation Period. The Scheme will then be completed to allow commencement of the DCWW managed operational term.

Following statutory pre-application consultation undertaken in 2025, Welsh Water expects to submit planning applications later this year.

Current estimated start and end contract dates are 30 November 2028 to 30 November 2058.

The market engagement process is as follows:

Phase 1 Market Engagement - Investors and Lenders - engagement deadline 4 August 2026

Investors, lenders or other providers of institutional capital, debt and equity finance wishing to provide feedback on the emerging commercial model, financing approach and financeability of the Cwm Taf WSS Procurement Scheme are asked to register their interest no later than 4 August 2026.

Registered participants will be issued with a questionnaire for completion and return by the response deadline which will be set out in the questionnaire. Following review of questionnaire responses, DCWW will consider responses and may, at its discretion, engage in one-to-one discussions to explore and clarify matters raised in their submissions and obtain further feedback on key commercial, contractual and financing issues.

Welsh Water intends to share an anonymised summary of key themes and insights arising from this focused Market Engagement with the wider market in advance of the Market Engagement events.

Phase 2 Wider Market Engagement Events – engagement deadline 10 August 2026

The events will provide an update on the Cwm Taf WSS Procurement Scheme, the proposed procurement approach, commercial model, contractual framework and financing strategy, and will provide an opportunity for participants to ask questions and provide feedback on the developing procurement and commercial arrangements.

Who should participate:

• Infrastructure investors and major infrastructure financing bodies
• Design, construction and engineering firms
• Contractors and other delivery organisations

DCWW welcomes participation from existing joint ventures and consortia and encourages the formation of new partnerships where appropriate.

The water company intends to hold in-person Market Engagement events at the following locations:

• Cardiff - 8 September 2026, time TBC
• London - 9 September 2026, time TBC

Organisations wishing to attend should register by 10 August 2026. Further details, including venue information and the final agenda, will be provided to registered participants.

The Market Engagement events are expected to comprise presentations and opportunities for market participants to engage in discussions and provide feedback on the developing procurement, commercial, contractual and financing approach for the Cwm Taf WSS Procurement Scheme.

Topics that DCWW is seeking market feedback on include:

• CAP Agreement structure and contractual framework
• Commercial and risk allocation principles
• Payment mechanism and incentivisation arrangements
• Financing structures and financeability considerations
• Contract duration and residual value approach
• Procurement process design and bidder participation
• Opportunities to improve value for money for customers

Registration process

Interested  organsations should email This e-mail address is being protected from spambots. You need JavaScript enabled to view it to register their interest in either:

• the focused investor/lender Market Engagement; and/or
• he in-person Mtarket Engagement events.

DCWW will provide further details regarding participation, key dates and engagement materials following registration.

When emailing, organisations should include one of the following subject lines to indicate the preferred engagement activity:

• Registration - Investor/Lender Market Engagement
• Registration - In-Person Market Engagement Event
• Registration - Investor/Lender and In-Person Market Engagement Events (if registering for both)