David Black, Interim Chief Executive at Ofwat has said that  the transformation of the UK water sector over the next 30 years will require significant new investment.

Speaking at a conference on water security last week,he told his audience that looking ahead to 2050, a step change in outcomes was required, including:

• significantly increased drought resilience
• reduced abstraction from overstressed sources such as chalk streams
• leakage reduced by 50% or more
• per capita consumption turning from a steady increase overtime to reduction to 110 l/per day by 2050.

The ambitions meant that the sector needs to “fundamentally change the way it delivers for customers and the environment, he said. This included the need to stop thinking about the wastewater sector as waste and rather as a source of renewable energy and clean water.

Describing the scale of change required as "vast", he commented:

“The transformation of the sector over the next 30 years (or the next 5 price reviews) will require significant new investment, but in many senses, this is the easy part, transforming culture and ways of working are also central to a successful transformation.”

"We cannot simply build our way out of the challenges. Firstly, this is likely to be unaffordable, but leaving that aside, the carbon impacts of massive concrete and steel capital programmes would be very large and such construction may well be net negative for the environment.”

He went on to identify six areas which could really help drive and deliver change at scale:

• mass scale consumer behavioural shift as part of addressing climate change
• the need to see community engagement and nature based solutions come from the margins to a mainstream approach that provides for most of the solutions in the next ten years
• smart networks and open data – harnessing the power of the fourth industrial
• revolution to operate and maintain networks intelligently
• a renewable energy revolution in wastewater
• long term and adaptive planning
• innovation - the need for the sector to become much more effective at turning ideas into action effectively, efficiently and at pace

According to Black, too often the water sector seemed to start afresh at a price review – he explained:

“We need to see the next five price reviews as incremental steps to deliver a 30 year plan….planning needs to be adaptive, recognising both the value of delaying decisions to learn more and to take near term decisions with long term goals in mind. It also needs to look beyond public water supply to other sectors.”

Ofwat in turn needed to play its role in enabling and encouraging the transformation of the sector – and it was clear that the regulator needed to need to change, he said. Looking ahead to the future, Ofwat had a key role to play in promoting the sector to deliver greater value – for customers, communities and the environment.

In his view, too often Ofwat had the seen the environment as "extra" on top of service to customers – however, it was at the centre of the sector and water companies had “huge ability to enable gains.”

He went on to say that progress was already underway on moving from a regulator of prices, investment and service to innovation, data and customer and community co-working, highlighting the following activities:

Announcement of a £2.8 billion innovative green recovery programme in May

Proposals which will reduce the risk of flooding, protect habitats, cut pollution, reduce energy and chemical usage, and save water. They also trail and showcase new ways to delivery such as partnering with local government to prevent surface water run off into sewers and with farmers to reduce run off of pollutants into rivers.

Establishment of Regulators' Alliance for Progressing Infrastructure Development (RAPID)

A collaboration between Ofwat, EA and DWI to promote integrated approach to new water resources which will help ensure that a range of sustainable and deliverable projects to improve drought resilience at PR24. RAPID is also working to ensure that the regulatory and commercial frameworks enable multi sector solutions and open up participation to wider range of players beyond water companies.

£200 million innovation fund

The fund is beginning to bear fruit, encouraging companies to collaborate with other sectors to address challenges. The fund sits alongside the stretching targets to improve performance set in PR19 and more powerful incentives.

WINEP reform programme and storm overflows taskforce

Now underway and have set big ambitions for change. A shift to an outcome based approach will better enable nature based solutions and a whole system approach.

He concluded by saying that Ofwat sees the 2024 Price Review as a stepping stone to achieving ambitious long term goals, commenting:

“Looking ahead, the transition to net zero and the ambition to make major improvements to the environment and resilience require the sector to transform. Innovation, data, customer and community participation must be right at the heart what water companies do.”