The Regulators' Alliance for Progressing Infrastructure Development (RAPID) has flagged up the need for Gate two submissions under the RAPID programme to include assessments of the whole life carbon cost of solutions.

The requirement is set out in the new strategic regional water resource solutions guidance for Gate two of the RAPID process published by the three water regulators Ofwat, Environment Agency and Drinking Water Inspectorate.

In January Ofwat agreed 15 strategic regional water resource solutions costed at up to £14.74 billion could proceed to Gate 2.

The new guidance says that the assessments of the whole life carbon cost of the solution should clearly present:

• Assessments of the whole life carbon cost of the solution
• Estimations of carbon costs and absolute operational and embodied carbon of the solution should be presented (in tCO2e) for all variations of solution options
• RAPID solutions should be designed in line with the net zero principles set out in Ofwat’s position paper published on 6th January 2022

Companies will also need to present “thorough consideration and discussion” as to how whole life carbon has been reduced within the design and how carbon has been considered in the best value planning approaches, metrics and decision making. Both operational and embedded carbon emissions are expected to form part of best value assessment, with solution designers expected to show how they are using “relevant policies, frameworks and approaches” to drive down carbon emissions within the solution design.

The RAPID guidance says that companies should also provide a description of how the solutions are embracing innovative designs and opportunities to generate or be powered by renewable energy and/or sequester carbon and explore joint opportunities with other sectors.

Evidence may be sought as to whether a focus on carbon reduction has been able to drive down solution costs, with companies’ submissions expected to demonstrate consideration of Scope 1, 2, and 3 emissions including an explanation of how materials have been selected.

“We expect water companies to use their influence to help shape the supply chain where low carbon materials may not be readily available,” the guidance says.

At PR19 Ofwat announced a £469 million ring-fenced development fund for companies to investigate and develop strategic water resource solutions - delivery of the solutions is subject to a formal gated process where decisions are made on delivery penalties and solution funding progression.

The latest guidance describes the gate two process and sets out the expectations for solutions at standard gate two.

At gate two, solutions should be developed to a standard suitable for submitting into final regional plans or final WRMPs. This stage of the programme aims to further enhance the funding portfolio based on refined and consistent costs and benefits. This is the key stage at which suboptimal solutions and options are eliminated and viable solutions and options are carried forward to the pre-planning stage.

Assessment and decisions will also be made at the gate regarding:

• whether new or alternative solution and/or options should enter the gated process if proposed by solutions owners 
• what activities are required for the next gate
• the penalty incentive mechanism to be applied for subsequent gates

Solution cost estimates

At gate two solution owners will also be expected to present key cost information, including:

• Overall costs of construction and operation for each option
• Detail of capital expenditure
• Detail of operating expenditure - including an indication of design life of the asset and any significant maintenance liabilities during operational life.
• Comparison of solution's costs with alternatives
• Description of where solution cost scalability moves from marginally more expensive to substantially more expensive (tipping points)

RAPID would welcome proposals from water companies for any new strategic solutions

The guidance concludes by pointing out that RAPID would welcome proposals from water companies for any new strategic solutions that will help to increase the resilience of the public water supply in England and Wales.

“Reducing the abstraction pressures on chalk streams and rivers, making best use of water resources in the north and solutions that will provide a benefit to Wales are just some of the issues RAPID would like to see explored,” the guidance says.

However, it cautions that companies proposing new solutions should “engage early with regulators before significant work is undertaken” on a new proposal. Organisations where RAPID would expect to see water company engagement include:

• Environment Agency
• Natural Resources Wales (if appropriate)
• Drinking Water Inspectorate
• Natural England
• Ofwat

Engagement might also need to extend to other regulators such as Historic England, Cawdr, the Forestry Commission or Ofgem.

Where a new solution impacts on another company’s water resource position or options or on another sector, RAPID would expect the solution to be submitted as a joint proposal.

Click here to download RAPID's Strategic regional water resource solutions guidance for gate two