Sludge will be ‘next big water sector market’

Sludge will be the “next big market” after the non-household retail market opens up to competition in April 2017, according to Severn Trent Water.

Speaking at Utility Week Live, the water company’s head of strategy Neil Corrigall said competition in sludge treatment is likely to be formally introduced before 2020.

He said: “There is scope for commercial sludge trading, and we don’t have to wait until 2020.”

However, he said, introducing sludge competition requires key changes including fair access for appropriately licenced parties to compete effectively; appropriate commercial and pricing practices; a level playing field for all parties and making sure the right information is available.

As part of its Water 2020 proposals, Ofwat has said it wants to encourage better use of resources in how the sector harnesses energy from waste.

It wants to remove regulatory red tape to open up the market for sludge and encourage innovation. The savings made would keep bills down and help meet our energy needs sustainably.

The regulator’s chief executive Cathryn Ross emphasised this morning (17 May) that Ofwat is becoming “a fundamentally more pro-market” regulator.

The regulator is currently consulting on its Water 2020 proposals, and is set to report back later this month.

Water companies are currently readying themselves for the opening of the market for retail services which is due to open in April 2017, allowing 1.2 million businesses, charities and public sector organisations to either be able to stay with their existing supplier, or shop around and switch.

At present, only businesses based wholly in England and who use more than five mega litres of water – which means a water bill of about £9,000 – per year can choose their water retailer.

Once open, the new market will link to the existing market in Scotland, and will be the largest retail water market in the world, delivering an estimated £200 million of overall benefits to customers and the UK economy.