Ofwat confirms funding for four strategic water projects

Ofwat has confirmed it will continue to provide ring-fenced funding for further development of four strategic regional water resource projects in England following their assessment by the Regulators Alliance for Progressing Infrastructure Development (RAPID).

The regulator has issued its final decisions for the accelerated gate two of RAPID’s four gate development process for large-scale strategic schemes to provide resilient water supplies to drier parts of the country.

Two of the projects seek to address supply deficits arising m reductions in the volume of water that can be abstracted on the River Test and River Itchen, which are reflected in changes to abstraction licences made in March 2019.

One is a water recycling scheme in Hampshire being developed by Southern Water that comprises two potential options.

The first would see water transferred from Budds Farm wastewater treatment works to a nearby water recycling plant, where it would be subjected to ultrafiltration, reverse osmosis, ultra violet disinfection and remineralisation.

The water would then be transferred to an environmental buffer, where it would be mixed water from the River Itchen, and then onto the Otterbourne wastewater supply works, where it would be fully treated to a potable standard to provide a drinking water supply of 61 megalitres per day (Ml/d).

The second option would be the same as the first, except the Budds Farm water recycling plant would also be fed from the Peel Common wastewater treatment works, increasing the drinking water supply from the project to 75Ml/d.#

Southern Water and Portsmouth Water are also developing an alternative project for both water recycling and water transfer in Hampshire, again with two possible options.

In the first, up to 61Ml/d of water would be directly transferred from the Havant Thicket reservoir, which is due to be constructed by 2027 and become operational by 2029, to the Otterbourne water supply works through a new pipeline.

The second option would combine the infrastructure from the first with a water recycling plant near Budds Farm wastewater treatment works that would supply water to the Havant Thicket reservoir.

Southern Water identified the latter as its preferred option for solving the underlying issue of reduced abstraction from the rivers Test and Itchen. It identified the second option from the first project as its back-up solution.

The company has discontinued a third solution proposed at gate one to build a desalination plant Fawley in Hampshire after concluding this would be more expensive and worse for the environment and emissions than the two remaining projects, and also may have been unable to secure planning consent soon enough.

Given that the two remaining projects are both seeking to address the same issue, Ofwat has decided to combine funding proposed in its draft decision earlier this year, resulting in a total allowance of £57.2 million across all four gates.

The regulator has also decided to impose a delivery incentive penalty of 10% on both projects, explaining that although the accelerated gas two submissions were “satisfactory overall”, they also fell short in some important areas and were not as developed as they should be at this stage.

In particular, Ofwat said Southern Water and Portsmouth Water need to do more to explain to customers how the water recycling process would work and reassure them that their drinking water would be clean.

Ofwat has also approved funding for two new projects, which were introduced for accelerated gas two but were assessed to gate one standards.

The Upper Derwent Valley reservoir expansion scheme was proposed Severn Trent and Yorkshire Water to support a bulk transfer agreement from Severn Trent to Yorkshire, whilst maintaining a supply surplus in Severn Trent’s region. The project seeks to increase the overall storage capacity of the Upper Derwent Valley reservoirs – Ladybower, Derwent and Howden – in one of three possible ways:

• Raise the dam height of one or more of the three reservoir dams
• Construct a new dam downstream of one or more of the three reservoir dams
• Construct a new reservoir in the vicinity of the Upper Derwent Valley reservoirs

Raising the heights of the both the Howden and Derwent dams is currently considered the most likely option. Ofwat has approved a total funding allowance of £35.86 million – up from £16.7 million in its draft decision.

Meanwhile, South West Water and Wessex Water have proposed the Mendip Quarries reservoir scheme, whereby a quarry in the Mendip Hills would be repurposed into a reservoir following its decommissioning.

The reservoir would be fed by a combination of groundwater and surface water from the River Avon, providing an additional water supply of up to 87Ml/d.

Four different transfer options have been proposed that include raw water transfer to Bristol Water, Wessex Water and Bournemouth Water, treated water transfer to Wessex Water, raw water transfer to Thames Water, South East Water and Affinity Water via the River Thames, and treated water transfer to Southern Water.

Ofwat has approved a total funding allowance of £30.08 million.

Commenting on the announcement, Ofwat chief executive David Black said: “To meet future needs of customers we need more water supplies alongside reducing leakage and making better use of water. We also need more innovative approaches. The new solutions are demonstrating this kind of approach and we would like to see more of it.”

RAPID comprises Ofwat, the Environment Agency and the Drinking Water Inspectorate. Its managing director and chair of the RAPID Advisory Group, Paul Hickey, said:  “Collaboration has been key to the RAPID programme working effectively.

“Ofwat, the Environment Agency and the Drinking Water Inspectorate are continuing to work closely together to support progress on investigating and developing these essential water resources schemes.

“The innovation that is being proposed not only enables greater water resilience in the future, but also offers greener environmental long-term solutions.”