20/01/2014

Environmental drivers for investment in the water industry

With the next regulatory period (AMP6) for the water industry starting in 2015 over the next few articles the blog will look at the main drivers for investment.

Improving the environment is one of the major drivers accounting for about a quarter of the capital spend (£25bn over last 25 years). This is led by the Environment Agency who via their National Environment Programme set out what they expect from the water companies in PR14. The Environment Agency is looking for water companies to reduce flood risk and meet the challenges of growth, development and climate change. They expect that in AMP6 they will see improvements in bathing water quality, catchments moving towards ecological status, secure water supply and no deterioration in the current quality of the environment.

This means that significant investment will be needed in a number of areas:
o   Compliance with all licences and permits
o   Reduced serious pollution incidents
o   Sustainable abstraction
o   Reduced sewer flooding
o   Tackling water leakage

Surprisingly Eels are the cause on one significant area of investment. European eel stocks are at an all time low and the EU has introduced new legislation (Eel Recovery Plan) that the UK must implement. One of the problems is allowing the passage of eels past river water intakes. This will require significant investment in the design of water intakes and their screens to stop the eels being sucked in. It will particularly affect the water only companies.


Reducing water over abstraction is another massive area. Currently 3.3% of all water comes from rivers suffering from over abstraction. Eliminating this will mean a mixture of developing alternative water sources and managing demand.  

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