What Challenges Face The Water Sector Between Now & 2040?

There are numerous challenges that the UK’s water industry faces between now and 2040, with more now expected of companies in all sectors to consider the wider impacts that their operations have, while delivering public value.

Water regulator Ofwat is now asking how the sector intends to meet the needs of its customers, as well as the environment and wider society, with the fourth industrial revolution now seeing smart technology changing the way businesses operate.

It has now launched the Future Ideas Lab to see how challenges, uncertainty and change can be anticipated and adapted to, a space for stakeholders to work together on the development of ideas for how future price reviews should be designed to meet the challenges and adopt the opportunities that have been set out.

Companies did adapt well to the immediate challenges posed by the coronavirus crisis, it was observed, but lessons have still been learned and the sector will need to innovate at a quicker pace than previously, while making full use of the opportunities presented by smart networks, nature-based solutions and markets to thrive in the years ahead.

Ofwat has also published a discussion paper looking into how customer preferences can inform the price review process more effectively. Consistently high levels of service are now expected by customers and water suppliers need to make sure that their clients’ interests are placed at the very heart of the decisions being made.

“The water sector faces profound challenges in the years and decades to come, but as the regulator – we share this challenge. We want to look towards 2040 and beyond and drive companies to seize opportunities to best meet the needs of customers, communities, and the environment.

“As in any industry, water companies will need to adapt and evolve if they are to transform their performance, and face the future with confidence,” chief regulation officer at Ofwat David Black said.

This comes as Ofwat publishes its annual assessment of water companies’ performances, finding that some – such as Wessex Water, Northumbrian Water, Wessex Water, Bristol Water and South Staffs Water – are making good progress.

However, it was also found that companies could still be doing more to deliver for both their customers and the environment, warning that some suppliers are still falling short of expectations. Companies not performing well at the moment include Thames Water, Southern Water, Affinity Water and Hafren Dyfrdwy.

The report further revealed that reported leakage is seven per cent lower than it was last year, delivered via a range of solutions with relatively low costs. Water consumption performance, however, was found to be poor, with just three companies meeting their performance commitments.

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