Water sector regulator Ofwat has published an investor pack flagging up upcoming potential private sector investment opportunities worth up to £14 billion.
Ofwat has published the information pack on behalf of the Regulators’ Alliance for Progressing Infrastructure Development (RAPID), the cross-regulatory unit based in Ofwat made up of Ofwat, the Environment Agency (EA), and the Drinking Water Inspectorate (DWI).
In its 2019 price review, PR19, Ofwat made £469 million available to water companies to jointly investigate and develop strategic water resource solutions to increase future water supply.
Currently 18 strategic solutions are being explored via the RAPID programme , with a potential investment of up to around £14 billion – “the first time since the privatisation of the water sector in 1989 that there will be such a large supply side intervention and collaboration”, the guide states.
The information pack sets out the upcoming opportunities in the sector for investors, with a predominant focus on the development of major new infrastructure and strategic water resource solutions.
The guide also outlines the delivery models that may be considered for the delivery of major new infrastructure and the role investors could play.
It highlights opportunities for interested parties to get involved and learn more about the sector, together with showcases the significant investment required over the coming years. It also sets out the opportunities for investors, both for the imminent pipeline of projects and future opportunities, specifically focusing on the Direct Procurement for Customers (DPC) framework.
Large projects are expected to be taken forward through DPC, whereby water companies put major projects out to competitive tender for delivery by third parties.
The guide identifies the Thames Tideway Tunnel (TTT) - the Specified Infrastructure Provider Model (SIPR) –as another potential delivery option for large major infrastructure projects in the sector.
Ofwat says in the pack:
“Both models may also be potentially used for development and delivery of other major new infrastructure required as part of PR24 and beyond and therefore offers further opportunities to investors to participate in meaningful ways. This includes significant investment required for development of wastewater infrastructure as well as other projects which may be put forward at PR24 and other future price reviews.”
Investor opportunity - "a low-risk growth sector with long-term stable returns and a guaranteed revenue stream"
According to the guide, Ofwat’s investment aims are:
- ensuring the delivery of future water supply (as well as infrastructure development across the industry).
- best value design, construction, financing and operations of major new infrastructure
- stability of the water sector
Ofwat is flagging up the investor opportunity describing the water sector as a low-risk growth sector with long-term stable returns and a guaranteed revenue stream underpinned by commitment from the regulator.
Ofwat says in the information pack:
“We aim to see many of these solutions being developed and delivered over the next 15 to 20 years and beyond, with a potential small number of solutions ready for construction in the 2025 to 2030 period."
"....Significant investment is signalled to be delivered through PR24 and so this builds on the current opportunity.”
Click here to download the investor pack
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