Ofwat launches fresh £40m funding stream for nature and climate innovation

To date, Ofwat has supported projects with more than £105m in funding and has committed to delivering £200m through its Innovation Fund

Ofwat, the economic regulator for the water sector in England and Wales, is launching its fourth and latest Water Breakthrough Challenge this week.

The Challenges allocate funding to support projects led by water companies that can help respond to major challenges. The latest funding will see £40m allocated for projects that can help the sector reach net-zero emissions, protect and enhance the natural environment and improve water infrastructure.

Up to £10m is available through a Catalyst Stream, with entries able to secure between £150,000 and £2m, while the remaining £30m will be allocated through a two-stage Transform Stream. The challenge closes in January 2024.

Ofwat’s innovation fund manager Marc Hannis said: “There are many challenges that the water sector needs to overcome in the next decade. They include the widely reported issues like leakage rates and sewage discharge into rivers. They also include less well-known challenges, like transitioning an industry that uses 3% of the country’s electricity to net zero while contending with the impacts of climate change and ensuring better quality services for customers.

“While it is our job as a regulator to hold water companies to account when they do not meet their obligations, we also want to incentivise water companies to accelerate innovative ideas that drive positive changes for the environment and consumers. Water Breakthrough Challenge 4 is calling for even bolder initiatives and will reward collaborations that generate and share knowledge, and roll out successful innovations.”

Earlier this year, Ofwat confirmed the allocation of £40m to 16 new sustainable innovation projects, including the UK’s first full-scale carbon-neutral wastewater works and a network of farm-based water ‘batteries’.

edie spoke exclusively to Ofwat’s senior director of strategy, finance and infrastructure John Russell about this funding in March.

To date, Ofwat has supported projects with more than £105m in funding and has committed to delivering £200m through its Innovation Fund.

In 2021, the UK Government set a target to reduce water consumption, on a per-capita basis, by 20% by 2038. This will require a change in direction, given that consumption increased by almost 4% between 2015 and 2021.