Ofwat announces hands-off approach to renewable energy in the water sector

Water services regulator Ofwat has said it will take a step back from renewable energy policy and will not provide specific guidance on carbon mitigation or renewable energy at the next price review in 2014.

During the last price review, Ofwat took an integral role in promoting renewable energy in business plans throughout the sector. As a result, £57m was invested in renewable energy and this is expected to deliver 1TWh of renewable energy a year by 2015.

However, talking to delegates at the Chartered Institution of Water and Environmental Management (CIWEM) annual conference, Ofwat principal analyst Robert Holdway said water companies looking to invest in renewable technology would need to ensure their proposals comply with their license conditions.

In addition, Ofwat stated that companies must also make sure renewable plans are not deemed anti-competitive and that they are able to demonstrate the benefits for customers.

Holdway said: “This is because we believe our proposed price setting approach provides companies with sufficient incentives to make use of renewable energy to deliver the outcomes their customers want.”

“Companies own their own output so companies can have renewable energy outcomes. Clearly the burden of that is that they need to be supported by customers, they need to be robust, they need to stand up, and if a company wants to go down this route then they can.”

However, Ofwat won’t be prescribing the delivery methods for renewable energy.

“Renewable energy is very much part of the regulated business, however, we need to make sure there is a balanced trade off between the risks and the opportunities,” added Holdway.

Conor McGlone

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie