Welsh Water secures £250m renewables loan and DONG Energy deal

The sixth largest regulated water and sewage company in England and Wales has secured a £250m loan from the European Investment Bank (EIB) to finance on-site renewable generation projects, alongside a clean energy purchasing agreement with providers DONG Energy.

Welsh Water, which provides drinking water and wastewater treatment services for more than three million people, announced the deals as part of an overarching aim to reduce utilities costs while increasing the use of self-generated clean energy sources to 30% by 2019.

The not-for-profit utility company penned a new energy contract with DONG Energy to ensure that 100% of the energy sourced from the grid will be generated from the wind farms lists under DONG Energy’s portfolio.

With an annual energy bill of more than £44m, the majority of which is used for pumping water and wastewater, Welsh Water has turned to on-site generation to reduce energy costs. The company currently generates 20% of its own energy needs through wind, hydro, solar and anaerobic digestion (AD).

Welsh Water’s managing director of wastewater services Steve Wilson said: “We are delighted to begin our contract with DONG as it secures green energy for the next five years while offering good value for our customers.  

“We’ve significantly increased the amount of energy we generate at our sites over the past few years by embracing technologies such as solar panels, hydro turbines, anaerobic digestion and our first wind generation sites in the past 12 months. By incorporating these sources with the green energy we now receive from DONG, we really are able to make a meaningful contribution to protecting our environment from the effects of climate change.”

Funding Five Fords

The £250m EIB loan was granted, in part, because of Welsh Water having the highest credit rating in the UK’s utilities sector. Since 2001, Welsh Water has benefited from loans of more than £800m from the EIB, financing £1.6bn of capital expenditure as a result.

Around £36m of the new loan will be spent at Welsh Water’s Five Fords wastewater treatment works in Wrexham. The site will be transformed into an “innovative energy park” that utilises solar and hydro. Welsh Water claims this is the UK’s first project that injects bio-methane gas into the national gas distribution network.

Welsh Water is also developing an advanced AD plant on the site, which will treat enough waste to supply energy for around 3,000 homes. It is hoped that the investment will allow Welsh Water to increase on-site generation to 30% by 2019.

The EIB’s vice president Jonathan Taylor said: “Here in Wrexham, Welsh Water is showing the world how investment to improve wastewater treatment can harness renewable energy from diverse sources. Pioneering innovation such as this is crucial to cut emissions and ensure that companies can contribute to climate action. The EIB is pleased to have supported this and other transformational investment by Welsh Water.”

Welsh Water follows Yorkshire Water in turning to AD to provide for energy requirements. The Yorkshire company’s £72m state-of-the-art AD plant, set to be completed in 2019, will process 131 tonnes of dry sludge every day, generating 55% of the site’s energy requirements.

Last week, the UK Coal Authority named the latest contractor for a four-year renewable energy framework to offset the costs of its 75 mine water treatment sites.

Matt Mace

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