Innovation on the water agenda in the UK

© Ben Tam

Innovation is rising up the water agenda in the UK, including two new competitions launched by Ofwat, the sectorís economic regulator in England and Wales, writes Ben Tam.

It is hard to avoid the word ‘innovation’ – it permeates most areas of business. In our sector, it has been used heavily in recent years as the catch-all term for how to overcome the challenges we face to provide water and sanitation globally. We are banking on the fact that we will innovate our way towards a brighter future, as current tools and solutions won’t be enough. Something that the sector also wrestles with is how to innovate safely, with enough speed and ambition, while continuing to provide a critical service.

Drivers of innovation

From a UK perspective, a few types of drivers are pushing innovation forward. First, there are very apparent environmental drivers. A good example is the stark warning from the Environment Agency that, if no action is taken between 2025 and 2050, around 3435 million extra litres of water per day will be needed for public water supply. Some of this will come from infrastructure projects, but we have to innovate to make progress on leakage and water efficiency.

Then there are the policy and planning drivers set by the sector. The water companies have ambitious plans to reach net zero carbon by 2050, and net zero operational carbon emissions by 2030 en route to this. To make this a reality, the companies will have to operate in new ways and employ new technology.

Also, the sector economic regulator for England and Wales, Ofwat, made innovation a core theme during the most recent cycle of the sector’s five-yearly price review (PR19). It sees this has a role to play in transforming water company performance. Ofwat released its strategy, ‘A time to act’, which sets out a vision for a sector “providing the very best service for customers, improving the environment and improving life through water, both now and in the future”.

In response to such drivers, the UK water companies recognised that it is vital to strengthen collaboration. They joined up to create a national innovation strategy ( This aims to “create open collaboration across the water sector and beyond to drive transformational change through innovation”.

It is clear from Ofwat and the water companies that there is agreement on the need to focus on transformative innovation together. This type of innovation is focused on ideas that might have the capacity to deliver a fundamental shift in patterns of working aligned with aspirations for the future. It requires massive collective effort, usually with a wide set of stakeholders, to stimulate and drive a shift in practice. Current examples of transformative innovation projects are the creation of digital twins that give a real-time view of the water network, the acceleration of graphene technology to bring a step change in membrane efficiency, or using AI to determine the location of leaks.

Funding transformative innovation

Ofwat has launched a fund of £200 million over the next five years to grow the water sector’s capacity to innovate. It has a focus on transformational innovation.

It is split into two competitions with multiple rounds. Both are focused on Ofwat’s strategic innovation themes, and add value to customers, society and the environment. The first is the £2 million Innovation in Water Competition, with the opportunity to win up to £250,000. This is focused on the power of partnerships and allows organisations to join up with licensed water companies in England and Wales to develop innovative solutions.

A second, £40 million competition is being launched in the first part of this year, with the opportunity for the sector to collaborate on larger impactful projects. This follows a similar example from the energy sector in the UK, where the regulator, Ofgem, supports innovation through the Network Innovation Competition (NIC). The NIC provides funding for the best innovation projects that help all network operators understand what they need to do to provide environmental benefits, cost reductions and security of supply while on a move to a low carbon economy.

A more extreme example of promoting transformational innovation is the Bill & Melinda Gates Foundation’s Reinvent the Toilet Challenge. By recognising that the sewer connection model is not feasible in many countries, the global initiative set a goal to reinvent the toilet and injected targeted funding of about $200 million. The subsequent activity and publicity prompted rapid progress, and has evolved to look at the recovery of all the resources, including the generation of clean drinking water, energy and fertilisers. This demonstrates the power of injecting targeted funding for innovation. The UK fund will be broader, with a portfolio of projects and not expecting a radical overhaul of the asset base. However, it will be key to harnessing some ambitious thinking and testing some of the assumptions of the status quo.

It will accelerate progress by allowing organisations to experiment – learning not only what works, but also what doesn’t

Why a new approach is needed

Water companies in the UK are acutely aware of the challenges they face, and have well developed innovation teams and organisational processes. They have been able to focus on incremental improvements, and so squeeze operational and capital delivery efficiency where possible, while still taking aim at bigger, long-term issues.

Innovating in the utility space is challenging, and there is no room for operational or infrastructure failures that risk impacting health. However, there are many areas where a change in approach, a new business model, or better use of data or technology can be developed safely and push boundaries. This fund can be a catalyst to kick-start these ideas and attract more external partners to solve some of the challenges in the sector. In addition, it will accelerate progress by allowing organisations to experiment – learning not only what works, but also what doesn’t. Sharing experiences widely means the same failure doesn’t need to be repeated, leveraging the power of collaboration.

Overall, these recent developments have started a new wave of activity, and we will see the progression of projects and ideas across the next four years. Anticipation is high that we will see groundbreaking progress that will benefit the UK and beyond. The water sector is far too important to fail, but playing safe with innovation is no longer an option. •

More information

Ben Tam is Managing Director, UK, at Isle Utilities.

The inaugural Innovation in Water Challenge is being led by Ofwat, in partnership with Nesta Challenges, Isle Utilities and Arup. For more information, see: