Ofwat has proposed its £100 million water efficiency fund should be used to support a relatively small number of large initiatives with demonstrable outcomes to lower water usage.
The regulator stressed that in order to receive funding through the scheme during the next price control, submissions should present strong evidence they are likely to be effective.
While Ofwat said it would consider how work can be targeted to regions with greater water scarcity issues, it acknowledged the need for coordination to avoid overlap.
The first of two consultations on the fund explores how best to target behaviour change, technological interventions and the challenge of addressing business demand versus household use.
In the document, Ofwat notes barriers to companies reducing per capita consumption (PCC). These include companies having limited in-house skills and experience to deliver behaviour change; dependency on consumers to achieve PCC targets; customers only having limited information or comprehension of usage; and coordination challenges across the sector.
It also looks at the eligibility and scope of the fund including the characteristics of the sorts of initiatives that Ofwat envisages supporting and what impact they may have.
Finally, it considers the implementation of the fund. This will take learnings from other sectors as well as from the implementation of the innovation fund launched as part of PR19.
Paul Hickey, senior director at Ofwat said: “This fund will enable the sector to accelerate the sort of collaborative and innovative work that is necessary to make progress in this area. By bringing fresh ideas and existing expertise together, we can achieve more resilient supplies, improve environmental protection, and deliver better value for customers.”
Similarly to the innovation fund, the new initiative seeks to provide money for work that reduces water use at a large-scale, or with roll-out potential. Submissions should provide measurable and sustained demand reductions with a focus on behaviour change and using data for insights. As with the innovation fund, collaboration is encouraged
Ofwat estimates the fund will cost each household around 62p annually.
“While the sector has worked on water efficiency for many years, we have not seen the sort of coordinated, sustained and large-scale initiatives that we think are required to achieve significant progress. We think that a different approach is needed urgently, and that a central fund has the potential to support the sorts of collaborative and innovative work that is necessary to get the sector on track,” the consultation said.
By 2050 it is estimated there will be a shortfall of around 4,000 megalitres daily. At present around 16,000 megalitres are pumped into supply networks each day in England and Wales, with around 56% of that serving household customers and 18% to business users. A similar volume is lost to leakage. The sector is tasked with halving leakage by 2050 and driving consumption down to 110 litres per person per day.