AMP 8 – the opportunity to deliver water and wastewater infrastructure fit for the 21st century
Steve Morris, Managing Director at wastewater technology specialists HUBER UK, takes a look at some of the challenges and opportunities for the water companies and the water sector supply chain as the start of AMP8 in April 2025 approaches.
Steve Morris: The start of AMP8 is getting closer and the water companies have been gearing up for action for some time. The publication of Ofwat’s Draft Determinations on the water companies’ AMP8 Business Plans on 11th July – delayed by the General Election – has thrown some light on the likely levels of expenditure for the 2025-30 investment programme.
The regulator’s Draft Determinations have allowed a total investment of £88 billion – which represents a £16 billion cut from the water companies’ AMP8 proposals. Ofwat has also flagged up the possibility of extending the backstop date to publish the Final Determinations from 19 December to 31 January 2025.
Despite this, what’s clear is that whether that final investment figure ends up at £88 billion, £95 billion or £104 billion, the water companies are facing the challenge of delivering an investment programme of an order of magnitude greater than anything we have seen since privatisation.
The new Government’s Water (Special Measures) Bill will require water companies to install real-time monitors at every sewage outlet with data independently scrutinised by the water regulators. In addition, the briefing which accompanied the Bill says the Government will also be outlining further legislation to fundamentally transform and reset the water industry.
AMP8 – significantly different from previous investment cycles?
But while no one quite knows how AMP8 will pan out at the moment, it definitely feels different from previous cycles. In my view it’s on a different level both in terms of the investment required and scale and pace of change required. I’d even go so far as to suggest that this could be possibly the most significant Price Review which will require companies to deliver the most lasting and significant step change of all.
From a supply chain point of view, one of the biggest concerns is always that there will be a slow down in activity as we approach the end of one AMP cycle and the start of another.
From the water companies’ point of view, it’s worth remembering that Ofwat’s final methodology for PR24 for the first time, required them to provide board assurance on deliverability and supply chain availability. Unlike previous price reviews – the business plans couldn’t simply state “we are going to deliver this amount of work”; they have also had to spell out how they’re going to do it.
This included setting out the steps the Boards had taken to satisfy themselves that supply chain risk was manageable and delivery plans account for:
- the ability of the company and its supply chain to expand its capacity and capability at the rate required to deliver the increased investment;
- the impact of similar levels of growth across the sector and any overall sector and supply chain capacity constraints; and
- key supply chain risks and capacity constraints, such as the availability of specialist resource or components
It will be interesting to see how this analysis will feature in the Final Determinations
The opportunity for long-lasting transformation of water and wastewater infrastructure
The water companies now have the opportunity via the AMP8 programme and beyond to bring about a long-term and lasting transformation of their water and wastewater infrastructure.
Importantly, there is also an acknowledgement amongst the Government, regulators and the public alike that significant investment is now needed to make this part of the UK’s critical national infrastructure fit for the 21st century to meet the challenges of climate change and population growth.
From the supply chain side, it’s about trying to understand realistically what will look different in terms of both timescale and the scope of the investment programme.
Ofwat also has its own expectations of the supply chain itself – including early engagement, building capacity to deliver the large step up in investment, delivery of new technology and greater innovation. The other side of the coin for suppliers is the willingness to increase capacity in the reasonable expectation that this will be matched with a corresponding increase in demand.
For HUBER in particular as a wastewater technology supplier with equipment already in situ in most of the UK water companies, we’re aware that we are already uniquely well-placed to participate to meet both Ofwat’s and our customers’ expectations.
Room for improvement - greater efficiency in the procurement process itself?
One of the areas where we think there is room for improvement is greater efficiency in the procurement process itself – which can sometimes be a time-consuming, lengthy and drawn-out exercise for everyone involved. So it’s encouraging to see that the water companies are increasingly proactive about Early Contract Involvement, including market testing exercises before the tender process itself is formally launched.
Greater realism about the time it takes when tendering what are often complex frameworks which typically run for five years and even longer would help to generate the high-quality bidding process both the water companies and the supply chain want to see.
So while capacity in the supply chain is a major issue, there is inherent capacity which can be maximised just by improving efficiency - and it could be hugely helped by smoothing out delivery of work and doing it in an efficient way.
At the end of the day, as a supplier we value consistency and visibility of work coming down the line,in order to more effectively meet customers’ demand and provide best value. Throughout AMP7 we have been expanding production capacity and further developing the right products and solutions for the future . - and we believe we are in a strong position to help our customers deliver in AMP8.
AMP8 - a particular focus on wastewater infrastructure
With an ongoing emphasis on tackling the many challenges surrounding stormwater overflows, AMP8 inevitably has a particular focus on the wastewater side of the sector. Money invested in a timely manner at the beginning of AMP8 will be key to long-term sustainable investment.
We are well aware of the importance of acting quickly to minimize pollution, optimize processes and operational performance before these become even bigger problems. Our technologies are implemented at different parts of the collection and treatment process to effectively mitigate these pollution risks.
Going forward, there are of course a mix of different solutions which will be used to address the issue of stormwater discharges - no single technology alone can tick all the boxes. Our storm screens for instance, are in widespread use on CSOs throughout the UK and we are continuing to install new storm screens and undertake retrofits of existing storm screens.
As well as understanding the national picture, working closely with individual water companies allows us to understand their stormwater management plan objectives. For example, which CSOs may be abandoned, to reduce spills, in favour of increasing the flow to the inlet works - and the subsequent upgrades required to deal with this increased flow. In some cases conventional storm water storage solutions may be replaced with the adoption of an alternative Peak Flow Equivalent Treatment (PFET) model, whereby stormwater is treated to a level which when combined back with final effluent remains beneath discharge consent. In such cases our technologies can be retrofitted to enhance existing inlet-works capacity, where flow is being diverted to reduce spills, and where discharge via CSOs screens may no longer be the best solution.
Coming down the line, the water sector is already thinking about how to remove micro-pollutants and PFAS (“forever” chemicals) from the public water supply. There are currently no legislative obligations under either EU or UK legislation for them to remove these harmful substances. However, water companies in England and Wales follow guidance issued by the Drinking Water Inspectorate in July 2022 for PFAS compounds in drinking water which requires them to monitor for a wider range of PFAS and update their risk assessments accordingly.
HUBER already has a range of solutions available for the fourth treatment stage at sewage treatment plants for the targeted removal of these trace substances – known as quaternary treatment.
AMP8 Lunch and Learn discussions
In the run up to AMP8, and in response to our customers’ growing demands, we’re currently putting together our Autumn programme for our Lunch and Learn sessions and we’ve already got organisations signing up.
Typically, these last for about an hour and are either face to face meetings or hybrid – face to face presentations where other people can join the discussion remotely. we're always happy to come and talk to water companies and their Alliance partners alike about how we can help.
We can’t cover all our products and solutions in just an hour so we generally ask what topics people would like us to talk about – and we can always cover other areas in a future session.
They are also free – so if you want further information and you’re interested in taking part, talk to our Business Development Managers, Dale Foster (07980 316059) or Adrian Heneghan (07540 667094), for an informal chat about possible dates, timings and topics you’d like to see covered.
To sum up, the water sector looks set to embark on a really exciting period of investment, starting with the next five year AMP8 plan - and as a company we at HUBER welcome the opportunity to play our part in helping to bring about the genuinely lasting step-change which will deliver water sector infrastructure the UK needs which is fit for the 21st century.