De-constraining the UK Bioresources Market

Building on Jacobs’ work, Ofwat, the Water Services Regulation Authority for England and Wales, published its draft findings and consultation on the Bioresources market last month. This sets out its initial plans for the sector from the next price review (PR24). Jacobs’ Strategic Consulting Director Sam Hughes and Water Consultant Zac Alexander contributed their technical knowledge and sector insight to Ofwat’s review, building greater alignment between future economic regulation and the practicalities of sludge treatment and logistics.

The Jacobs team examined six areas where third parties could have the opportunity to provide sludge treatment services to water companies. We found that:

• Collaboration between companies to build new capacity has a high potential for new activity.
• Collocation of other organic waste treatment with sewage sludge, outsourcing and project finance approaches have some further potential.
• Trading of existing unused capacity has a somewhat lower potential to bring new market activity.
• Cotreatment of sewage sludge and other wastes has a high potential but is subject to heavy physical and regulatory constraints.

Our work identified16 important constraints to market development and developed 20 recommendations to address all but one of them. The constraints included areas such as regulatory fluidity, cultural and organizational factors, and physical and technical limitations.

Many of our recommendations have been reflected in Ofwat’s initial plan. But our consultation with stakeholders, including water companies, regulators and industry bodies, showed that development of the market is not owned by any one party. The constraints we found and our recommendations to address them go beyond economic regulation, and suppliers, regulators, water companies and academia all have contributions to make.

Jacobs’ Bioresources lead Adrian Mercer commented, “We believe that the future of the sector is in greater collaboration and innovation. Ofwat’s strategy will help to create flexibility for the water companies to select the best value solutions for their customers, whether in-house, outsourced or in partnership.”

Read our report on Ofwat’s website.