Ofwat announces details of £400m fund to spur water sector transformation in next five years

28 Jan 2025 11:56 AM

The Ofwat Innovation Fund will double to £400 million to support projects that could transform the water sector to meet and solve the many challenges it faces.

Pipebots for Rising Mains 1 (Credit University of Sheffield)

‘Pipebots’ to spot cracks inside hard-to-reach sewage pipes

Established in 2020, the original £200 million Ofwat Innovation Fund has been awarded to collaborative projects which see water companies working with promising innovators from across different sectors and around the world to develop and deploy solutions to the water sector’s biggest challenges. Today’s announcement will extend the fund for a further five years to 2030.

The fund was highlighted by the Chancellor of the Exchequer following a meeting of UK regulators on 16 January as one of a number of promising ways in which regulators are supporting the Government’s plan for economic growth. Investment expenditure is set to quadruple over the next five years as part of a wider £104 billion plan for the sector.

Helen Campbell, Senior Director for Sector Performance, Ofwat, said:

“There’s no question that the water sector faces many urgent challenges – reaching net zero emissions, ending the overuse of storm overflows, preventing leaks, and adapting to the impact of climate change – all while ensuring customers are properly served and enabling economic growth. Our £400m commitment to continued investment in innovation will support highly collaborative projects to develop and deploy solutions to these enormous challenges. While the first five years championed nascent technologies and new approaches to demonstrate their future potential, the next five years must see them scale and deliver a lasting and beneficial impact for customers, society and the environment”.

Through multiple competitions (four Water Breakthrough Challenges, the first Water Discovery Challenge – plus the pilot Innovation in Water Competition in 2020), the fund has so far supported 93 projects involving more than 240 partners, including water companies, universities, environmental charities, local governments, civil society organisations and other utilities. The fifth Water Breakthrough Challenge is underway and the winners will be announced in Spring 2025.

Previous winners have included robots that spot cracks from inside pipesseagrass restoration projectscitizen science initiatives, partnerships to help communities adapt to increased rainfall and new ways to process sewage sludge to destroy forever chemicals.

The funding for the next five years will see further annual Water Breakthrough Challenges, focused on innovative ideas from consortia led by water companies, and at least two more Water Discovery Challenges, seeking groundbreaking ideas to revolutionise the water sector from companies outside the industry. It will also introduce three new funding streams to support the implementation and scaling of successful innovations, solutions which require collaboration across the entire sector, and challenges across other sectors.

The water sector must transform its environmental impact whilst encouraging growth, and innovation is crucial to end the overuse of storm overflows, cut greenhouse gas emissions and reduce leaks. It must innovate to continue improving services for customers, provide value and meet the high standards that the public demands. Collaboration is at the core of the innovation fund – it fosters new thinking and new approaches to develop effective solutions that are fit for the future.

Big River Watch 1 part of CaSTCo (Credit The Rivers Trust)

The Big River Watch (Credit: The Rivers Trust)

The Ofwat Innovation Fund will be delivered by innovation prize experts, Challenge Works (a Nesta enterprise), in collaboration with Arup and Isle Utilities.

Natalie Wadley, CEO of ChangeMaker 3D, a partner in Water Breakthrough Challenge 3 winning project, Water Industry Printfrastructure, said: 

“The Ofwat funding has quite simply been game changing for both our company and the development of Printfrastructure as a positive impact for the UK water sector. The funding has unlocked new jobs for our business, five new products, a patented design and a significant opportunity to add value in the next five years. We are incredibly proud to work alongside all of the project partners, United Utilities, Scottish Water and Print City, in what has been the most trailblazing project to date. This project has truly delivered several UK firsts, pushed all of the technology boundaries and demonstrated how we can return tangible value to water customers.”

Paul Lavender, UK Water Utilities Director at Royal HaskoningDHV, a partner in Water Breakthrough Challenge 4 winning project, Biopolymers in the Circular Economy, said:

“As a technology provider, we highly value this centralised innovation funding approach for its role in supporting the development of large, impactful projects. We’ve witnessed strong collaboration among partners who share a unified vision to address major industry challenges, effectively bridging gaps across the supply chain. We’re excited about the next steps, as engagement with the water company project partners and widespread industry dissemination will help us to develop new opportunities.”

Professor Ana Soares from Cranfield University, a leader and partner on multiple Ofwat Innovation Fund winning projects, including Water Discovery Challenge winner, Innovative Coagulant Free Phosphorus Removal Technology, said:

“Having participated in three Ofwat Innovation Fund challenges, I have witnessed firsthand how the programme nurtures collaborative innovation, transformative projects addressing strategic challenges, and the introduction of fresh perspectives from new innovators. The programme is inclusive, supporting every stage from the conception of new ideas to their practical implementation. It supports ambitious projects that address long-term challenges such as climate change, resource efficiency, and resilience, while embracing inclusivity, leveraging leading-edge technologies and services, and ensuring tangible benefits for customers, communities, and the environment.”

To find out more about the Ofwat Innovation Fund and its previous winners, visit waterinnovation.challenges.org

Printfrastructure 3D printed water chamber at UU test facility, Weaverham, Cheshire (Credit ChangeMaker 3D)

Printfrastructure 3D printed water chamber at United Utilities test facility, Weaverham, Cheshire (Credit: ChangeMaker 3D)

Notes to Editors 

For all media enquiries, please contact waterinnovation@seven-consultancy.com or call +44 (0)20 7754 3610

About the Ofwat Innovation Fund
In December 2024, Ofwat published the final determinations for the 2024 Price Review (PR24) – a £104bn package over the next five years, designed to accelerate work to deliver cleaner rivers and seas along with improved services and strengthened supply resilience for customers. The boosted Innovation Fund is a part of this package and will cost each household in England and Wales about £2.13 per year between 2025 and 2030.

Ofwat consulted on changes to the fund, including doubling its size to £400 million for 2025-30, in March-April 2024. Ofwat will be appointing an evaluation specialist to undertake a full impact evaluation and value for money evaluation of AMP 7 (2020-2025). Ofwat will review the approach to the Innovation Fund in 2027 using feedback from the impact evaluation and value for money study.

The Ofwat Innovation Fund aims to grow the water sector’s capacity to innovate, enabling it to better meet the evolving needs of customers, society and the environment. It is encouraging new ways of working that go beyond business-as-usual innovation practices in the water industry, in particular increasing and improving collaboration and building partnerships from within and outside the water sector. It is delivered by challenge prize experts Challenge Works in partnership with Arup and Isle Utilities.

The Innovation Fund forms part of Ofwat’s approach to innovation in the water sector. Ofwat with the Environment Agency and Drinking Water Inspectorate also runs StreamLine, a joint service for innovators and businesses to get informal regulatory advice.

To contact Ofwat’s press office, please call 0121 644 7700.

About the Biopolymers in the Circular Economy project

The Biopolymers in the Circular Economy is a £6.2m project is led by United Utilities that aims to bring innovative solutions to sludge management through biopolymer extraction. Wastewater treatment bacteria produces naturally occurring polymers that have been shown to exhibit a wide range of beneficial properties, making them suitable to replace the fossil-derived polymers used in a range of applications including water treatment processes, paints, coatings, biostimulants for plants and fire retardants. Partners in the project include Royal HaskoningDHV, Aquaminerals, Cellvation, Cranfield University, Glasgow Caledonian University, Severn Trent Plc, South West Water Limited and Yara.

About Water Industry Printfrastructure

United Utilities and tech innovators ChangeMaker 3D have achieved a first in the UK water industry by demonstrating the use of 3D concrete printed components – with significant carbon, cost and labour savings. During a 12-month period, ChangeMaker 3D successfully designed, 3D-printed and installed a wastewater chamber at one of the United Utilities’ test facilities in Cheshire. With testing now complete, the partners (ChangeMaker 3D, United Utilities, Scottish Water, Print City) say it proves the huge potential of 3D printing for construction and could lead to widespread benefits for other sectors. In the case of the water chamber, ‘Printfrastructure’ delivered a 25% reduction in carbon, 20% cost saving and 55% reduction in labour versus traditional methods. The team also point to the extremely fast build time – the chamber was printed in under four hours, and with a significant reduction in the materials used. The printing process for the water chamber has also demonstrated safety benefits by reducing the requirement to work at height or in confined spaces.

About Innovative Coagulant Free Phosphorus Removal Technology

Options for phosphorus (P) removal from wastewater remain limited. Most utilities use coagulants leading to high chemical use, high greenhouse gas emissions, sludge production, combined with significant supply chain risks. New-found research has shown that is possible to remove (and recover) phosphorus as biologically induced struvite (bio-struvite) in real wastewater open culture systems using biocatalysts with selected bacteria in a continuous reactor. The effluent was <2 mg P/L and the struvite recovered had very high purity, as demonstrated after metals and pharmaceuticals analysis. The aim of the project is to optimise this sustainable technology leading to a wider implementation by the UK water industry.

Current and previous competitions and winners

About Challenge Works

Challenge Works is a global leader in the design and delivery of high-impact challenge prizes that incentivise cutting-edge innovation for social good. In the last 10 years, we have designed and delivered 101 prizes, distributed more than £310 million in funding and engaged with 16,000 innovators. Challenge prizes champion open innovation through competition. We specify a problem that needs solving, but not what the solution should be. We offer large cash incentives to encourage diverse innovators to apply their ingenuity to solving the problem. The most promising solutions are rewarded with seed funding and expert capacity building support, so that they can prove their impact and effectiveness. The first or best innovation to solve the problem wins. This approach levels the playing field for unknown and previously untested innovators so that the best ideas, no matter their origin, are brought to bear on the most difficult of global challenges.

About Arup 

Dedicated to sustainable development, Arup is a collective of designers, consultants and experts working globally. Founded to be humane and excellent, we collaborate with our clients and partners using imagination, technology, and rigour to shape a better world. Together we help our clients solve their most complex challenges – turning exciting ideas into tangible reality as we strive to find a better way and shape a better world. With a community of over 1700 water professionals, Arup is leading global thinking across key areas like innovation, resilience, net zero carbon and sustainable water management. Find out more: www.arup.com

About Isle Utilities

Isle is a global team of independent scientists, engineers, business and regulatory experts with a common drive to make a positive environmental, social and economic impact through the advancement of innovative technologies, solutions and practices. Our passion and expertise in technology and innovation enables us to connect expertise, investment and inspired ideas across the globe. At the core of all our activities is our ambition to make the world a better place. Find out more: www.isleutilities.com