Water & Wastewater Treatment

WWT December 2016

Water & Wastewater Treatment Magazine

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Page 5 of 39

6 | DECEMBER 2016 | WWT | www.wwtonline.co.uk Comment W hile many people's attention in the industry may be more focused on the opening of the non-domestic retail market next year, it's now apparent that the opening of the market for sludge, which is the subject of our cover feature in this issue of WWT, is in some respects more exciting in terms of the opportunities it presents and its potential value. While there is still plenty of work to do in a number of areas – notably, ironing out the level of information utilities must provide on their raw sludge before it can be traded and in ensuring that any new entrants are subjected to a high level of scrutiny in meeting environmental regulations – there is every reason for wastewater companies to welcome the changes in the pipeline under Ofwat's Water 2020 proposals. Not only will they provide scope for immediate financial reward Sludge games and efficiency gains through sludge trading and the use of spare capacity, but in the longer term, the developments open the door for cleverer methods of funding and supplying tomorrow's new capacity and the speedy exploitation of new and sustainable technology. It is tempting for many people to be sceptical about the introduction of competition to the water sector, if you take the view that a business activity so based around infrastructure will always tend towards being a natural monopoly. However, sludge is a little different: while sludge treatment does require significant infrastructure, the fact that the majority of sludge is transported by road means that there is considerable scope for new sites to built outside of the traditional structure of the incumbent water company. Indeed, when you consider the potential national network of sludge treatment centres and transport, the division of the country into water company regions begins to look a little arbitrary and inefficient. Moreover, sludge treatment and anaerobic digestion is an area of technology that is advancing quickly and generates much-needed renewable energy. Removing what can be seen as artificial barriers to open up this market James brockett eDItor JamesBrockett@fav-house.com Twitter: @wwtmag Industry view sponsored by richard Hawkins, account Director, seams I strongly believe that a number of macro-environmental changes are set to disrupt the water industry, bringing challenges and opportunities not just for water companies, but suppliers and new market entrants alike. The responsibilities for achieving outcome delivery incentives will fall across both suppliers and asset owners. This shared responsibility means that strong partnerships with clearly defined remits will be critical to success. Every 5 years, UK water companies invest considerable time, money and energy into generating an optimised strategic investment plan for OF WAT Price Reviews. The resulting strategic plan informs the business of budgets and targets. However, all too o en water companies produce this plan, Let's not drop the ball a er PR19 heave a huge sigh of relief and then …. nothing until the next price review. In the meantime various challenges, unforeseen events etc. can result in this strategic plan o en not being realised during an AMP period. In fact many water companies report a stark contrast between their strategic plan and their actual delivery plans. For a variety of reasons, the projects carried out o en bear little relation to the business plan. Water companies aren't getting full value of the advanced analytics and decision support that has taken place during a price review. What happens when new risks are raised, or projects don't go according to plan? How can these be integrated to keep the plan on track? And who's making the decisions on what should be funded? What should be delivered and in what order? Very o en, the theory of the business plan is very different to the realities of the deliverable plan. The division of responsibilities between different departments and suppliers can be difficult to implement. So what is the way forward? How do you create a dynamic, rolling plan that takes into account emerging risks and opportunities throughout the AMP period? How are the ODIs and performance commitments promised by the plan monitored and managed? In my view, there needs to be an acceptance that life goes on a er PR19 and that significant change is required in preparation for this. There needs to be a clear understanding of how business and deliverable plans can be aligned and, crucially, how change is monitored/managed. It comes down to four points: 1) Ownership – From Strategy to Delivery and the SLAs between them. 2) Monitoring and Management. What 's important to monitor? Where do we need quick feedback and agility in decision making? 3) Processes and Change – A change to ensure processes alignment with new management approaches. 4) Systems – supporting these changes and enabling efficient and reliable decisions to be made. So, the question remains: Is the water industry ready for this? could allow a new and innovative technology to spread quicker and to pull in raw material from further afield. This should be an enticing proposal for potential new entrants and investors, and good news for the environment as greener, more sustainable energy is enabled to come on stream quicker. What could possibly go wrong? Nothing, as long as water companies approach the change in a positive manner. It is to be hoped that the trading of sludge will be easier to bring about than the trading of water resources, which has been mooted for years without essential investment in the form of pipelines between utilities being built. The industry is arguably at its best when it is collaborative, and the prospect of joint ventures and bilateral trading relationships will with any luck come much closer when there is not a multi-million pound infrastructure project to fund and overcome before it can start. Sludge is being renamed by the reforms as 'bioresources', while some in the recent past have preferred the moniker of 'black gold'. Let's hope that water companies across the UK are equally as alive to the value that it could represent.

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