Water & Wastewater Treatment Magazine
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Close-Up A mong the various strands of the Water 2020 regulatory reforms being introduced to the sector, the opening up of the market for sewage sludge – or bioresources, to use the preferred terminology of Ofwat – arguably has the greatest potential in terms of the value it could unlock from the wholesale water industry. With early research from the regulator estimating the value of the market at £780M, few can doubt that there are significant gains to be made by the more efficient processing of, and energy generation from, a material that has historically been seen as a waste product le over from the sewage treatment process. Water and sewerage companies have traditionally been responsible for their own sludge, an approach which was sensible enough when the emphasis was simply on making it safe and then disposing of it as cheaply as possible. However, with treatment options for sludge now including anaerobic digestion (AD) and advanced anaerobic digestion (AAD), both capable of generating significant amounts of energy, the logic of the reforms is that breaking open this 'siloed' approach will allow the utilities to find cheaper – or in some cases, more profitable – destinations for their sludge, involving deals with other water companies or third parties. But where are the best opportunities likely to come from – and how easily realised will they be? Water companies' sludge activities can be broadly broken down into four areas – its transport, treatment, recycling and disposal – with all four being opened up to market involvement by the proposed changes. Wastewater utilities are set to receive a separate price control for their sludge activities as part of the PR19 price review process. In advance of this, companies are currently working to delineate the costs of their sludge treatment operations, to give them a clear picture of how much this part of their operations costs them and earns them. Where and how the sludge is treated, and how far it needs to be transported, are the key factors that determine the cost efficiency of the whole process, explains Alison Fergusson, Principal Engineer at Ofwat, who is one of the architects of the reforms. "This is one bit of the water industry that is not infrastructure driven, in that instead of being connected up by pipes, a lot of sludge gets transported in a tanker," says Fergusson. "At the moment, the tanker gets to the gate of the sewage works, turns le and goes to the incumbent company's sludge treatment centre. Well, what's to stop it turning right and going to the neighbouring company's sludge treatment centre that is actually closer? Or to the organic waste facility down the road where they can do the job cheaper, or get more energy out of it? That's the thinking that we are trying to bring to this." The 'quick wins' from the new market are likely to come from water companies transferring untreated sludge across borders to neighbouring water companies which have facilities that are closer or boast more advanced technology. Ofwat's research has indicated that 13% of the sludge in England and Wales could be profitably transferred in this way; this has used the assumption that it would be profitable to transport sludge within a 50km radius, but no further. Water companies are understood to be very keen on this sort of transaction, and the regulator has a consultation currently underway on requiring the companies to share information to facilitate such trades. "We're consulting right now on changes to company licences that will require companies to publish and Sludge trading and treatment From sludge to bioresources 16 | DECEMBER 2016 | WWT | www.wwtonline.co.uk ● Ofwat lays ground for separate PR19 price control as sludge market takes shape ● Sludge treatment information to be published to 'open conversations' on trading ● Quality standards likely to be written in to contracts to protect agriculture and environment by James Brockett