In recognition of the challenges posed by climate change and population growth, OFWAT has recently made some changes to the way it regulates parts of the UK water sector. Wastewater sludge transport, treatment, recycling and disposal activities are now being termed ‘Bioresources Services’. OFWAT are trying to change the thought process from viewing sewage sludge as an inconvenient waste produced by treating wastewater, to seeing it as an opportunity. By permitting the trading of bioresources, they hope to promote even more low-carbon energy generation whilst also reducing customer water bills.
In light of these regulatory changes, Thames Water has been looking for opportunities that will help accelerate their transition to net zero. The potential for success is enormous; Thames Water’s Bioresources ‘Retail Capital Value’ (RCV) is 22% of its £6.5bn Wastewater RCV. Whilst a fantastic string to the sector’s bow, the generation of electricity from sewage sludge via Anaerobic Digestion and Combined Heat & Power (CHP) plants is by no means a novel solution. With 25 AD sites which together yield over 800 GWh/year of biogas, Thames is already maximising the benefits of CHP. Their successful investment in modern CHP plant means that many sites are now meeting their process heat demands with biogas to spare. The value in adding CHP capacity at these sites is hence limited. As an alternative, and empowered by the regulatory changes discussed above, Thames has taken the decision to let Frameworks in AMP7 for the development of Biomethane Generation concessions at appropriate sites across the region. These Biomethane Plants will upgrade the biogas for grid injection or distribution as a commodity. In the case of each site, Framework partners will be invited to tender for various concession models. These concessions will see partners take on aspects of the responsibility to build/own/operate/maintain the plant and monetise the end product.
This short presentation will provide a simple summary of the upgrading processes itself, Thames’ approach in respect of the concession model and the forecast carbon impacts at programme level.
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