Despite paying out almost £80billion in shareholder dividends since 1991, suppliers now say they urgently need cash to upgrade infrastructure and tech.
One third of leaders at water companies in England and Wales are facing ‘challenging’ cost pressures, according to new research by software solution giant SAP.
41% of these spokespeople cited lack of digital infrastructure as a key contributor to the shortfall, baking-in unpredictability and making costs difficult to gauge. 31% said expensive and time consuming upgrade attempt to Britain’s 200-year-old pipe network are the main factor.
Water companies in England and Wales are currently preparing to submit spending plans to the Water Services Regulation Authority [OFWAT] for the AMP8 deadline. Financial penalties, and reputational damage, will face any firm that doesn’t comply at a time when public opinion of the sector is in the sewer and and record fines are already being handed out by authorities, largely for environmental damage include the release of raw sewage into waterways and bodies.
Just under one-tenth of water bosses are worried their company will not meet its KPIs and objectives, as established by regulators, and around one-quarter say third parties will be relied on for improvements.
‘The water industry is currently facing significant challenges in meeting the regulatory targets set for AMP8,’ said Greg Moyle, Head of Energy and Discrete Industries at SAP UK&A. ‘Maintaining high service quality is crucial, and there is a pressing need to reevaluate and enhance the operational strategies of the UK’s water network.’
Visibility and insights are major obstacles, with 55% of companies lacking the ability to accurately monitor and understand consumption and demand. 45% do not have a complete picture of their pipe networks, 43% are failing to capture data on environmental emissions and 30% have no detailed understanding of their sewage system.
‘Lack of visibility into the water network hinders the industry’s ability to understand and address key infrastructure issues. Adopting digital tools and real-time insights are key for business transformation to drive long-term improvements in service delivery,’ said Hamendra Gupta, Business Architect for Water Utilities at SAP UK&I.
Among other things, the numbers show the extent to which England and Wales’ water network has been systematically neglected for decades. Although many high tech solutions are recent developments, upgrading existing systems would be more affordable without existing pressures stemming from an estimated £96billion in costs for upgrading the physical infrastructure.
Between 1991, when the network was privatised, and March 2023, English and Welsh water companies paid out £78billion in dividends, with £2.5billion awarded to shareholders in the two financial years since 2021-2022, during which time they also added £8.5billion to their combined net debt.
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- Source: https://environmentjournal.online/waste-recycling/uk-water-companies-need-considerable-investment-to-meet-customer-needs/