Innovation in the water sector

As we set out in our strategy, ‘Time to act, together’, the sector faces unprecedented pressures in the shape of climate change and population growth. At the same time they have big opportunities to change lives and improve our natural environment.

We consider that the adoption of innovative approaches is key to delivering long-term resilience and great customer service at an affordable price.

And the sector will need to step up to make sure it can continue to deliver reliable, resilient and safe water that is affordable for all.

We also want to see companies work more effectively together, and with their supply chain, to better tackle these challenges.

Our overall approach to innovation includes the following.

  • Our £200 million innovation competition fund to encourage innovation to transform water and wastewater services. We are delivering this using two types of innovation competition. Visit to get details on the competitions and how to enter. For general background to the fund, visit our water innovation competitions page.
  • Our ‘innovation one-stop shop’ gives water companies and innovators access to non-binding regulatory advice on current rules and regulations, as they explore early stage innovation opportunities. Get advice about your innovation from Ofwat
  • The mechanisms and incentives we included for companies in our decisions on the price, service and investment packages for the 17 largest companies for 2020-25 (the ‘2019 price review’). For example (among other things):
    • the process we used encouraged companies to put forward plans which are high-quality, ambitious and innovative; and
    • our outcomes and total expenditure approach facilitate innovation by giving companies the flexibility and freedom to adopt more efficient and effective means of delivery.
  • The business retail market, which aims to improve price and services for business and other non-residential customers.
  • The new appointments and variations market to improve local price and services for customers at sites across England and Wales.
  • Other existing markets and opportunities for new markets.

Our work is also complemented by the sector’s own work:

  • UK 2050 Water innovation strategy’: The strategy seeks to guide innovation investment across the sector, and will provide insight for us in rolling out the £200m innovation fund. It also signals new opportunities for partners and suppliers of all sizes to innovate and collaborate more easily and efficiently across the whole sector.
  • Spring: the water sector’s innovation centre of excellence, which is expected to launch in December 2021. Spring will accelerate water sector transformation through innovation and collaboration.