AMP 8: Navigating the Future of Water Sustainability

What is AMP 8?

Asset Management Periods (AMPs) are five-year regulatory cycles set by the UK’s Water Services Regulation Authority, Ofwat, for water companies in England and Wales. The aims of these cycles is for water companies to outline their business plans, setting out short and long-term goals to enhance efficiency, service quality, and resilience in the sector.

Starting on April 1^st 2025, AMP8, will replace AMP7 and introduce new targets with a stronger focus on net-zero goals, customer engagement, affordability, and innovation. Meeting or missing targets set out in the business planning for each AMP can lead to financial rewards or penalties depending on against the key focus areas.

Therefore, with sustainability taking centre stage, AMP8’s heightened emphasis on issues like climate resilience and environmental stewardship brings about both challenges and opportunities for organisations involved.

Net zero

The big sustainability issue that is dominating discussion ahead of the start of AMP 8 is the UK water industry’s net zero operational emissions by 2030 target. Given this is the last regulatory period before 2030, it is a crucial time for the industry to ensure it delivers the 2030 targets set.

In order to meet these targets, water companies have been introducing various carbon reduction initiatives such as transitioning to renewable energy, moving to green fleets and water saving improvements. For example, Severn Trent have been at the forefront of this by creating the world’s first carbon neutral wastewater treatment plant.

However, while significant progress has been made from many companies, particularly around the transition to more renewable energy usage, there is still a lot of work to do and many challenges to achieving net zero by 2030.

Climate Change Adaptation

Another area of focus is around adapting to the weather-related impacts of climate change. For water companies, managing weather risks has always been a core part of their operations. However, as the climate continues to change, these risks are becoming more significant and complex, requiring innovative strategies and solutions.

This is where water companies are looking to incorporate green infrastructure and nature-based solutions to help cope with increasing extreme weather events such as droughts, floods and severe storms. For example, in Thames Water’s ‘drainage and wastewater management plan 2025-2050’ they set out their plans for wetland restoration and reducing impermeable surfaces. This will help to mitigate flood risks as well as reduce carbon emissions.

Welsh Water are also assessing the feasibility of 6 sites to be developed into constructed wetlands as part of their AMP8 programme. These wetlands act as much needed solutions for smaller wastewater treatment works, reducing the need for carbon intensive infrastructure while also having other environmental benefits.

The key challenge around these adaptation approaches will be ensuring the water systems are able to withstand the impacts of while maintaining service reliability to customers.

Water Quality and Supply

Water quality improvement and balancing supply and demand also remain critical challenges for water companies ahead of AMP 8. Current predictions suggest that the UK faces a gap between supply and demand of approximately 4 billion litres of water per day. While, 75% of UK rivers pose a serious risk to human health. There is clear crossover between both issues and it is something that must be at the forefront of decision making for AMP 8.

Earlier this year, Ofwat approved plans for around £35 billion to be spent on reducing pollution and delivering greater water supply resilience, more than trebling the level of investment in this than for AMP 7. This involves investment in storm overflow reduction, wastewater treatment upgrades and more.

Thames Water aim to deliver improvements at 106 high priority storm overflows with investigations at the remaining 348 potentially, high priority sites to inform investment beyond AMP8. They also set targets to reduce storm overflows by 28% and total pollutions by 30% between the end of AMP7 and AMP8.

While Severn Trent have introduced a ‘zero-spills’ innovation hub at one of their sites which enables them to test a range of technologies, including AI, nature-based solutions and behaviour changes. The goal is to find lower cost ways of achieving zero storm overflow spills, sharing findings and outcomes with the sector.

Biodiversity

Biodiversity is another key sustainability topic that falls under the water industry’s sustainability commitments for AMP8. Not only is it just a topic that the industry has agreed to focus on but the UK government has also recently mandated a minimum 10% Biodiversity Net Gain (BNG) for developers. Therefore, any developments taking place during AMP8 must consider biodiversity.

One of the key approaches being taken by water companies to improve biodiversity is the use of nature-based solutions such as constructing wetlands and rain gardens. This would be similar projects to the River Ingol wetland project that was funded by Anglian Water in partnership with Norfolk Rivers Trust and the Environment Agency in 2019. The project helped deliver a valuable habitat for wildlife as well as helping to improve water management in the area naturally.

As mentioned previously, this is also the type of approach that Welsh Water are looking into across 6 of their sites for AMP8.

As the water sector prepares for AMP8, sustainability remains a key focus, with companies needing to address critical environmental targets and goals. However, it is well known the industry also faces significant practical challenges, including rising costs, supply chain disruptions, and ongoing labour shortages. All of which could hinder the implementation of these initiatives. Balancing these demands will be key to driving meaningful progress and ensuring a sustainable future for the sector.

Find out more on about the sector’s approach to sustainability from some of the UK’s biggest water companies at our upcoming virtual conference here.