Water companies must calculate sludge costs
Water and sewerage companies have a lot of work to do in a short time before they can make informed choices about the coming deregulation of the sludge market, a panel of experts said at the UK AD & Biogas conference yesterday (July 7th).
The opening up the sludge market is set to take place as part of Ofwat’s Water 2020 proposals, but wastewater utilities will need to make strategic decisions a long time before 2020 about whether they will compete in the market, form partnerships with other companies or exit the market by outsourcing their sludge operations. The regulator will be engaging with the water companies on these issues from next year as part of the PR19 price review process, delegates heard at the conference in Birmingham.
Alison Fergusson, Ofwat, said: “There’s real potential for markets in sludge activity,” said Alison Fergusson, Principal Engineer on the Water 2020 Programme at Ofwat. “Between local water companies there could be better ways of handling sludge across company boundaries. We also think there could also be synergies with the wider waste market.”
She said that Ofwat’s research had shown that 13% of the sludge in England and Wales could be profitably transferred to other facilities across water company boundaries. This rests on the calculation that it would be economic to move sludge a distance of 50km but no further. Information sharing, in the form of published figures, would be required at an early stage from the wastewater utilities, she added.
But Richard Laikin, UK Water Sector Leader at PwC, warned: “Most water companies have no idea about the unit costs of their sewage sludge operations - how much it costs to treat and transport the sludge, and the cost of generating energy from it. There’s a lot of work to do to work out what the costs are in this part of the value chain, and a lot that has to happen before informed choices can be made.”
With sludge treatment facilities making up only around 5% of water company assets, most companies still saw the aims of their sludge operations as “minimising costs” rather than “maximising value”, he said. Utilities must decide if they are able to make the shift to the latter, or whether they would be better off exiting the market by outsourcing sludge operations. “They haven’t got a long time to think about it,” he added.
Steve Bungay, Chair of the Wastewater Management Panel at CIWEM, cautioned that the new market would need to follow clear standards on the quality of sludge treatment so that agricultural users of the final product could have confidence whatever company ends up supplying them. “As the final stakeholder, the farmer is the person that is too often forgotten about,” he said. “If you produce a poor quality digestate, they won’t take it, and quite rightly. We’ve got to learn to protect the fields.”
Plastics, glass and small solid items such as batteries cause particular problems if they end up in the digestate supplied to agriculture, he said. He said that the new Biosolids Assurance Scheme should be widely adopted by the industry as the various regulations covering the new market are consolidated.
The UK Anaerobic Digestion and Biogas conference and exhibition was organised by trade body ADBA, and took place in Birmingham on July 6th and 7th.
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