July 23, 2026

Water Infrastructure Investment: Why the Sector Is Still Playing Catch-Up

Written by Charlotte Whitehouse

On paper, water has never had it better. Ofwat’s latest price determination supports £104 billion of water infrastructure investment over the next five years, around three times the level of the previous price review and one of the largest overhauls of the UK’s water infrastructure in decades.

Compare that to electricity, where Ofgem’s RIIO-T3 settlement awarded £10.3 billion for transmission alone, with the sector on track to invest over £70 billion by 2031. On a headline basis, water’s number is bigger. But the two sectors aren’t starting from the same place, and that’s the part the funding announcements don’t capture.

A bigger number, but a bigger hole to fill

Electricity’s infrastructure push is largely about expansion: building new capacity, new grid connections, and new transmission spines to support renewables coming online.

Water’s £104 billion, by contrast, is going substantially toward repair, ageing pipes, sewage overflows, leakage, and asset health problems that have been building for years.

The Independent Water Commission’s Cunliffe Review made the case explicitly, calling for a 25-year national strategy specifically because the underlying network has been left to deteriorate for so long that short-term fixes won’t cut it anymore.

The Institution of Civil Engineers’ State of the Nation report puts it in starker terms: ageing water assets are now flagged as a genuine risk to operational continuity and public safety, not just an efficiency problem. That’s a different category of urgency than the electricity sector is currently facing.

Deferring maintenance in water isn’t just costly, the report is explicit that the eventual replacement bill will dwarf what proactive maintenance would have cost, and that gap is growing.

Different regulatory clocks, different investment pace

Part of the lag comes down to how each sector is regulated. Electricity transmission’s RIIO framework has been through several iterations and is generally seen as a more mature, faster-moving regulatory mechanism.

Water’s price review process, by contrast, is a five-year cycle that critics, including water companies themselves, have described as slow and expensive to navigate, with review costs running into the millions per company before a pound of investment even reaches the ground.

That mismatch in regulatory speed matters, because it shapes how quickly problems can actually be addressed once they’re identified. An issue flagged in year one of a water price review may not see funded action until several years later.

Electricity’s more iterative regulatory cycle means capital can move faster relative to need.

The debt problem no one asked for

There’s also a structural issue unique to water: many water companies are carrying levels of debt that limit how much of the new capital translates into infrastructure improvement versus debt servicing.

Average gearing across major water and sewerage companies has been sitting close to the point Ofwat itself considers a risk to financial stability. Electricity network operators aren’t wrestling with the same legacy of leveraged ownership structures at the same scale, which gives them a cleaner path from funding settlement to delivery.

What’s actually changing

To be fair to the water sector, there is real movement.

Strategic New Reservoirs have been designated as Nationally Significant Infrastructure Projects, which streamlines the planning process considerably. The Direct Procurement for Customers model, already gaining traction on major reservoir projects, is bringing in institutional capital in a way that mirrors how private finance has accelerated other infrastructure sectors. And the government’s forthcoming Transition Plan is explicitly framed as an attempt to give water the kind of long-term, cross-political-cycle direction that energy infrastructure has arguably had for longer.

The direction is right. The question is pace and whether five years of intensive spend is enough to close a gap that’s been widening for considerably longer than that.

The leadership question underneath it all

There’s a talent dimension to this gap that’s easy to overlook, and it sits above the engineers and site teams: delivering £104 billion of investment requires a depth of programme leadership, commercial and delivery expertise that the water sector hasn’t needed to resource at this scale before, and it’s competing directly with electricity, nuclear and broader infrastructure for the same senior talent pool.

Capital doesn’t execute itself, it needs experienced leaders who can run major capital programmes, manage regulatory relationships, and de-risk delivery at pace. That leadership capability is arguably as significant a constraint on how quickly water closes the gap as the regulatory cycle itself and it’s a much harder gap to close quickly than simply approving a bigger budget.

The bigger picture

Water and electricity aren’t really in competition with each other for investment priority, both are essential, and both are underpinned by the same broader truth: the UK’s 10-year infrastructure strategy has committed £725 billion across transport, energy, water and social infrastructure precisely because all of it has been underfunded relative to need for a long time.

But water’s starting position is different. It’s not simply building for growth the way electricity is; it’s repairing decades of deferred investment while also trying to build for growth at the same time. That’s a harder problem to solve on the same timeline, and it’s worth being honest about that gap rather than treating the two sectors’ funding headlines as directly comparable.

Practicus works across the utilities and energy sector, connecting specialist talent to the organisations building the UK’s next generation of infrastructure.

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