The Water White Paper has landed. And while many have welcomed it as a step forward, I argued yesterday that when it comes to innovation, it leaves two fundamental problems completely unaddressed: the white space thinking gap and the commercialisation gap. The Ofwat Innovation Fund, for all its good intentions, has become a machine that produces pilots — not transformation.
But here is the thing. Whether Ofwat likes it or not, change is coming. The 2030 funding cycle will mark an inflection point. After years of pouring money into research and development, the next logical — and urgent — step is getting water companies to actually adopt these ideas at scale and at speed, so that bill payers and the environment see real, tangible benefits. The current model will not get us there. Two bold alternatives will.
Option 1: A Commercially-Driven Innovation Investment Model
Look outside the water sector and there are powerful blueprints for how to fund innovation with genuine commercial edge. The Cardiff Capital Region is one of the most instructive. The Cardiff Capital Region City Deal — a £1.2 billion investment programme — was established to stimulate economic development and build long-term resilience across South East Wales. Within this, a dedicated Investment Fund was created specifically to back innovation, and critically, Cardiff partnered with PwC as a specialist fund manager to identify, appraise, and deploy capital into high-potential opportunities.
The results speak for themselves. The model has attracted private co-investment, supported scalable businesses rather than one-off pilots, and brought genuine commercial discipline to the process of deciding where public money goes. It has created jobs, built supply chains, and generated returns — not just reports. The partnership with an expert commercial operator was the decisive factor. PwC brought market intelligence, deal-structuring capability, and accountability that a grant committee simply cannot replicate.
We have seen similar success in the defence sector, where innovation funding is structured around competitive lots tendered to private enterprise. Suppliers are incentivised to deliver outcomes, not outputs. The Ministry of Defence’s Defence and Security Accelerator (DASA) is a strong example — it funds innovation through open competitions, with industry partners taking on commercialisation risk alongside the public sector. This is how you move from interesting idea to deployed capability.
My proposal for the 2030–2040 price control cycle is simple: divide the Ofwat Innovation Fund into competitive lots and open them to private enterprise to bid for and deliver. Each lot would be aligned to DSIT and Cabinet Office innovation objectives — improving productivity, building resilience, and creating world-class jobs and capabilities in the UK water sector. Private partners would bring commercial expertise, IP management, and skin in the game. Grant committees would be replaced by investment panels. Collaboration seminars would give way to commercial partnerships with accountability built in from day one.
Innovation does not come from good intentions. It comes from commercialisation. And commercialisation requires partners who have something to lose if it does not work.
Option 2: A Price Control Delivery Mechanism for Innovation Adoption
The second option is more radical — and in my view, potentially more powerful. Scrap the Innovation Fund entirely.
Before you close the tab: hear me out. The money currently collected from bill payers would still be ring-fenced by Ofwat. But instead of being deployed upfront into grant competitions, it would be held in reserve and released to water companies through a Price Control Delivery (PCD) mechanism — only when they can demonstrate that they have adopted an innovation and evidenced its benefits.
PCDs are already used in the current regulatory framework to reward companies for delivering specific outputs. This proposal extends that logic directly into innovation. Water companies would receive funding from the regulator only upon demonstrating verified adoption of innovative solutions, with benefits evidenced across four pillars: resilience, environmental performance, efficiency, and customer bill impact. No adoption, no money. Benefits demonstrated, funding released.
This matters for three reasons that go beyond the obvious financial accountability argument. First, it builds supply chains. When water companies are incentivised — and funded — to adopt innovation at scale, technology providers, SMEs, and specialist consultancies grow around them. We diffuse technology across sectors and borders, not just between water company board presentations. Second, it forces companies to partner with genuine experts. Without the safety net of a grant application to write, water companies would need to identify credible commercial partners who can help them evaluate, adopt, and embed new approaches — not simply collaborate in a workshop.
Third — and this is the argument I am most passionate about — it transforms the people inside the water sector. Today, the innovation ecosystem is full of talented individuals whose skills have been shaped by the funding environment: bid writers, delivery managers, report authors. They are good at what they do. But what the sector desperately needs are entrepreneurial thinkers, commercially-minded strategists, and risk-taking innovation champions. A PCD model would force companies to develop and reward that capability internally — because their funding depends on it. We would see a genuine shift from grant dependency to innovation leadership.
The Status Quo is Not an Option
Let us be clear about what we are doing right now. After £190 million spent and 109 pilots funded across 300 partners since 2020, the sector still does not have a completed value-for-money evaluation of the Innovation Fund. We risk spending £400 million between 2025 and 2030 generating more pilots than a British Airways staff lounge — and calling it innovation.
One of the structural reasons adoption stalls is that water companies’ own capital is tied up in regulatory commitments. They cannot easily use bill payers’ money to trial unproven innovation — the risk is too high and the regulatory exposure too great. Both models above address this directly: the first by shifting commercialisation risk to private partners, the second by making adoption the trigger for public funding rather than research activity.
The sector faces urgent, existential challenges — from crumbling infrastructure to climate resilience to customer affordability. These will not be solved by well-meaning grants and collaboration seminars. They require an entrepreneurial, commercial edge. They require the right partners. Not virtue.
Ofwat will have to change after 2030. The only question is whether it does so boldly — or whether it waits until the evidence of failure is impossible to ignore. I know which one the sector deserves.
Thomas Harrison LLB MPWI MAPM is a senior strategic transformation and innovation specialist with experience across the water, infrastructure, and public sector.
Thomas originally published this opinion piece on LinkedIn on 27th February 2026. He has recently completed his contract as Senior Demand Strategy Manager at Pennon Group and is currently open to senior strategic transformation, digital innovation, infrastructure, and partnership‑building roles.
Feature Image Source: Jannoon028 on Freepik