The UK Infrastructure Bank to invest £50m in first UK reservoir to be built since the 1980’s

15 March 2023

The UK Infrastructure Bank has today announced that it will make its first investment in the water sector, supporting the UK’s climate resilience by providing a loan of £50m to finance a new environmentally-led storage reservoir for the South of England.

This is the Bank’s first deal aimed at improving climate resilience, investing alongside private sector partners in a collaboration between water companies to finance the Havant Thicket Reservoir, managed by Portsmouth Water. The reservoir, which is the first to be built in the UK since the 1980’s, will help to protect internationally-rare chalk rivers by providing additional water supplies and resilience to the South of England, an area with significant risk of water shortages due to climate change and a growing population.

As set out in the government’s recent "Environmental Improvement Plan 2023", the impact of climate change on our water resources is already apparent and will only increase over further years without significant action. Building new reservoirs and facilitating collaboration between water suppliers is key to this.

The Bank’s investment will enable the first reservoir to be built in the UK since 1991 and construction is expected to start in Spring 2023. Spanning 160 hectares, the reservoir will supply around 160,000 customers once completed, enabling Portsmouth Water to provide up to 21 million litres of water each day to homes and businesses supplied by neighbouring Southern Water Services (SWS), especially important in periods of drought. This will enable SWS to reduce abstraction from world-renowned chalk streams – the River Test and the River Itchen – in Hampshire.

In line with the Bank’s mission to boost regional and local economic growth, the project also helps protect the region from the economic, social and environmental burden that comes with severe droughts, as well as creating around 80 jobs in the local area. Portsmouth Water has committed to planting and improving more than 200 hectares of woodland and wood pasture in the area, as well as creating a new green leisure facility comprising a wetland, visitor centre and a network of footpaths, cycling routes and bridleways around the site.

Importantly, the reservoir is intended to reduce reliance on chalk streams which are often used to manage dry spells and increased water usage. There are currently 200 chalk streams in existence globally, of which 85% are found in the Southeast of England, including the unique chalk rivers in Hampshire, the River Test and River Itchen. The government and OFWAT are working with water companies to protect these unique habitats and this project is one of several designed to support this vital work.

John Flint, CEO of the UK Infrastructure Bank, said:

"I’m delighted to announce our first investment in the water sector and our first to support climate resilience. It will enable water to be stored and directed to where it’s needed most, create jobs, and help protect the environment."

Bob Taylor, Chief Executive Officer for Portsmouth Water, said:

"We are delighted to have secured the support and commitment of the UK Infrastructure Bank in our flagship Havant Thicket Reservoir project. This is a unique agreement and the first of its kind for our sector.

"Havant Thicket Reservoir will be the first large scale water storage reservoir to be built in the UK since the 1980s. It will play a key role in protecting internationally important chalk rivers – the River Test and the River Itchen, by securing a new, sustainable source of water for the region. This is an exciting time for the project. We have recently taken a major step forward in awarding the main reservoir works contract and, with all capital and investment now secured, look forward to work progressing on site."

You can download or read the factsheet on this deal.

You can read the blog about this deal.

Further information

Water sector in UK

The UK government’s Environmental Improvement Plan was published in January 2023 and addresses the water sector specifically in its chapter on Clean and Plentiful Water.
In its 2022 strategic priorities for Ofwat, the Government notes the resilience of the water sector is becoming ever more important, with increasing pressure from climate change and population growth, identifying that for some water companies, reservoirs will be part of the solution to these challenges.

Portsmouth Water

In addition to the UK Infrastructure Bank, ING, Lloyds, Nat West, and Siemens Bank are also investing in the Havant Thicket Reservoir project.
Portsmouth Water is one of the oldest water companies in the country, having been incorporated in 1857. Its water is derived from the chalk of the South Downs and abstracted from wells, boreholes, springs and the River Itchen.
The company serves 316,000 homes and businesses in an area stretching from the River Meon in Hampshire to the River Arun in West Sussex. Each day it supplies around 170 million litres of water to more than 720,000 people at the lowest cost in England and Wales.