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Constructing the UK’s first major reservoir in over 30 years

Environmentally led project will protect world-renowned chalk streams and address water resilience, sharing water supplies across the south-east of England. It has been enabled by an industry-first agreement secured with the help of infrastructure manager Ancala.

The investment in numbers

  • £140 million Provided by Ancala to finance construction
  • 8.7 billion litres of water Capacity of Havant Thicket reservoir, enough to supply more than 160,000 people
  • 200 hectares Woodland and wood pasture created and improved
Artist’s impression of the Havant Thicket Reservoir

 

Portsmouth Water is a leading water company that is delivering an industry-defining project: constructing the UK’s first major reservoir since the early 1990s. It is designed to safeguard internationally rare chalk streams – the River Test and River Itchen in Hampshire - by providing an alternative, sustainable source of water. Once completed, the reservoir will hold approximately 8.7 billion litres of water, enough to supply more than 160,000 people. This comes at a critical time when climate change and population growth are increasing the strain on water supplies and the natural environment. 

In 2023, with the support of its shareholder Ancala, Portsmouth Water completed significant milestones in order to begin construction, made possible by successfully engaging and collaborating with a broad and complex group of stakeholders, careful planning and a significant amount of capital. This has been delivered by the experienced leadership team at Portsmouth Water, backed by the expertise and capital provided by Ancala and its industry partners – former CEOs and chairs of leading organisations in key infrastructure sectors.

Responding to a critical challenge

According to the UK’s National Audit Office, water shortages are an increasing risk, exacerbated by regional imbalances. Parts of the UK face a significant risk from drought, while neighbouring regions have surplus supplies.

Portsmouth Water is uniquely placed to help. There are many natural springs in its local area which provide 30% of the company’s water. These springs deliver a high quality, sustainable supply and are among the largest individual sources of spring water in Europe.

In the winter, and during periods of high rainfall, the springs produce a surplus which flows straight out to sea. The project aims to capture and store this excess for use during times of water scarcity and to share with neighbouring regions.

The River Itchen is a beautiful chalk stream with high-quality habitats for a range of protected species. 

 

Driving innovation through collaboration

Portsmouth Water has owned the land on which the reservoir is being constructed since 1965. However, the project was never able to progress due to a lack of funding and the complexities of aligning stakeholders, particularly since the water would facilitate transfers to a neighbouring water company. 

A primary driver for Ancala’s investment in Portsmouth Water in 2018 was the opportunity to deliver this project. Since Ancala’s investment, its active asset management approach has been a core part of bringing this together. Ancala’s expertise and cross-sector network has helped to secure the necessary approvals, including planning, an industry-first commercial agreement for sharing water with neighbouring Southern Water, and industry regulator Ofwat’s approval of the structure and the necessary funding allowances. 

Construction has been enabled by an innovative financial, regulatory, and commercial partnership between Portsmouth Water and key project stakeholders. This will enable the company to share its new resource with Southern Water and make supplies much more resilient across the whole South East region.

Ancala has helped to secure a £325m financing package that includes £205m of innovative ESG performance-linked financing. This places Portsmouth Water among a leading group of utility companies across Europe that are actively integrating ESG metrics into their financing strategies. As part of the package, Portsmouth Water has secured £50m from the UK Infrastructure Bank – marking its first investment in the water sector and creating new financing options for the wider industry. Ancala has also provided the project with a further £140m of equity funding to mid-2024, date and has committed to provide future capital. 

Designated as a Site of Special Scientific Interest, the Itchen is of international importance.

 

Prioritising environmental and social outcomes

In addition to protecting environmentally sensitive chalk steams and enhancing water supply resilience, the reservoir will also contribute positively to the local environment and communities. It will provide a leisure facility that benefits local wildlife and more than120,000 residents. There will be a new wetland that supports bird species, footpaths, cycle paths and bridleways, bird watching facilities, and picnic and play areas.

More than 200 hectares of woodland and wood pasture will be created and improved. Some 6,000 trees have been planted and a sapling rescue project will grow 200 oaks from seed. All this will provide safe and attractive habitats for a wide range of animals and birdlife. 

The project is a prime example of how private capital can support key infrastructure developments that address sustainability challenges. It showcases a collaborative approach to innovation, where regulatory support, financial ingenuity, and a focus on positive environmental and social outcomes are converging to create a resilient and sustainable water supply system for the south-east region of the UK.

You can find out more about the Havant Thicket Reservoir project here.

To learn more, visit Ancala's website.