This report considers the investability of the water sector in England and Wales, in light of Ofwat’s recent PR24 Draft Determinations and the wider market for infrastructure investment. Oxera’s report has been informed by a detailed analysis of Ofwat’s proposals, as well as direct engagement with over 30 major investors in the England and Wales water and infrastructure sectors, from both the listed and unlisted markets.

We recognise the challenges Ofwat faces in balancing competing objectives at PR24. It is essential that improved services are provided to consumers at the lowest possible cost, with companies incentivised to deliver investment and operations efficiently.

However, if implemented as proposed, Ofwat’s Draft Determinations would likely result in significant investability issues for the sector as a whole. In particular, there is a material risk that the sector is unable to raise the new equity investment required to finance the proposed investment programme for AMP8, as well as the high levels of expenditure expected over the coming decades.