Portsmouth Water partners with Wattstor for solar project

Portsmouth Water secures 3MW solar installation at Highwood Reservoir

Portsmouth Water has signed a 25-year agreement with energy firm Wattstor to develop a 3MW solar project on the roof of its Highwood raw water storage reservoir. The deal, confirmed in late 2024, doubles the utility’s renewable capacity to 6MW. It also introduces a fixed-price tariff designed to protect against energy market volatility.

The utility serves 324,000 homes and businesses across South East Hampshire and West Sussex. Energy costs represent one of its largest operational expenses. Therefore, the move to generate power onsite addresses both financial risk and environmental commitments.

This project forms part of a wider infrastructure investment programme. In 2024, Portsmouth Water secured £325 million to construct the Havant Thicket Reservoir, the first major new reservoir built in the UK since the 1980s. Consequently, the company is positioning itself to meet future demand while reducing its carbon footprint.

How the Highwood solar project will work

The installation will use a DC-coupled solar-plus-storage system. This setup combines solar panels with battery storage, allowing Portsmouth Water to capture excess energy during the day and use it when generation drops. The system is designed to supply over 85% of the site’s annual electricity demand from renewable sources.

Wattstor will install and maintain the equipment under a 25-year agreement. The company’s ‘Price Protect’ tariff caps electricity rates for the duration of the contract. In addition, it allows Portsmouth Water to benefit if wholesale energy prices fall, while shielding the business from price spikes.

Kevin Ball, Chief Commercial Officer at Wattstor, explained the approach. He said the project depends on tackling both the engineering and the commercial model side by side. The result is a system that maximises the use of the reservoir roof area while providing long-term cost certainty.

The Highwood reservoir offers a large, flat surface that is currently underutilised. By installing solar panels on the roof, Portsmouth Water avoids the need for additional land while generating clean power at the point of use. This reduces transmission losses and reliance on the national grid.

Energy costs and volatility remain a concern for UK utilities

Water companies face significant pressure from rising energy costs. Pumping, treatment, and distribution require continuous power. Moreover, wholesale energy prices have fluctuated sharply in recent years due to global supply disruptions and geopolitical instability.

For businesses with high electricity consumption, this volatility creates budgeting challenges. It also increases the risk of passing costs onto customers through higher bills. Fixed-price contracts offer some protection, but they often come with premiums and limited flexibility.

Portsmouth Water’s agreement with Wattstor addresses these issues. The Price Protect tariff caps rates over 25 years, providing financial predictability. Meanwhile, the onsite generation model reduces exposure to grid price fluctuations. As a result, the utility gains more control over its long-term operating costs.

The project also supports compliance with environmental regulations. The Environment Act 2021 requires water companies to improve resilience and reduce environmental impact. Onsite renewables contribute to both goals by cutting emissions and reducing pressure on the grid during peak demand periods.

Portsmouth Water’s broader investment in resilience and sustainability

The solar project sits within a larger programme of infrastructure improvements. Portsmouth Water’s 2025 to 2030 business plan, valued at £347 million excluding the Havant Thicket Reservoir, focuses on water security, environmental protection, and operational efficiency.

The Havant Thicket Reservoir is the centrepiece of this strategy. The project received planning permission in 2021 and appointed Future Water MJJV Limited as the main contractor in February 2023 for £167 million. The reservoir will store 8.7 billion litres of water, providing protection against droughts with a 1-in-200-year frequency.

In addition, the reservoir includes an 80-year bulk supply agreement with Southern Water for 21 million litres per day. This deal strengthens regional water security and supports population growth in the area. The site will also feature wetlands and leisure facilities, creating environmental and community benefits.

Bob Taylor, CEO of Portsmouth Water, described the Havant Thicket project as the most ambitious investment in the company’s 166-year history. The Highwood solar installation complements this work by addressing energy security alongside water supply.

Together, these investments demonstrate a shift towards dual-purpose infrastructure. Reservoirs are no longer just storage assets. They can also serve as platforms for renewable energy generation, improving financial performance and environmental outcomes at the same time.

What this means for UK water companies and SMEs

Portsmouth Water’s deal with Wattstor offers a model for other utilities and industrial operators. Many businesses have large roof spaces or land that could support solar installations. However, upfront capital costs and technical complexity often create barriers.

Power purchase agreements like the one used here remove the need for initial investment. The energy supplier installs and maintains the equipment, while the customer pays for the electricity generated. Fixed-price tariffs add a layer of financial protection, making the business case easier to justify.

For water companies, the benefits are particularly clear. Energy represents a major cost base, and regulatory scrutiny over customer bills is increasing. Onsite renewables offer a way to reduce costs, improve sustainability credentials, and meet net-zero targets without requiring large capital outlays.

SMEs in other sectors can also apply these principles. Manufacturing sites, warehouses, and distribution centres often have suitable roof space. Furthermore, businesses in energy-intensive industries face similar challenges with volatile electricity prices. A long-term fixed tariff can stabilise costs and improve competitiveness.

There are also supply chain implications. Public sector tenders increasingly include environmental criteria. Companies that generate renewable energy onsite may score higher in procurement processes. Additionally, net-zero programmes for carbon reporting compliance require businesses to measure and reduce emissions, and onsite solar contributes directly to Scope 2 reductions.

DC-coupled solar-plus-storage systems explained

Traditional solar installations connect to the grid via an inverter, converting direct current (DC) from the panels into alternating current (AC) for use by the building or export. Battery storage is often added separately, requiring additional conversion steps.

DC-coupled systems integrate the battery into the solar array before the main inverter. This reduces energy losses during conversion and allows more efficient use of stored power. It also simplifies the system design, reducing maintenance requirements and improving reliability.

For a site like Highwood, where demand is continuous but fluctuates throughout the day, this setup offers clear advantages. Excess solar generation during daylight hours charges the battery. That stored energy can then be used during periods of low generation or high demand, reducing reliance on the grid.

The system also provides resilience against grid outages. While not a full backup solution, it can support critical operations during short disruptions. This is particularly valuable for water utilities, where continuous operation is essential.

Regulatory and environmental drivers behind the shift to renewables

Water companies operate under strict regulation by Ofwat, the economic regulator for the sector. The regulator sets price controls that determine how much companies can charge customers. Consequently, reducing operating costs is a key priority.

The Environment Act 2021 introduced new requirements for environmental performance. Water companies must protect and enhance natural habitats, including chalk streams and rivers. They must also demonstrate progress towards net-zero emissions, as outlined in the government’s net-zero strategy.

Portsmouth Water’s service area includes the Rivers Itchen and Test, both designated chalk streams. These habitats are sensitive to abstraction and climate change. By reducing energy demand and improving efficiency, the company can lower its environmental impact while maintaining service levels.

In addition, ESG compliance and carbon reporting services are becoming standard expectations for businesses of all sizes. Investors, regulators, and customers increasingly scrutinise environmental performance. Companies that fail to act risk reputational damage and regulatory penalties.

The solar project at Highwood supports these objectives. It reduces emissions, lowers costs, and demonstrates leadership in sustainable operations. Moreover, it provides a visible example of innovation that can be communicated to stakeholders.

Five key facts about the Portsmouth Water solar project

• The 3MW solar installation at Highwood Reservoir will double Portsmouth Water’s renewable capacity to 6MW, generating over 85% of the site’s annual electricity demand.
• Wattstor’s 25-year agreement includes a Price Protect tariff that caps electricity rates while allowing the utility to benefit from falling wholesale prices.
• The DC-coupled solar-plus-storage system reduces energy losses and provides resilience against grid volatility, improving operational efficiency.
• Portsmouth Water secured £325 million in 2024 to construct the Havant Thicket Reservoir, the first major new UK reservoir since the 1980s, storing 8.7 billion litres.
• The Highwood project supports compliance with the Environment Act 2021 and contributes to the company’s net-zero strategy by cutting Scope 2 emissions.

What businesses should consider when evaluating onsite solar

Companies considering similar projects should start by assessing their energy consumption patterns. Solar works best for sites with consistent daytime demand or the ability to store excess generation. Businesses with high electricity costs and suitable roof or land space are ideal candidates.

Next, evaluate financing options. Power purchase agreements remove the need for upfront capital, but long-term contracts require careful commercial assessment. Fixed-price tariffs offer cost certainty, but businesses should understand how they compare to wholesale market trends.

Technical feasibility is also critical. Roof structures must support the weight of solar panels, and electrical infrastructure may need upgrades. Working with experienced contractors reduces the risk of cost overruns and performance issues.

Regulatory considerations vary by sector. Water companies face specific requirements under Ofwat and the Environment Act. However, businesses in other industries may need to consider planning permissions, grid connection agreements, and environmental permits. Additionally, training on Scope 3 emissions and carbon reduction can help teams understand how onsite renewables fit into broader sustainability strategies.

Finally, businesses should consider the reputational and commercial benefits. Public sector tenders and private supply chains increasingly favour suppliers with strong environmental credentials. Demonstrating investment in renewables can improve competitiveness and open new opportunities.

Further information and government resources

The Department for Energy Security and Net Zero provides guidance on renewable energy and carbon reduction for businesses. Its net-zero strategy outlines the policy framework for achieving emissions targets.

Ofwat regulates the water sector in England and Wales. Its website includes information on price controls, environmental performance, and investment requirements for water companies.

The Environment Agency oversees environmental permits and compliance. Businesses can find guidance on emissions reporting and environmental protection on the agency’s pages.

Water UK represents the water industry and publishes updates on sector-wide initiatives. Its website includes resources on sustainability and infrastructure investment.

For businesses seeking advice on renewable energy procurement and carbon reporting, the government’s business support services offer free guidance on energy efficiency and net-zero planning.