Thames Water did not complete the works needed to comply with the Industrial Emissions Directive by the end of the 2020–2025 price control, its 2025/26 annual report confirms. New environmental permits have taken effect, or are due to, before the upgrades they assume, and the company says its sites are at risk of operating outside their permit conditions.
No accepted plan yet
The Environment Agency has not accepted Thames Water's original remediation plan for the works due by March 2025, known as the Best Endeavours Plan. The company has since submitted a New Directions Plan. No formal enforcement action has been taken, but operating in breach of a permit is a criminal offence, and the company lists the matter as a contingent liability.
A large stream at stake
Thames Water's sludge operations handle a steady volume: 371 thousand tonnes of dry solids in FY 2025/26, against 374.5 thousand tonnes a year earlier. Sludge management met 100% of regulations and codes of practice, and the company passed a Biosolids Assurance Scheme audit in 2025. It also warns of "increased challenge around recycling sludge to land."
What comes next for sludge
Thames Water has adopted a new sludge strategy and plans to have two of three larger "super centres" running by 2030; its modeling found the change would give a 15% efficiency saving and generate 24% more energy over 25 years. A £6.9 million pyrolysis demonstration, mostly funded by Ofwat, is due to finish by the end of 2029. Both would build on the same sludge operations whose permit compliance is now in question.
How Thames Water plans to deliver sludge consolidation, how much energy Thames Water recovers from sludge today, and where its water recycling and demand programs stand are covered in the full report. The full report, Circular Water Economy: Thames Water, is available for USD 499 at https://ourfuturewaterintelligence.com/reports/circular-water-economy-thames-water. For a free overview, read the Thames Water Utility Snapshot at https://ourfuturewaterintelligence.com/utilities/thames-water.