Canal de Isabel II

About the Utility

Canal de Isabel II is a wholly public company: the Community of Madrid holds 81.99% through the Canal de Isabel II Public Entity, with Madrid City Hall and other city halls owning the rest; it is governed under the Community of Madrid’s institutional administration law, and its Board proposes tariffs that the regional government approves. Canal runs the whole urban water cycle, from its own mountain reservoirs and drinking water supply to municipal sewerage, wastewater treatment and reclaimed water. It supplied 6.92 million people through 1.64 million customer contracts in 2025, and its service now covers 147 municipalities after a new sewerage agreement with Majadahonda, while Latin American activities sit in a separate holding company, Canal Extensia.

Water System

Supply rests on rainfall captured in Canal’s own reservoirs in the Tagus headwaters and the Lozoya and Jarama catchments, separate from the reservoirs that feed the Tagus-Segura transfer. Hydrology is therefore the central operating variable. Drought years have become more frequent, but the 2025 hydrological year was exceptional: rainfall 38% above average filled the reservoirs to a record 97.2% of capacity in May. Demand has adapted, with per capita consumption down by more than 30% since the 2005 drought. The supply network is managed through about 700 metered districts, and estimated real losses stand at 4%.

Wastewater System

Canal also manages sanitation across the region, with 155 wastewater treatment stations and municipal sewerage networks that reached 15,947 km in 2025. The largest plant, Sur in Getafe, serves a population equivalent of about three million and is managed by Canal for Madrid City Council. Treatment plants double as resource sites, generating biogas energy and hosting Spain’s largest struvite plant. Reuse remains modest: of 110.7 hm³ of reclaimed water produced in 2024, most was returned to rivers in improved quality, and 13.54% was reused for parks, golf courses, industry and street cleaning.

Investment & Priorities

Investment has stepped up sharply: the annual average for 2023–2025 was €462.7M, against €172.2M for the previous three years. The Strategic Plan to 2030 provides for more than €2B, led by the Plan Red pipe-renewal programme and Plan Sanea for municipal sewers, with a European Investment Bank loan supporting loss reduction, digitalisation and reuse. Net financial debt has risen with the programme from its 2022 low, while Fitch kept the company at BBB+ with a stable outlook.

Sustainability & Resilience

Resilience is being pursued on two fronts: using less water and producing more of the company’s own energy. The Sustainability Plan targets per capita potable consumption below 200 litres a day by 2026, and smart meters with hourly readings now alert customers to leaks and unusual use. Canal aims to produce as much electricity as it consumes by 2030, from hydro, biogas, cogeneration and solar. Greenhouse gas emissions remain below the restated base year, although they rose in the latest year.

Key Challenges

1. Protecting supply security in a reservoir-fed system facing more frequent drought years.
2. Delivering the pipe-renewal and sewer-modernisation programmes on which the Strategic Plan depends.
3. Maintaining financial headroom as investment and net financial debt rise together.
4. Expanding the reuse of reclaimed water, most of which is still returned to rivers.
5. Reaching energy self-sufficiency by 2030 while emissions edge back up.

Major Projects