Thames Water tenders £70m biogas, biomethane contract

June 15, 2020

UK-based Thames Water has gone out to tender with several Lots worth £70 million (€78 million), covering biogas and biomethane.

Thames Water has 25 sites using anaerobic digestion processes, all of which produce more than 800 GWh of biogas. The firm said each site is unique and may require alternative solutions depending on their location, biogas composition, and energy usage.

In April 2019, the organisation pledged to achieve net-zero carbon emissions by 2030, underlining its commitment to mitigate climate change. It also set a target of reducing its AMP7 Embodied Carbon Emissions by 25%, compared to AMP6.

The company’s sourcing project covers the funding, supply, installation, operation, and maintenance of upgrading and compressing plants to produce biomethane, which is capable of being transported or injected into the grid. According to the firm, projects delivered under this framework need to not only help Thames Water towards its carbon target, but also ensure that its health and safety record is not compromised.

The contract has been divided into Lots and tenders may be submitted for all Lots. The maximum number of Lots that may be awarded to one bidder is four.

For Lot 1a, Thames Water is seeking suppliers to help it utilise biogas in an “optimum manner”, to improve its environmental performance and maximise the value of the biogas. The company said that depending on the site solution, it may need a combination of upgrading and compressing plants to enable it to transport the biomethane and inject it into the gas grid. Lot 1a covers all requirements, including ancillary equipment, such as grid entry units and basic fuel output.

Biogas produced from its AD plant contains siloxanes, carbon dioxide, hydrogen sulphide and methane. Thames Water said it needs an upgrading plant that can handle its biogas composition and its variants and produce biomethane that meets grid specifications.

The firm added that as a main contractor, the supplier will be expected to undertake principal design and principal contractor roles under CDM, and that the purchaser may be Thames Water Utilities Limited or another firm within the Kemble Holding Group, a parent of Thames Water. Lot 1a will be funded by the purchaser.

This lot is primarily aimed at EPC contractors or OEM entities that may be required to undertake the following works:

  • Design plant to maximise efficiency and achieve excellent value for money
  • Source plant from reputable suppliers
  • Undertake works on Thames Water operational sites to allow the existing AD plant to be integrated with the upgrading plant
  • Install upgrading and potentially compressor plant in line with TW process standards and relevant industry standards
  • Conduct commissioning
  • Operate and maintain the system after final handover/commissioning has ended
  • Guarantee a level of availability of the plant and conversion rate for the gas

The agreement value of £17.5 million (€19.5 million) provided in the tender document is a quarter of the estimated value of installing a plant on all 25 sites. Thames Water said it is currently unknown how this value will be split between Lot 1A, 1B and 3, as the funding operation and risk profile will be decided on a project by project basis.

Lot 1B will be funded by a third party. In addition to the scope of works outlined in Lot 1A, the bidder will also be responsible for the funding of the plants and ownership for 10-20 years through a contract and lease for the plant, which will process and enable the off-take of gas to the required specification, with ownership of the gas remaining with Thames Water.

At the end of the contract, the installation ownership would transfer to Thames Water or the installation would be removed. Suppliers would be expected to operate and maintain the facilities for the duration of the contract.

Lot 2 covers the sale of biomethane and requires suppliers to work closely with biogas plant and grid injection to generate and share value achieved. If the supplier is collecting biomethane from the site, it should consider whether storage is required.

Thames Water said the tender process will enable it to award an initial contract under the framework agreement for a specific site, with the opportunity to enter ‘mini competitions’ for other sites during the term of the agreement. It also said it reserves the right to invite Lot 1 and Lot 2 suppliers and/or Lot 3 suppliers to participate in mini competitions, depending on the specific business requirements for each project.

Lot no 3 allows bidders to apply to offer complete solutions for the sites, combining lots 1b and 2, giving bidder responsibility from the digester plant outlet to revenue generation from the sale of biomethane. Thames Water said it is looking to enter into a framework agreement with multiple providers.

The time limit for receipt of tenders or requests to participate is 22 June at midday. For more information, visit: