May 21 (Bloomberg) -- Andy Triggs Hodge, a gold medal-winning rower at the Beijing and London Olympics, stopped training on Britain’s most famous river when it turned out water wasn’t his biggest obstacle: raw sewage on the Thames was.
The capital’s sewer network, built by Victorian engineers after the “Great Stink” of 1858, can’t cope. Too many people, too much waste. Thames Water Utilities Ltd. apologized in January after London properties were damaged by sewage overflow.
Help is on the way. A 4.1 billion-pound ($6.2 billion) “super-sewer” is on the drawing board, the longest and deepest tunnel ever to be built in mainland Britain and set to follow the Thames for 20 miles, passing such landmarks as Buckingham Palace. Kemble Water Holdings Ltd.’s Thames Water unit, with 14 million customers in the London area, hired UBS AG to help raise as much as 3.5 billion pounds for the works.
“Once you explain to people that the river banks their children are playing in are not actually mud at all, they support the project,” Michael Gerrard, managing director of the Thames Tideway Tunnel project, said in an interview.
The existing sewer network’s tunnels and arched caverns were constructed to serve half the current population. This means at least 30 million tons of excrement and waste spill into the river every year, sometimes remaining in the water as long as three months before washing out to sea.
No wonder the English rower Triggs Hodge, 34, took his training to Reading. Powering oars through toilet paper, effluent and other unmentionables while practicing on the Thames took a toll on the double World Champion.
“In the summer when things warmed up, the sewage and debris that collected on the riverbanks got pretty smelly,” he said. “The effects on our health became a major concern.”
That’s exposed the U.K. to potential fines for breaching European law on treatment of wastewater. Penalties could amount to 620,000 pounds each day Britain is deemed in breach, or as much as 226 million pounds a year, according to Thames Tideway.
The European Court of Justice in October ruled the U.K. failed to meet its obligations. The commission said it’s too early to speculate how much any fine may be.
The complexities of building a 7.2 meter-wide (24 feet) concrete tunnel extending west to east along the course of the river will require a new type of funding solution, according to the project’s financial adviser KPMG LLP.
Tight government pockets, and the late Prime Minister Margaret Thatcher’s 1989 privatization of the industry, point to a privately financed plan. The problem is finding investors for such project risks, said Richard Threlfall, head of the firm’s U.K. infrastructure, building and construction unit.
“It’s about the sheer amount of finance required and the risk of tunneling 100 meters underneath the Thames,” he said. “When you get to that scale, it’s impossible for even the biggest international contractors to take the risk on balance sheets.”
To lure investors, Thames Tideway proposes to separate out the tunnel as a single asset, concentrating risk in one vehicle. That company will raise debt and equity in the markets and from sovereign wealth and pension funds, according to Threlfall.
Plans for the tunnel that would intercept overflow points along the river and shunt excess sewage to treatment plants are being finalized, with construction to begin as early as 2016 amid a wider government effort to secure investment in its aging infrastructure.
The government agreed to give contingent financial support to cover “exceptional risks” in its 2011 National Infrastructure Plan. The model will receive special treatment by Britain’s water regulator, giving investors certainty of no changes during their investment period.
The plan is unprecedented, ripe for replication elsewhere for similarly scaled or high-risk projects, Threlfall said.
The financing model will help drive returns to investors in line with the water industry, or about 10 percent, according to Thames Tideway’s Gerrard.
Infrastructure and pension funds, current investors in U.K. water, are likely to avoid those construction risks, said Christopher Gasson, publisher of Global Water Intelligence in Oxford, England.
The project will need a “reasonably sizable” government guarantee, he said. “If you are a sewer rat, you will probably have to make do with your current accommodation.”
Improvements couldn’t come soon enough for Triggs Hodge.
Changing weather patterns mean short, sharp downpours are more frequent and overflows are increasing, according to Triggs Hodge and the Friends of the Earth group.
As little as 2 millimeters (0.08-inch) of rain can cause some London sewer tunnels to reach capacity and spill untreated waste into the Thames from 57 overflow points.
Raw industrial, animal and human sewage in the river that fermented in a warmer-than-usual summer spurred creation of the current sewer system after Parliament drapes were doused in a mix of chloride and lime in 1858 to negate the stench and lawmakers debated relocating upsteam to cleaner air.
As it is, about once a week untreated sewage overflows into the river. “People have no idea how bad the situation is,” Thames Tideway’s Gerrard said.
The lack of a system large enough to cope with London’s rising population is hampering growth as the city seeks to add new homes and businesses to revive Britain’s economy, according to Thames Water, the U.K.’s largest water supplier that’s proposing the “super sewer” to expand capacity.
Tunnel program manager CH2M Hill Inc. is working on similar projects in Doha, Abu Dhabi and Singapore, which is investing more than $2.4 billion digging tunnels to collect and treat its waste. Cities including Helsinki and Washington have similar projects, and Paris has a 3.4 billion-pound program to invest in upgrading its network.
“The European water utility industry is facing significant challenges in these uncertain times,” said Jonathan Refoy, a spokesman from CH2M. “Many of these change drivers -- workforce shortages, customer demands, financial constraints, aging infrastructure, security and emergency response, population growth, climate change, regulatory compliance -- have been around for some time but many are new or emerging.”
It’s time for change, said Jenny Bates of Friends of the Earth. “Having raw sewage entering the Thames untreated is unacceptable in the 21st century.”
As many as 125 species of fish have been documented in the Thames, including salmon, sea trout and eel, and there have been several “really bad” incidents when large numbers died due to sewage overflows, Bates said. In June 2011, overflow into the river after heavy rains caused the loss of as many as 26,000 fish, according to Thames Water.
The Tideway tunnel is designed to help. It’s the largest of three projects being developed by Thames Water to boost network capacity. The utility is investing 675 million pounds to upgrade five of the city’s main sewage treatment plants by 2014 and is also building the Lee Tunnel to deal with spills into the Lee River, a Thames tributary.
The cost won’t be insignificant. London residents can expect to see annual wastewater bills, which at about 123 pounds are the lowest in the country, rise about 70 pounds to 80 pounds, or 57 percent. This would bring them in line with the national average, according to Thames Water.
The project’s latest plan involves 24 construction sites across London. With work expected to start within three years, the tunnel should be operating by 2023.
A planning application for the project that will capture untreated waste from 34 of the river’s most polluting overflow points was submitted in March.
Meanwhile, Triggs Hodge rarely rows on the Thames except for one or two race events.
“Literally what you flush out of your toilet will appear in the river and just because the pipes aren’t big enough and there isn’t the capacity,” he said. “The bottom line is the river is an excellent venue for rowers. Its potential is huge and it’s such a shame.”
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