Dwr Cymru Cyfyngedig / Welsh Water has launched preliminary market engagement for a multi‑hundred‑million pound investment to replace and upgrade ageing water treatment infrastructure in the Cwm Taf area of south Wales.

The company says the Cwm Taf Scheme, part of its wider Cwm Taf Water Supply Strategy, aims to “future proof” supplies to more than 3M customers by replacing plant built in the early 20th century and meeting modern regulatory standards.

Two linked projects form the scheme: a new water treatment works at Dan‑y‑Castell Farm, Merthyr Tydfil (near the A465 Heads of the Valleys Road) and upgrades to the Llwyn‑onn works that would allow the decommissioning of Cantref works, originally opened in 1926. A replacement raw water pumping station at the Pontsticill site is also part of the works.

Welsh Water has told potential suppliers it intends to deliver the works through Ofwat’s Direct Procurement for Customers (DPC) route using a Competitively Appointed Provider (CAP) on a design‑build‑finance (DBF) basis. Indicative values for the two sites are around £362M (Dan‑y‑Castell) and £194M (Llwyn‑onn), excluding VAT, although the company stresses the figures are preliminary.

If the timetable runs to plan, Welsh Water expects to award contracts in August 2028. The project timeline envisions regulatory completion with the Drinking Water Inspectorate in March 2032, followed by about 12 months of testing and then a 25‑year operating term. Contract dates are currently estimated to run from 31 August 2028 until 30 August 2058.

A statutory pre‑application planning consultation began at the end of October 2025, and Welsh Water’s current consultation on the two proposals remains open until 10 December.

In the meantime, the company is preparing to publish technical documentation to support planning and procurement and will host a market‑engagement launch event in Cardiff on 19 November 2025 for organisations that have registered interest. Further engagement events are planned between December 2025 and February 2026 to discuss commercial models, risk allocation, financing and opportunities for innovation.

The company says the market engagement aims to test the viability of its procurement approach and identify potential barriers to delivery that might affect value for customers.

Welsh Water said the works are required to maintain compliance with drinking water standards and to reduce the risk of future supply interruptions. The scheme will incorporate water treatment works, pumping stations, transfer pipelines, treated water storage and environmental and mitigation measures, and will need to address environmental obligations including objectives under the Well‑being of Future Generations (Wales) Act 2015.

The Cwm Taf proposals follow growing pressure on UK water companies to upgrade old assets and reduce environmental impacts while securing supplies in the face of population growth and climate change. Ofwat’s DPC programme is intended to bring private capital and expertise into large public‑facing infrastructure projects, with costs ultimately borne by customers but subject to regulatory oversight and customer protections.

Local residents and environmental groups are likely to scrutinise the plans during the statutory consultation and forthcoming planning process. Key issues will include the siting and footprint of new works, impacts on the Bannau Brycheiniog National Park where part of the scheme is located, disruption during construction and long‑term environmental mitigation.

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