Ofwat has opened the second round of its Water Efficiency Lab (WEL2), an annual, challenge-led competition that aims to unlock and scale innovations that reduce water use by households and businesses across England and Wales. The water supply regulator is offering up to £5 million (£1.5 million per winner) for tools that prevent, predict, pinpoint or fix customer-side leakage, i.e. in homes and businesses rather than the mains network.

It is estimated that between 1 to 1.5 billion litres a dayis lost to leaks in our homes and workplaces – equating to up to 547 billion litres a year and costing customers and businesses between £1-1.6 billion. This can include leaks from water pipes or fittings, including internal plumbing and external supply pipes within property boundaries. In addition to the direct cost to customers, ‘escape of water’ claims from businesses and households cost UK insurers £1.25 billion in 2024, with almost three quarters of that sum coming from household leaks.‘

Through the Water Efficiency Lab, Ofwat will be looking for the most promising solutions that help to prevent, predict, pinpoint and/or fix customer-side leaks in homes and businesses – with up to £1.5 million available to each winner:

  • PREVENT: Prevent leaks through better materials, accessible fixtures, or retrofit of durable components 
  • PREDICT: Use data or models to predict where and when a leak is likely to occur before failure happens 
  • PINPOINT: Identify the exact location of a suspected or confirmed leak – such as ‘second floor bathroom toilet’ rather than ‘somewhere in this property’ 
  • FIX: Enable low-intervention, low-disruption or low-cost repairs, or simplify the repair journey from detection to completion 

In June 2026, Ofwat announced the winners of WEL1, which is funding innovations that provide water users with data-led insights to help them make water efficient choices. The winners include a programme from the Royal Horticultural Society (RHS) to help homeowners make water efficient choices in their garden, a pilot fitting homes with water efficient household appliances to reduce their water use to just 50L per day, and a partnership with supermarkets, pubs and retailers to understand how to use water smartly across their premises. 

A further WEL winner, the WIN Initiative, led by Quensus, has been awarded £495,000 to install more than 1,000 sensors across 30 commercial buildings to tackle the 10 to 30% of water lost in commercial settings to leaks and continuous flow. The project will also test whether linking water efficiency to insurance premiums could turn water saving from a voluntary commitment into a financially motivated one, with insurer Aviva exploring how a new Water Management Plan standard might unlock benefits for building owners. 

The Water Efficiency Lab is delivered by innovation prize experts Challenge Works (part of Nesta), in partnership with Arup and Isle, and funded by Ofwat’s Water Efficiency Fund. 

Applications opened at 1pm on 3 August 2026 and will close on 20 October 2026. For full details and to apply, visit: waterinnovation.challenges.org