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UK wastewater treatment start-up I-Phyc raises £2.3m

© Shutterstock / DedMityayAerial view of industrial sewage treatment plant

UK-based wastewater treatment start-up I-Phyc has secured £2.3 million to further develop its circular, chemical-free wastewater treatment. 

  • I-Phyc will use the funds to expand its circular, chemical-free wastewater treatment across the UK. 
  • Contaminated wastewater is environmentally harmful and damaging to human health, but the dominant treatment methods require dangerous, expensive and inefficient chemicals. 
  • As business value is increasingly determined with the future in mind, the development and commercialisation of new technologies will accelerate to bring innovative solutions to market. 

The start-up’s latest fundraising round was led by Swedish investment firm Mellby Gård, with added contribution from the Mercia-managed MEIF Proof of Concept & Early Stage Fund and a number of private investors. 

Their investments will be used to enhance I-Phyc’s technology, onboard new treatment works and expand its team of staff.

Currently being piloted at just a few selected treatment plants, I-Phyc now plans to roll its system out across the UK and is reportedly in discussions with other international operators. 

According to executive chair Karl Wills, “this latest investment round will not only provide funds for expansion, but also greatly enhance our credibility within the industry.” 

Mercia investment manager Kiran Mehta said, “our previous investments helped I-Phyc to develop and roll out its technology and it is now attracting huge interest within the industry. With water companies trying to meet ever increasing water quality standards and challenging carbon emission goals, new technologies will have a key role to play.” 

How does I-Phyc’s wastewater treatment work? 

The technology uses algae to remove phosphorous, ammonia and other contaminants from the tertiary wastewater released by treatment plants. 

Wastewater is pumped into I-Phyc’s system before adding microalgae that has been specially developed to provide rapid nutrient uptake. The algae absorb CO2 and releases oxygen throughout the process, enabling its low carbon footprint. 

Having essentially ‘fed’ on the contaminants it removes, the algae grow and multiplies before being re-harvested from the system for direct reuse, or to create other bioproducts such as fertilisers, fuels or livestock feed. 

What problems does it address? 

Wastewater is rich in contaminating nutrients, particularly ammonia and phosphorous. If these are not adequately removed during treatment, they wreak havoc on local ecosystems. 

These nutrients escape into natural aquatic systems, feeding wild algae to the extent that they deplete the water’s oxygen content, causing fish and other aquatic species to suffocate.

This reduction in local biodiversity has rippling effects, as it eats into the food chain of larger land animals. 

Although there are already methods for treating wastewater, these too come with their consequences. 

The current mainstream approach, chemical precipitation, uses iron, calcium or aluminium salts are used to remove contaminating nutrients. 

These salts must be handled carefully, as they are harmful to both human and environmental health if leaked. They are also expensive, with costs only increasing as regulation outpaces the chemicals’ efficiency and demands greater volumes be used in order to meet stricter limitations. 

Furthermore, these chemicals are typically delivered by road tanker, while their use generates a chemical sludge that must be removed by transported elsewhere for safe disposal.

Transportation adds to the carbon footprint of the process, as well as to the costs incurred by plant operators. 

Are there any limitations to I-Phyc’s solution? 

These are the problems I-Phyc is using algae to address. 

The start-up is not alone in pursuing algal solutions. Indeed, microalgae has also been celebrated for its potential use in fuels, food, livestock feed, bioproducts, carbon capture and environmental remediation. 

It is, however, extremely difficult to cultivate microalgae in enough volume to achieve economic viability.  

This is an issue of technological readiness, defined as the series of steps that must be taken throughout technological development to eventually achieve the maturity required to bring it to scale.

As new technologies advance from conceptualisation to commercialisation, they must be supported along the way.  

Typically, the early research, development and piloting stages rely on academic and governmental aid, with the private sector becoming involved during subsequent demonstrations, refinements and, eventually, full-scale deployment. 

Tightening regulation and sustainability concerns attract support from investors 

Technological innovation in the wastewater treatment industry is already gaining traction among governments, as exemplified by the increasing refinement and introduction of policy regulation. 

In the US, the Clean Water Act regulates the discharge and treatment of wastewater, backed by the National Pollutant Discharge Elimination System (NPDES), which issues permits that define specific monitoring and reporting requirements. 

The Environmental Protection Agency continues to update the Act’s rules, with the Biden administration expected to bring stricter obligations into play. 

The EU is similarly revising its Urban Waste Water Directive, while the UK government is due to receive newly mandated drainage and wastewater management plans from all water and sewerage companies by 2023. 

These policy developments feed into a wider shift, whereby investors are increasingly basing the value of a business based on long-term considerations.

New legislation comes alongside regulatory risks, which must be considered when making investment decisions. 

Sustainability concerns are another example of such forward-thinking. Resources such as water are vital components of global supply chains, without which many companies would be unable to operate. 

Water pollution, therefore, becomes a material risk to business sustainability.

Indeed, research from CDP places the potential costs of water-related risks to business as being around five times higher than the cost of taking action. 

As such, it is well within the interest of investors to mitigate water risk within their portfolios by investing in firms with long-term water governance policies in place.

Companies that are actively working to promote sustainable water treatment, therefore, provide an attractive opportunity. 

These types of consideration extend beyond wastewater treatment, reflecting a broader shift from determining value by traditional drivers such as scope, scale and efficiency to a more future-oriented approach. 

As policy-makers and investors are increasingly turning their focus to long-term value creation – seeking to mitigate climate, regulatory and reputational risks – their support will continue to allow businesses such as I-Phyc to progress through the stages of technological readiness and bring their solutions to market.

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