The Scots firm making a splash with water treatment innovation

Apocalyptic language, you might think. Yet the record temperatures we have been experiencing are an uncomfortable echo of the report’s scientific findings.

While much of it was focused on temperature, water also featured. The committee found that drier summers mean that water supply shortfalls could exceed five billion litres per day. 

In Scotland, water is a misunderstood commodity. Many assume we are water-rich. Yet last year, Scotland experienced a drought after the driest hydrological year since 1976, with eastern areas hit hard.

Improving water management was among “the highest priorities” to deal with climate challenges, the report concluded. Fortunately, a key element of this is underway in Scotland with the most far-reaching upgrade of municipal water infrastructure for decades, driven by Scottish Water.

The need is urgent. Most water treatment plants in the UK were built using so-called gravity filters filled with sand in the 1950s and 1960s. Since the creation of Scottish Water in 2002, the publicly-owned utility has been engaged in a rolling programme to replace this outdated technology.

RSE, a water treatment business based in Muir of Ord, has been involved from the start – and was among seven companies selected by Scottish Water this month for the delivery of its biggest programme so far: a proposed £8 billion scheme to run from 2027-2033.

RSE was founded as Ross-Shire Engineering by engineer Allan Dallas in 1982, initially focused on oil, gas and hydropower. Its ownership has evolved such that Envoy Capital, founded by former Global Energy Group chief executive Iain MacGregor, and MML Capital Partners, are now the two largest shareholders. The rest is held by the Dallas family and management.

To get a sense of what RSE does I visited one of Scotland’s remotest water treatment sites, on Shetland. Here, on a slope opposite the original 1978 plant next to Eela Water, engineers have for the past nine months been installing one of the company’s units. Once switched on in March next year, it will serve 5,500 people in the north and west of Shetland.

Inside a modern building that RSE has erected is a Heath Robinson-like collection of pipes, tanks and cables that reminds you of a whisky distillery.

Water is piped in from the loch, then treated with a coagulant that clumps together any particles suspended in the water for easier removal later.

Next is ceramic filtration, using technology provided by Japanese company Metawater, to remove the particles and microscopic parasites known as cryptosporidium that naturally occur, especially in environments where sheep and deer are present. Minerals are added, since peaty loch water contains few, while disinfection rounds off the process.

Each stage involves a modular unit that’s been built at RSE’s Muir of Ord factory and shipped to Shetland. The company operates seven of these manufacturing and assembly facilities across the UK, and employs almost 2,000 people.

“Everything previously had been traditionally built, with people digging holes, pouring concrete and fixing stuff in place sequentially,” explains Stephen Slessor, RSE chief executive. “We’ve developed our own technology with everything built in a factory, shipped out in modules and assembled within a very short space of time. So, we can build entire assets in roughly half the time of anybody else. This modular way of doing business has really underpinned a lot of our success.”

RSE’s first use of ceramic filtration technology in Scotland was at the Bonnycraig water treatment plant in Peebles, which opened in 2023. The technology will be central to the upgrading of water treatment in Scotland in Scottish Water’s next programme.

“Scottish Water recognised the innovation we brought to this and are probably the main reason why we are where we are,” explains Dallas, RSE’s managing director. In the year to March 2025, RSE’s net profit jumped 51 per cent to £22 million on sales of £307m, up from £257m the previous year.

RSE now has its sights on international markets, in particular the US, where the company last year opened an office in the Great Lakes city of Milwaukee, home to the highest concentration of water-related companies in North America.

Slessor says the US water market is ripe for consolidation given its fragmentation. “One of the things we’ve done successfully in the UK is bought about 18 businesses over the last five or six years, which has helped us strengthen in specific market sectors. We’re looking to deploy a similar strategy in the US, where we’ll look to do some acquisitions over the next few years,” he says.

The aim is to increase the share of RSE’s overseas sales from 10 per cent of the total currently to around 30 per cent in the next five years.

A key part of the US strategy is offering RSE’s modular solutions in states such as California, Arizona and Florida, where populations are shifting for political and demographic reasons, creating new communities requiring housebuilding – and water - in the process.

A similar trend is playing out in Scotland, with Central Belt populations recently starting to shift from west to east, and movement also into the Northeast. This is why RSE is set to build a water treatment plant at Turriff “to help deliver more clean water in the Northeast to support future growth,” Slessor says.

“It’s not that we have water scarcity generally in Scotland, it’s that water’s often not in the right place for our emerging needs.”