Benchmarking the energy valorisation efficiency of sewage sludge: a persistent-transient stochastic frontier analysis

Sewage sludge valorisation through anaerobic digestion and combined heat and power represents the primary pathway for energy recovery in wastewater treatment. However, the energy cost efficiency of these bioresources activities remains poorly quantified at the utility level. This study proposes the Bioresources Energy Performance Index (BEPI), a composite benchmarking index derived from a four-error-component stochastic frontier model that simultaneously decomposes energy cost inefficiency into its persistent (structural) and transient (operational) components. Applied to all ten water companies providing wastewater services in England and Wales over the 2020–25 regulatory period results show that the sector operates at approximately half its potential energy cost efficiency (mean BEPI = 0.496). Persistent structural inefficiency, rooted in legacy digestion infrastructure and plant configuration, consistently dominates transient operational inefficiency across all companies, indicating that capital investment rather than operational adjustment is the primary lever for efficiency improvement. Translating BEPI scores into monetary terms reveals a cumulative potential saving of £475 million over the five-year period. The decomposition into structural and operational components enables targeted regulatory interventions, providing water regulators and utilities with an evidence-based tool for prioritising capital investment in anaerobic digestion infrastructure and calibrating efficiency targets within the bioresources price control framework.