THAMES WATER, the German-owned London utility company, will invest £200 million to build Britain’s first desalination plant.

The development, at Barking, will help the utility to cope with a shortage of water that it believes makes London drier per head of population than Madrid or Istanbul. Thames Water will submit a planning application to the London borough of Newham this month for the plant, which will be built in the Thames Estuary.

The plant, which could open as early as 2007, will take salty tidal water and turn it into water suitable for drinking. Thames hopes that the desalination plant will initially be used to guarantee supplies to customers during periods of drought. It says that demand for water has increased by 15 per cent in the past 20 years.

Thames is bracing itself for opposition to the plant because of the environmental impact. In the past large-scale desalination plants consumed a lot of energy. They were considered expensive and damaging to the seawater habitats.

Globally, however, seawater is increasingly playing an important role in providing drinking supplies. There are large desalination plants in the Middle East and the Mediterranean. They are also used in the Channel Islands and Malta.

Thames’s plant will treat 150 million litres of water a day, enough to supply 900,000 customers. The plant will use new reverse osmosis technology, widely used in Mediterranean countries. A pilot plant near the site of the planned works is already in operation.

According to the utility, London is now drier than Madrid and Istanbul. More than 55 per cent of available rainfall in the Thames Water area is used for public supply, the highest rate in the country.

London’s growing population is exacerbating the problems. The increasing number of single-occupancy households in London and the South East also means that individual demand for water is still rising.

The average daily amount of water used per customer at present is 163 litres, compared with 153 litres in 1990 and 140 litres in the early 1980s.

Climate change is also having an impact, with drier summers expected to be the norm.

By 2016 London’s population is expected to have grown by 700,000 to almost eight million. That increase is the equivalent of the current population of Leeds moving to the capital.