The FTSE 100-quoted utility firm, which supplies water to over 4m customers in the Midlands and parts of Wales, currently generates 24 per cent of its energy from renewables.
“Our power costs were around £65m net last year, but we probably used £85m to £90m,” said finance director Mike McKeon.
“Producing some energy ourselves provides a natural hedge against rising energy costs.”
The energy required to run Severn Trent’s business – including waste treatment sites and pumps – equates to around 30 per cent of the firm’s total operating costs.
While the wholesale price of power has been falling, green levies and increased network costs are raising energy bills.
A number of large companies are looking at renewable energy generation as a way of securing supply, cutting costs and reducing their carbon emissions.
Ofgem has warned that the risk of a major power blackout will rise toward the middle of the decade as older generators go offline.