A report by Scottish Renewables has revealed that proposed cuts in financial support, known as the Feed-in Tariff (FiT), could slow down or even halt the development of small scale hydropower projects in Scotland.
The report states that projects worth £23m per year could be affected by the changes, while delays and ambiguity created by the UK government’s review of the FiT scheme in 2011-2012 have resulted in a backlog of licence applications.
By the time the projects are approved they could be subject to a new FiT rate, which will be considerably lower than current levels due to high level of applications in 2013, Scottish Renewables said.
The Scottish hydropower industry wants the planned cuts, which could be as much as 20% from April 2014, to be delayed so that the high numbers of projects currently caught up in the planning system do not affect support for future schemes.
Scottish Renewables senior policy manager Joss Blamire said: "In a year when the Scottish hydropower industry is celebrating its 70th anniversary, and still produces the equivalent of 12 per cent of our electricity needs, it is extremely disappointing to learn that the next 70 years look so uncertain.
"The hydropower sector understands the need for the UK Government to cut the cost of the FiT scheme, however, the problem is this system is unsuitable for hydro and should be delayed for at least a year."
Another longer term issue, according to Blamire, is that FiT support cuts are linked to expected, but not actual build of hydro schemes.
"Unfortunately, due to uncertainties in financing, grid connections and construction in the hydro sector, projects may be further delayed. This means that projects in future could suffer from cuts in financial support as a result of schemes which were expected to be built, but never were," Blamire added.
"A possible solution to this problem would be to have a one year hiatus of cuts, known as ‘degression’, in order to deal with the backlog of hydro scheme applications caused by the delayed review by DECC, and then introduce annual cuts in financial support based on small-scale hydro schemes which have been built, not on schemes which only gain pre-accreditation."
Mór Hydro director Adrian Loening said the company has been working with partners on the 330kW Allt Mor Hydro scheme at Kinloch Rannoch for more than two years and invested over £70,000.
"The threat to our business is very real with as much as £50,000 being lost every year if the 20 per cent cut is applied," Loening added.
Image: The report claims that small scale hydropower projects worth £23m per year could be affected in Scotland. Photo: Courtesy of Scottish Renewables.
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