GHOST hydropower plants that will never be built could cause a collapse in the industry in Scotland.
Even though the plants do not exist they are still counted as producing energy by the Department of Climate Change (DECC) which then cuts the subsidy for schemes planned for the future, making them unviable.
“These cuts could put us out of business,” said Richard Haworth of Blairgowrie-based Glen Hydro which is planning eight schemes over the next two years.
“The way DECC operates the subsidy means that we are being penalised for something that is not going to happen and is going to stop a lot of schemes being built.”
The small scale hydropower industry directly employs 500 people in Scotland with 70-80 per cent of a new scheme being spent in the local economy of rural parts of the country.
Scottish Renewables, which represents over 300 members, said that the future of the industry now hangs on a DECC review of the way the subsidy is paid through the Feed-In Tariff (FiTs).
FiTs pays a guaranteed price for every megawatt of green power produced but the cuts have already had a drastic effect on the number of schemes being planned. One result is the Scottish Environment Protection Agency (SEPA) has broken up a team of specialists which dealt with the hydro applications.
Joss Blamire, Scottish Renewables senior policy manager said: “SEPA’s decision to step down the permitting team paints a stark picture of the sudden decline in new hydro applications, caused by recent drastic and ill-considered cuts to Feed-in Tariffs. The industry will now have two very busy years during which schemes with planning permission already in place can be built, but the future looks bleak after that.”
At the moment, once all the paperwork is gathered for a proposed scheme, the subsidy is applied for and usually granted by DECC.
However even though the subsidy is “pre-accredited” and the plant may never be built, DECC still counts the number of megawatts expected to be produced and reduces next year’s FiTs accordingly.
In 2013, 75 megawatts were pre-accredited – which is about five times the amount of schemes built in a typical year. Yet as DECC counts the number of megawatts that is actually produced it resulted in a 20 per cent cut in subsidy last year.
Last year 90 megawatts were pre-accredited – about six times what is normally produced in a year, causing a 20 per cent cut in subsidy this year.
“The way the government operates FiTs is unhelpful and goes against DECC’s targets for increasing renewable energy,” said Simon Hamlyn of the British Hydropower Association. “The way it operates for hydro is based on the deployed capacity but they include schemes that have been given permission but have, for one reason or another, never been completed and don’t operate.
“The Scottish Government is very supportive of hydro power as Scotland is geographically ideal for these schemes but the budget by which the tariff is allocated is determined by DECC which causes a lot of grief.
“Hydropower is probably the least environmentally invasive of all renewable technology and operates significantly beyond the lifetime of any tariff or subsidy.
Hamlyn continued: “Hydro schemes can last up to 80 years whereas solar and wind don’t get beyond 20 years. It’s also the most efficient of renewable technologies as they can operate all year round except if there is a drought.
“They are incredible value for money because while they do cost more to build, they last longer. Some go back to the 1850s with turbines often taken out of older schemes and put into new ones in African countries, for example.”
A review of FiTs is scheduled for this year but will not take place until after the General Election. The industry is calling for it to be held urgently as soon as the next government is formed.
A spokesperson for energy minister Fergus Ewing said: “The UK Government has repeatedly failed to act on what they appear to accept is a flaw, despite the clear call from the industry and ourselves over the past two years.
“We have repeatedly raised concerns that aspects of the Feed-in-Tariffs scheme are causing unintended consequences for the hydro sector and if left unchecked could lead to an uncertain future.
“The Scottish Government is keen to have early engagement with the next UK government on this issue to press for more sustainable support for the sector.”
A DECC spokeswoman said she was unable to comment on the matter but said a review was due this year although it was up to the next government to decide when it would take place.