ENERGY bosses have accused the Scottish Government of “empty rhetoric” on renewables as a business rates row continues.

Hydro power made up almost one fifth of the country’s renewable electricity output last year.

Almost 500 small-scale schemes are in place, many of which are in rural and remote communities.

While the developments had benefited from UK Government incentives to boost the industry, this has now changed, prompting fears about the sustainability of the sector.

Meanwhile, a Scottish Government relief scheme has been set up to reduce business rates by 60% in the wake of two increases in recent years that have pushed costs up to three times higher than those for small wind projects.

But that scheme isn’t permanent and doesn’t apply to all operations.

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The hydro industry has been calling for a long-term remedy to remove what it calls “crippling” rates. Yesterday the “fast-track” Tretton Review on the matter found there is “no evidence” that the sector has been treated differently than any other, and the rates regime may “undermine” future investment.

But while it says “significant elements of the existing sector will struggle, at least in the short term, without further public sector support”, it backs the continuation of temporary measures over the permanent solution sought by operators.

Responding, Alex Linklater of hydro sector body Alba Energy said: “Long-term economic damage is being inflicted on Scotland’s indigenous green energy source, suffocating the potential for future development and investment.

“Small hydro is being penalised by assessors who have got their formula wrong but won’t admit it – and by a Scottish Government whose promises about a low carbon economy and rural development appear to be little more than empty rhetoric.”

Simon Hamlyn, chief executive officer of the British Hydropower Association, said: “If the Scottish Government does not intervene then many small hydro schemes will become uneconomic to local operators and risk being sold off at a knockdown price to institutional investors outside Scotland. Some will just not be worth operating in future, with the resulting impact on rural economies and communities and local jobs.

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“While the sector is grateful for the government relief schemes which have helped the majority of operators in the short term, and which we hope will continue until a permanent solution is found, we are angry and very disappointed that the Tretton Review has completely failed to come up with any form of long-term solution that the industry has been requesting. That must now be a priority. If the First Minister is serious about the world making progress at the COP26 climate conference, she must take action closer to home.”

But Public Finance Minister Kate Forbes said the Scottish Government is “committed to a fair and sustainable rates regime”, adding: “We value the significant role the hydro sector plays in Scotland’s economy – particularly in some of our most rural areas.

“I’d like to thank Professor Tretton and his team for their work. The Scottish Government will now take the time necessary to consider their recommendations and act on them as swiftly as possible.

“It should be noted that the ability of ministers to offer support to the sector through an ongoing relief is predicated on there being a resolution to the Non-domestic Rates Bill.”