SMALL hydro power operators say they have been encouraged by talks with the Scottish Government over a business rates row.

The firms have been calling for a long-term remedy to “punitive” business rates, which they say are harming Scotland’s 500 small hydro operators. There have been two increases to the tax in recent years. The Scottish Government set up a relief scheme to reduce the rates by 60%, but it is not permanent and does not apply to all operations.

Representatives from the small hydro sector met with the Public Finance Minister Kate Forbes yesterday and warned her that some schemes would be put at risk or sold off to investors outside Scotland if the situation isn’t resolved.

The meeting came after the “fast-track” Tretton Review found there is “no evidence” that the rates regime may “undermine” investment.

READ MORE: Energy bosses slam Tretton review over small hydro power

CEO of the British Hydropower Association, which represents the hydro industry, Simon Hamlyn said: “After the whitewash of the Tretton Review, which failed to come up with any long-term solutions, I am encouraged that the minister understands the seriousness of the situation facing small hydro operators. It was a positive meeting, and we fully expect the minister to search hard for a resolution to the financial nightmare being faced by small businesses.

“The BHA is encouraged by the minister’s positive approach. She has asked for alternative solutions beyond those contained in the disappointing Tretton Review and says she will be considering the issue carefully. There is so far no proper long-term proposal despite a two-year review, but the Scottish Government appears to want to find solutions.

We will work with them to come up with answers.”

Hyrdo schemes are being hit with Rateable Values, which are up to three times higher than small wind schemes and four times higher than solar energy schemes. Hydro operators have suggested rateable values of 8-10% being prescribed for the small hydro sector, or the wording in current legislation being changed to ensure key components of plant and machinery in hydro construction are not rateable.

Hugh Raven, managing director at Ardtornish, Argyll, which runs five small hydro plants and is facing a non-domestic rates bill of £500,000 this year, said: “I hope a solution can be found, quickly, because expansion and investment is on hold because of the unfair, punitive, rateable values being imposed on us.”