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Small hydro providers count the cost of disproportionate proposed SEPA charges

Small scale hydro production in Scotland faces further uncertainty over its future due to proposed new SEPA charges, businesses have warned.

A new fee regime for the monitoring of hydro schemes, which has been placed for public consultation by SEPA, would see larger hydro providers have their costs reduced whilst smaller schemes, previously exempt from monitoring charges, face new bills of thousands of pounds per year. The British Hydropower Association estimate the average business, operating 0.1-2MW schemes, will be hit by new charges averaging more than £3,000 per annum. There are nearly 300 such schemes in Scotland.

Scottish Land & Estates, which represents rural businesses across the country, said the additional expenditure was a further disincentive to the renewable sector, which has been affected by uncertainty over feed-in tariffs as well as the prospect of large bills as a result of the non-domestic rates revaluation.

The organisation’s response to the consultation was backed by Alexander Linklater of Alba Energy Ltd, a grouping of independent hydro operators in Scotland.

Mr Linklater said: “Hydro power, as one strand of Scotland’s drive towards renewable energy sources, has been heavily encouraged by government over the past decade. It was rightly recognised as clean and environmentally friendly technology. Crucially, it has been promoted by government as a way for the rural economy to diversify its activities but is continuing to face economic hurdles placed in its way.

“Operators of small hydro schemes recognise that an end to the exemption of monitoring charges was always likely. However, the fees laid out by SEPA are disproportionately high and appear to be a mechanism to raise funds towards the running of SEPA in other areas. Many providers seldom receive visits from SEPA once their schemes are operational but would now be expected to pay thousands of pounds a year for this service.

“Hydro projects are recognised by SEPA to have a net gain for the environment, creating very few problems during their operation. Hydro operators want to work in partnership with SEPA to deliver government policy objectives but this will breach trust between the parties, with explanations for the proposed charges being either incoherent or incomprehensible. Small hydro providers are happy to pay for the costs that SEPA incurs as a result of our operations. We are not happy to pay for costs that SEPA incurs in other areas of its work.”

Gavin Mowat, policy officer at Scottish Land & Estates, said: “Hydro power has been heavily promoted by government as a reliable power source, one which usually has a predictable year-round power output and is typically low maintenance when compared with windfarms. Such systems are quiet and can be made unobtrusive on the landscape which also makes them more attractive to local communities.

“It is disappointing, however, that we continue to see the viability of small hydro schemes placed under increasing strain despite the wide-ranging commitment to renewable energy. SEPA’s proposed charges are problematic on their own but they are compounded by uncertainty over the future of feed-in tariffs and the recent revaluation of non-domestic rates, which would see huge increases in rates for this technology. There is a real risk that new schemes won’t be viable and that the ability of existing providers to produce energy at a cost acceptable to the market could be adversely affected.”

 

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