Green Highland Renewables site under construction

Scotland is still the hydro nation

Scotland’s small scale hydro sector is one of the hidden success stories of the Scottish renewables revolution.

Drive anywhere north of the Highland line and odds on you’ll be within a few miles of a small-scale hydro scheme.

You may not be able to see them, and perhaps that is why you don’t hear so much about them, but Scotland’s glens and corries are home to dozens of new hydro projects – usually less than 2 MW in size, and in the coming years we can expect dozens more to come online, bringing more than 100MW new capacity to our renewable electricity supply, and with it hundreds of local jobs. Trade body Scottish Renewables estimates the sector already supports 649 full time posts, with potential for significant new employment.

It is a very active sector, driven principally by private landowners and a small number of busy specialist hydro firms, with increasing numbers of local communities involved.

Earlier this year the people of Morvern became the first community group in Scotland to invest their own money in a hydro scheme on land managed by Forestry Commission Scotland.

The move will provide the community with additional regular income when the hydro project, being developed by Perth-based Green Highland Renewables, is switched on later this year.

The 469kW scheme on the Abhainn Shalachain river could generate enough electricity to run 350 homes. The community on the remote Morvern peninsula has invested £30,000 into the development and it is hoped this step will spur on other communities across Scotland to consider taking a share in similar Forestry Commission renewable projects.

Of course it is no great secret that Scotland has a long heritage in hydro energy. We’ve been harnessing the power of water in this way since the country’s first hydro-electric scheme at Fort Augustus, at the west end of Loch Ness, in 1890.

But it was in the mid-20th century that most of our capacity was built, driven by the ‘Power from the Glens’ campaign initiated by Tom Johnston, the Secretary of State for Scotland. Johnston pushed through the Hydro-Electric Development (Scotland) Act, which was passed in 1943 and thus founded the North of Scotland Hydro Electric Board.

In what is an interesting parallel to some of the debates of today, the early schemes attracted huge controversy, with claims that hydro dams would kill tourism stone dead. Now they are an accepted part of the landscape, and today hydro forms a major part of Scotland’s renewable energy mix.

Hydro remains Scotland’s most popular form of renewable energy, and a 2013 YouGov poll indicated more than 80 per cent of respondents would be happy to have a hydro scheme in their local authority area. In total Scotland has 1.5 gigawatts installed hydro capacity, which in 2013 contributed over a quarter of Scotland’s renewable energy generation. As of last year, 161 megawatts of this capacity was classified as small (less than 2MW), and there is a very active pipeline of new projects.

Scottish Renewables recently estimated Scotland has over 36MW of projects in planning, with 68MW about to commence construction and 9MW in construction, with developers still keen to identify new sites.

Under the current regulatory regime, administered by the UK Department of Energy and Climate Change, sub-5MW hydro schemes are eligible for a feed-in tariff offering a guaranteed seven year return.

“This works well for landowners,” says Alex Reading, development director at Perth-based Green Highland Renewables. “One of the big attractions is that hydro power is a non-controversial, established technology which offers good long term returns. Well-built and maintained schemes can easily last decades and provide steady income long after the feed-in tariff expires.”

As a consequence, there is strong a strong desire from both landowners and developers to identify and develop new sites. Trade body the British Hydropower Association estimates Scotland is home to 90 per cent of the UK resource, so there is still plenty to play for.

However although the market is buoyant and will continue to be so, there is a concern across the industry regarding the steady decrease in the level of feed-in tariff available.

Under the current arrangement the available feed-in tariff reduces each year, dependent on how many projects have been pre-accredited with industry regulator Ofgem, a process known as ‘degression’. This is a principle which has been applied across the board for less mature technologies, such as onshore and offshore wind, where there is still scope for innovation to drive down costs.

But for hydro this is creating a real rush for projects, according to Joss Blamire, Senior Policy Manager at trade body Scottish Renewables.

“Although the system of degression was set up to avoid a ‘boom and bust’ scenario, with hydro it in fact encourages it,” Blamire says.

“Projects accredited today will be eligible for a higher tariff than projects accredited next year and this is creating artificial deadlines which are having a real impact on consenting bodies, which are coming under pressure to consent projects by set dates, and also on local supply chains, with bottlenecks affecting small firm’s ability to plan ahead and take on labour.

“Small scale hydro is a finite resource in Scotland, and because it is a mature technology, the scope for cost reduction is limited. As degression rates start to bite, the pool of viable projects will inevitably start to shrink,” Blamire says.

There is however potential to amend the system. Scottish Renewables believes it makes more sense to base degression rates on schemes which are actually built, rather than those which are pre-accredited, but may not be built for a number of years, if at all.

“It seems the current arrangements have resulted in a dash for pre-accreditation, where a system of degression based on actual deployed capacity would make for a much more consistent path to cost reduction and a more realistic long-term pipeline of projects,” Blamire concludes.

So whilst Scottish Renewables continues to lobby for change, Scottish hydro firms will continue to keep busy. With more than 100 megawatts of viable schemes on the horizon, and many more to be identified, we can be confident that numerous new projects will be built across Scotland in the coming years, in many cases with strong local community input.

Scotland’s hydro revolution began more than a century ago, and the current pipeline of new small schemes guarantees hydro will remain a significant part of Scotland’s renewable landscape in the decades ahead.