Hydroelectricity in Scotland (with thanks to SRF for this material)

INTRODUCTION

Most hydroelectricity comes from the energy of dammed water driving a water turbine and generator, although other common variations use undammed sources such as run-of-river schemes. The energy extracted from water depends on the volume and on the difference in height between the source and the water's outflow. This height difference is called the head. The amount of potential energy in water is proportional to the head.

The present abundance of hydro capacity in Scotland (still the largest source of renewable electricity), is due to the vision of those people who could see the benefit of harnessing the natural resources and using them to take electricity to the most remote parts of the country - it was hydro that brought electricity to the Highlands through the post-war construction programme of the North of Scotland Hydro Electric Board (NoSHEB).

CURRENT HYDRO DEVELOPMENT

Now owned by Scottish and Southern Energy, the hydro stations of NoSHEB continue to generate cost effective renewable electricity today. In addition to this, SSE has begin construction on a 100MW scheme at Glendoe; the first large-scale hydro electric station to be built in Scotland for 50 years. There are two pump storage schemes operating in Scotland that provide 700MW of electricity for balancing services and to meet peaks in demand. While not classed as hydro energy, as it is a means of storage rather than of generating electricity, pump storage has many similarities to hydro generation and is based on the same principles.

While it is generally agreed that most of the large hydro sites within Scotland have already been developed, there remain countless opportunities for the development of small-scale hydro through 'run-of-river schemes'. At the present time, there is close to 180MW of new hydro either in construction, with resolution to consent, in planning or in scoping. Longer term, there remain many opportunities for the development of small-scale hydro schemes throughout Scotland. In particular, there is increasing interest in the development of run of river and smaller impoundment schemes of between 100kW and 1MW size.

THE WATER FRAMEWORK DIRECTIVE

The EUs 'Water Framework Directive' requires all potential hydro schemes in Scotland to obtain a licence from the Scottish Environmental Protection Authority (SEPA) for abstraction or impoundment of water and certain engineering works. Under the new Controlled Activities Regulations ('CAR') hydro scheme developers with abstraction greater than 50m3 will also have to pay Licence Application charges as well as Annual Subsistence charges.

The Simple License application fee of £542 is multiplied by two for Abstraction and Impoundment making a total of £1,084. For larger schemes, Complex Licence applications have a minimum charge of £6,000; however some (with as little as a 200kW capacity)schemes are known to be expected to cost over £25,000. In England & Wales the Environment Agency has decided to levy a flat fee of £350 per licence application. This steep differences in charges north and south of the border does not make sense and will discriminate against developers of hydro power in Scotland.

Scottish Renewables considers that the current high level of application fees are discouraging development applications, countrary to the Scottish Executive's stated aim or promoting responsible renewable energy development. Scottish Renewables is keen to work with SEPA to find appropriate and pragmatic solutions.

SECTION 36 AND HYDRO SCHEMES

Under Section 36 of the Electricity Act, all hydro scheme proposals over 1MW in capacity must go to the Scottish Executive for consideration. The 1MW limit was originally introduced as the local planning process was deemed not to provide enough protection for fisheries' interest. With the advent of CAR this is no longer the case. Raising of the Section 36 threshold from the 1MW to a 5MW level will ensure that smaller hydro proposals can be considered by local planning.

BUSINESS RATES FOR HYDROPOWER

In April 2005 prescription for business rates in the electricity sector came to an end. The new rating assessments for hydro schemes set by the Scottish Assessors Association have been based on receipts and expenditures including ROCs and LECs, in most cases resulting in swinging increases in the assessment levels of up to 400%. This is unacceptable in cost terms and at present most small hydro operators have appealed their assessments. In October 2006, following lengthy negotiations between the hydro sector and the Scottish Assessors Association, a suitable method of valuation that could result in reduced Rateable Values for members was agreed. The resulting provisional agreement is based on two valuation methods, the contractors basis and the receipts and expenditure method.

SUPPORT FOR NEW HYDRO

Hydro developments are capital intensive and dependent upon the characteristics of each particular site. Economic viability depends on water flow, the head of the water, availability and cost of grid connection and the market price for power generated. Despite the high construction costs, hydro remains viable because of its long operating life. Small scale and micro hydro can also be supported through developing a distribution and transmission grid that has shallow connection charging, so that smaller schemes are not stopped through grid changes. Options exist for encouraging small-scale hydro as embedded generation to help provide system stabliity to the local grid system.

The Forum for Renewable Energy Development in Scotland (FREDS) has set up a Hydro Sub-Group with the intention of carrying out a resource study to provide evidence of the potential for further hydro development in Scotland and assess the key constraints on realising this potential. Such development is crucial to helping Scotland meet the Scottish Executive's target or generating 40% electricity from renewables before 2020.