Changes to the Feed-In Tariff will have unintended consequences for a revived hydropower industry, just at a time it is bringing investment and clean energy into rural areas, argues Simon Hamlyn, chief executive of the British Hydropower Association
Hydropower is a flexible technology that has improved and been refined over many years, but its site-specific features make it highly innovatory in application. It makes use of a wide range of resource – large or small, pumped storage or run-of-river, tidal range, canals or even water treatment works.
Over 150 years hydropower has revolutionised electricity generation in the UK and it remains one of the most inexpensive ways to generate power, playing an important role maintaining electricity system stability.
Hydropower is a very well-established and proven technology. The first water turbines were built in the mid 1800s and they have been developing ever since. Turbine efficiencies are rarely below 80% - about double that of a steam turbine. The cost per kW of this clean energy is the lowest of all renewable technologies over the full lifetime of the scheme and there are close to 7400 people directly employed in the UK hydropower industry.
Much of the hydropower in the UK has been developed – at present it provides 30- 40% of the UK’s renewable generation – but recent resource studies have indicated that as much again of undeveloped potential is still viable.
As an established technology, hydropower offers long term generation beyond the subsidy period and hydropower schemes have an 80-year life. On average 70% of the cost of a new UK hydropower scheme is in civil construction, which is procured locally and the majority of new small schemes are in remote rural areas, providing valuable energy and income in a way which is environmentally sensitive and has significant community support and involvement.
FIT changes will stunt the industry’s growth
The overriding problem facing the hydropower sector is government is reducing the level of the Feed-in-Tariff (FiT), in a way that is unduly severe and detrimental to future growth.
The Department of Energy and Climate Change (Decc) is undertaking a review of the Feed-in-Tariff scheme – the subsidy mechanism for renewable technologies, which will report this year. The FiT has been good for hydropower. Before it was introduced, 2-3 MW of small-scale hydropower was connected per annum. Since the FiT was introduced in 2010-2014, around 65MW of new hydropower has been connected.
Government support for small-scale hydropower in the UK continues to be essential, otherwise even with all the associated benefits both environmentally and economically, small scale hydropower development in the UK will effectively cease. But Decc has disadvantaged hydropower in its review. By including pre-accredited schemes, rather than just those that have been deployed, it has accelerated the speed at which the FIT is being degressed to a point where it will damage the growth of the industry, employment, future economic activity and development and many rural communities.
The rapid speed at which government has allowed the FiT to be degressed is causing a dramatic decline in new hydropower projects – a totally unanticipated result.
A great many concerns have been raised with Decc about the current FiT structure and the BHA is keen to ensuring that the review is completed in a timely and effective manner and avoids any unforeseen consequences for the hydropower sector.
So what is it that government can do to help the hydropower sector and ensure there is a sustainable future for this and future generations?
We would like the government to include;
- An upward revision of tariff levels to stimulate further hydropower development
- A revised degression mechanism that creates a ‘glide path’ rather than the current ‘sharp steps’ approach
- The introduction of a grace period for grid connection delays where the project would have connected on time but for delays that are not the developer’s fault
- Extending the pre-accreditation ‘window’ to allow time to reach financial close. With delays of 3-4 months – sometimes longer – in granting preliminary accreditation, the current system is not delivering the length of guarantee that was the original policy intention
- De-coupling the degression and pre-accreditation mechanism
Some of these changes are urgent, and require a fast-track review in order to prevent unintended but grave harm to the sector.
Hydropower is one of the most reliable, predictable and least environmentally intrusive of all the renewable energy technologies. The BHA and its members strives to ensure that its potential and associated economic benefits are fully realised, but it is essential that there is genuine government understanding of the current issues and a willingness to provide the support required to secure the future of the industry.
Let us not forget that hydropower has offered clean power since the first water mills were used over 2,000 years ago. Now is not the time to be consigning such a legacy to the renewables scrap heap.