Simon Hamlyn, Chief Executive Officer at The British Hydropower Association sheds light on how hydropower could play an essential role in reducing carbon emissions
The British Hydropower Association [BHA], was established in 1995 and has over 180 members. It is a trade membership association solely representing the interests of the UK hydropower industry – from micro to large scale – and its associated stakeholders in the wider community, in the UK and overseas.
Hydropower, which over 150 years ago revolutionised electricity generation in the UK, is a flexible technology that has improved and been refined over many years. Its site-specific features make it highly innovatory in the application which makes use of a wide range of resource available, large or small, pumped storage or run-of-river, tidal range, canals or even water treatment works.
The first water turbines were built in the mid-1800’s and they have been developing ever since. Turbine efficiencies are rarely below 80% which is about double that of a steam turbine. The cost per kW of clean energy is the lowest of all renewable technologies over the full lifetime of the scheme and there are 7,400 [BIS 2025] people directly employed in the UK hydropower industry.
Hydropower currently produces around 20% of the world’s electricity and 90% of the world’s renewable power.
Most of the hydropower in the UK has been developed but recent resource studies have indicated that as much again of undeveloped potential is still viable. At present 30% to 40% of the UK’s renewable generation is provided by hydropower, whilst globally, 17% of energy is supplied – and will continue to be supplied – from hydropower sources.
As an established technology, hydropower offers long term generation beyond the subsidy period and hydropower schemes have an 80-year life compared to 25 years for wind, solar PV and AD; 35 years for nuclear.
On average 70% of the cost of a new UK hydropower scheme is in civil construction which is procured locally. 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 strong community support and involvement.
Hydropower is an important and valuable contributor to the UK renewables mix and to achieving the UK’s low carbon targets. It offers a unique and attractive combination of low lifetime cost and a local/UK based supply chain.
The Department of Energy and Climate Change (DECC) is undertaking a review of the Feed-in-Tariff (FIT) scheme – the subsidy mechanism for renewable technologies, which will report during 2015. The BHA has been inputting into this process to try and ensure that by working constructively, DECC can deliver an effective and affordable scheme that provides future support for the sector.
The overriding problem facing the hydropower sector is how the government is reducing the level of the Feed-in-Tariff (FiT), in a way that is unduly severe and detrimental to future growth.
At the moment, once all the paperwork is gathered for a proposed scheme, the subsidy is applied for and usually granted by DECC. However even though the subsidy is “pre-accredited” and the plant may never be built, DECC still counts the number of megawatts expected to be produced and reduces next year’s FiTs accordingly.
In 2013, 75 megawatts were pre-accredited – which is about 5 times the amount of schemes built in a typical year. Yet as DECC counts the number of megawatts that is actually produced it resulted in a 20% cut in subsidy last year.
Last year 90 megawatts were pre-accredited – about 6 times what is normally produced in a year, causing a 20% cut in subsidy this year.
The BHA agrees that the FiT has been good for hydropower. Before FiTs was introduced, c2-3 MW of small-scale hydropower was connected per annum. Since the FiT was introduced in 2010-2014, c65MW of new hydropower has been connected.
However government support for small-scale hydropower in the UK is essential, otherwise even with all the associated benefits both environmentally and economically, small scale hydropower development in the UK will effectively cease.
The rapid speed at which the government has allowed the FiT to be digressed has caused a dramatic decline in new hydropower projects. This is a totally unanticipated result of linking the pre-accredited schemes, rather than just those that have been deployed, with the degression mechanism.
A great number of concerns have been raised with DECC about the current FiT structure and the BHA are keen to assist the government in ensuring the review is completed in a timely and effective manner and avoids any unforeseen consequences for the hydropower sector.
There are several important changes to the current FiT scheme that the BHA has requested the government to consider in their review, which includes;
– A revision of tariff levels to stimulate further hydropower development;
– De-coupling the depression and pre-accreditation mechanism;
– 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.
Some of these changes are urgent and require a fast-track review in order to prevent unintended but grave harm to the sector. The BHA, other renewables organisations and their members, strive to ensure that the potential and associated economic benefits of hydropower are fully realised. However, 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’s not forget that hydropower is the world’s leading renewable energy source and the oldest method of harnessing clean power – the first watermills were used over 2,000 years ago, so now is not the time to confine such a legacy to the renewables scrap heap.
Simon Hamlyn
Chief Executive Officer
British Hydropower Association
