Jobs fears as hydro energy projects face subsidy cuts

Fergus Ewing warned that the changes would be 'particularly damaging' in Scotland. Picture: Esme Allen
Fergus Ewing warned that the changes would be 'particularly damaging' in Scotland. Picture: Esme Allen
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THE UK government is expected to announce a cut in subsidies for small-scale hydro power schemes this week in a move that industry leaders said could kill off further investment in the sector and put Scottish jobs at risk.

Trade body Scottish Renewables fears that feed-in tariffs (FiTs), which pay a guaranteed price for each unit of renewable power, could be slashed by as much as 10 per cent following a recent rush for schemes to get the green light.

Energy minister Fergus Ewing warned that the changes, due to be unveiled by the Department of Energy & Climate Change (Decc) on Wednesday, would be “particularly damaging” in Scotland, which is home to 73 per cent of the UK’s total small-scale hydro capacity.

Scottish Renewables said there are more than 500 direct jobs in hydro in Scotland, with “many hundreds” more involved in supply activities.

Ewing said: “I have been lobby­ing Decc alongside Scottish Renewables and the British Hydro Association on this issue for the last year and am acutely aware of the negative impact a FiTs degression will have on the hydro sector.

“Like others in the renewable sector, I have been disappointed by the lack of any real sense of urgency to take the issue seriously.”

Ewing is now seeking an urgent meeting with Amber Rudd, the UK government’s new parliamentary under secretary of state for climate change.

Joss Blamire, senior policy manager for onshore energy at Scottish Renewables, told Scotland on Sunday that cuts of at least 5 per cent are expected to come into effect in October, “but it could be as much as 10 per cent, depending on how much has been pre-accredited in the last month”.

He said the current FiTs system creates an incentive to get schemes signed up before a change in tariffs is announced, but this exacerbates the problem because the more power that secures approval, the greater the eventual reduction in subsidies.

Blamire said: “Our members say there’s a very real risk that this could put jobs at risk and businesses will suffer. It will mean a lot of schemes that are marginal at the moment won’t go forward, so of course jobs will be impacted.”

John Heaton, senior project manager at Blairgowrie-based consultant Glen Hydro, warned that development in the sector could come to a “dead stop” because of a rush to secure consent for projects before the end of next year. Glen Hydro employs eight people and director Luke Milner said he was still hopeful that Decc could have a change of heart over cutbacks to FiTs.

Scottish Renewables has been lobbying, with support from the Scottish Government and British Hydro Association, to see the level of subsidy cutbacks based on projects that are operational, and not just approved.

Blamire said: “The problem with the current system is you’re locked into that tariff for two years, and if you don’t build the scheme within that time you have to go through the whole process again.”

A Decc spokeswoman said: “We provide incentives like the FiT to give industry the opportunity to get established and bring down costs to the point where they no longer require subsidies.”