Row over business rates for Scottish hydro schemes heads to court after 10 year battle

Ben Cruachan hydro electric power station in Argyll is one of many renewable energy schemes across Scotland that rely on its abundant water supplies. Picture: Jeff Mitchell/Getty Images

A row over how business rates are handled for Scotland’s small hydropower sector has moved to court this week after a decade-long dispute.

The hearing marks the culmination of a complex and costly legal battle dating back to the 2017 revaluation, when hundreds of small hydro operators saw their rateable values (RVs) soar.

In some instances, RVs reached higher than wind farms eight times their generating capacity, industry leaders said.

Read more: Scotland's small hydro schemes face ruin after being hit with huge backdated bills

Inver dam on the Isle of Jura on the west coast of Scotland | Alba Energy

Those valuations, on which business rates are based, have been challenged ever since by Alba Energy, a membership organisation representing small hydro-operators in Scotland.

The case — Connell Renewables Limited v. The Assessor for Highland and Western Isles Valuation Joint Board — opened before Lord Young at the Upper Tribunal in Edinburgh on Monday and is scheduled to run for five days.

Alexander Linklater, executive director of Alba Energy, said: “After more than ten years of legal wrangling, this is finally the moment of truth. We hope the Tribunal will bring an end to this long and costly battle and restore fairness to Scotland’s hydro sector.

Alexander Linklater, executive director at Alba Energy | Alba Energy

“These small rural businesses simply want a level playing field. The bills they are currently paying make no sense. Rateable values for hydro power average out at more than 240 per cent those of comparable wind power.

“This is massively at odds with the green agenda and highly damaging to growth, particularly in Scotland’s fragile rural economy.”

Inver dam has been hit with the revised, backdated bills from the SAA | Alba Energy

A spokesperson for the SAA said: “This case is currently being heard by the Upper Tribunal for Scotland and it would not be appropriate to comment.”

The court hearing comes amid fresh controversy over scores of small hydro schemes being hit with retrospective rates bills.

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The Scotsman reported last month that the country’s network of such schemes said they could face financial ruin after what has added up to millions of pounds-worth of backdated business rates, according to Alba Energy.

The invoices were ordered by the Scottish Assessors Association (SAA), a voluntary, non-statutory association of land valuation assessors who set rateable values.

Alba Energy claims the SAA decided to reassess its own methodology on rates mid-way through the ongoing battle that has landed in court this week.

One 2-megawatt hydro scheme, Inver on the Isle of Jura, for example, has been revalued at £676,000 — higher than a 20-megawatt wind farm valued at £597,000.

There are more than 500 small hydro schemes in Scotland, which generate enough energy to power 350,000 homes. More than 85 per cent of the UK’s hydropower is generated in Scotland and most small hydro is designed in Scotland, developed in Scotland, engineered in Scotland and built in Scotland.