Climate change: Hydro schemes 'abandoned' by grant decision

A grant - seen as key to small hydropower plants - is to be scrapped, leading to accusations the sector has been "abandoned".

Industry leaders warned many of the green energy schemes would decide to stop operating as a result.

Plaid Cymru has called for a U-turn, calling the move "bizarre" and "short-sighted".

The Welsh Government said a support scheme introduced in 2018 had provided more than £1m to the sector.

Hydropower harnesses the power of water as it flows through a turbine to help generate electricity.

The row has its roots in the way business rates were recalculated across England, Scotland and Wales in 2017 by the Valuation Office Agency, with hydro schemes hit particularly hard.

In some cases their business rate bill rose by as much as 1,000%, offsetting much - if not all - of the money they made generating electricity.

It led to the introduction of a rates relief scheme by the Welsh Government, offering grants to cover some of the costs.

Now, the British Hydropower Association (BHA) has been told this support will only be available to Wales' community-run hydro schemes as of April 2021.

In 2019-20, seven community plants benefitted from the grant, while 50 non-community schemes - many run by farmers and other landowners - were also supported, costing the government an estimated £435,000.

The Welsh Government said there were 363 hydropower projects in Wales, contributing 2% of the country's power needs.

Simon Hamlyn, BHA's chief executive officer, said the government's position made "no sense at all".

"There will be hydropower operators who will now say 'why on Earth should I keep generating just to pay my business rates?'"

He predicted many would stop running their plants, which would be "an absolute tragedy".

He claimed the Welsh Government ignored a proposal by the BHA which would have reduced the annual cost of running the relief scheme by about £140,000.

There have been calls for a longer-term solution to the problems caused by the business rates hike and the Welsh Government commissioned a report in 2018.

It advocated an alternative model whereby scheme owners would pay an amount into the public purse based on how much electricity they produced - but this has not been implemented.

The report author, chartered surveyor and hydropower scheme owner and expert Ed Bailey, said he was angered by the latest developments.

"The sector has been somewhat abandoned and I don't think the Welsh Government has properly understood how self-defeating this is," he said.

The Welsh Government has a target for 1GW of locally-owned renewable energy generation by 2030, and wants 70% of Wales' electricity needs to come from green sources by the same year.

Plaid Cymru's environment spokesman Llyr Gruffydd said scrapping rates relief for hydro schemes risked "making large parts of the hydro sector in Wales unviable" and the Welsh Government was undermining this part of the renewable energy sector.

The Welsh Government said it had worked closely with BHA to address the impact of business rates, and would "consider options for longer term support for hydropower... when the next revaluation takes place".

A spokesman added difficult budgetary decisions needed to be made because of the cost of the Covid-19 pandemic.

"To date, we have no evidence of hydropower projects ceasing to operate due to unsustainable costs," he said.