Small hydropower investments slow as U.K. mulls feed-in tariff scheme

EDINBURGH, Scotland 6/22/12 (PennWell) -- Questions surrounding the United Kingdom's feed-in tariff support scheme could be holding back millions of dollars in small-scale hydroelectric investments, the British Hydropower Association says.

The investments -- which BHA says could equal as much as US$156 million -- are stalling as the UK considers changes to rates paid to hydropower operators under the FiT plan.

"We believe that if the uncertainty over future FiT rates was removed, that would unlock a significant amount of fresh investment in hydro," says David Williams, BHA chief executive. "Many potential schemes have been in limbo for more than 18 months as lenders won't give them the financial backing they need until things are clearer."

HydroWorld.com reported in June 2011 that BHA was counting on the FiT program to incentivize small hydroelectric development, which represents an integral part of the U.K.'s 2020 Renewable Energy plan.

According to BHA, output must increase to 6,360 GWh by 2020 to meet the goal, with hydropower plants with a capacity of less than 20 MW accounting for the bulk of the additional production.

Given the number of small hydroelectric facilities currently operating in the U.K., that means growth in the sector would have to increase 73% over 2010 figures. 

"These figures demonstrate the contribution small-scale hydro is already making to landowners, businesses and communities in Scotland, which is home to an estimated 90% of the U.K.'s hydro resource," Williams says.

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