Select Committee on Environmental Audit Written Evidence

Memorandum submitted by the British Hydropower Association

  I am responding to the Committee's call for evidence on behalf of the British Hydropower Association The British Hydropower Association is the trade association for the UK hydropower industry. It represents about 100 companies with a wide range of interests: consulting engineering, manufacture, design, investment and operation as well as specialist service providers. There is a long established hydropower manufacturing industry in the UK.

  From the single renewable technology represented through the BHA, we are not in a position to comment directly on the three inquiry issues as set out in the consultation paper. However, some general comments on the place of hydropower in the UK generation portfolio and its potential for the future might be of value to the Committee in their deliberations.


  Hydropower is a long established and proven technology. It is innovative and the industry continues to develop increasingly sophisticated design, development and implementation solutions to meet site specifications sensitively and to put in place measure to mitigate real and potential environmental impacts. Hydropower accounts for about 40% electricity that is generated from renewable sources at present in the UK. We recognise that, as a mature renewable resource, the contribution hydropower can make to new generation capacity towards meeting the Government's targets for the proportion of electricity supplied from renewable sources by 2010 will be limited. However there remains considerable hydropower potential that could be tapped—2GW-2.5GW (500MW large, 1'5GW small and 200-500MW micro). Much of this potential is in the many abandoned or disused former mill sites and in retro-fitting plant in association with river and water utility infrastructure. The BHA believes that the sensitive development or re-development of hydropower at such sites would aid both urban and rural regeneration, contributing towards sustainable development. The principal factors limiting the development of many hydropower projects are the availability of financing and planning constraints.


  The high up-front costs of hydropower projects make financing difficult. This is despite hydropower having a long payback period coupled with low maintenance costs. Measures that would increase financiers' and suppliers' confidence in the market could help to make finance available for new renewable energy developments, including hydropower. Under current market conditions suppliers are not prepared to offer long term Power Purchase Agreements (PPAs) at a price that enables the financial viability of a new project but, without a long term PPA which would ensure a guaranteed income for the project, financiers are unwilling to provide backing. Difficulty in securing finance is exacerbated by uncertainties in the market for Renewable Obligation Certificates (ROCs); measures that would reduce this uncertainty would have a positive impact. The apparently annual reviews of the Renewable Obligation do not help.


  Planning is another significant obstacle to the development of renewable energy. The uncertainty caused about the time taken to process applications and to secure planning consents can add to the overall cost of developing a project and for smaller projects it can inhibit development. Additionally, there are several agencies that need to be consulted (local planning authorities, environment agencies, conservation and fisheries authorities, etc) and there are concerns about hydropower receiving consistent and appropriate guidance across the regions.


  On strategic benefits, the BHA believes that hydropower plays a valuable, indigenous power resource and deserves to play a full role in the energy mix. Additionally the BHA believes that more consideration should be given to the development of pumped-storage hydropower. Pumped-storage is a variant of traditional hydropower, comprising an upper storage reservoir connected to a lower storage reservoir allowing off-peak power to be used to replenish the upper reservoir ready for use at times of peak demand. In this way pumped-storage can play a valuable role in managing load demand and supply. It is the only proven technology for large-scale energy storage and the UK has several pumped-storage plants include the world' largest, Dinorwig. The BHA believes that smaller pumped storage facilities should play a valuable role in association with intermittent wind power enhancing its efficient use.

  If the Committee needs further information on hydropower and pumped storage hydropower we should be very happy to help.

22 September 2005

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