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 POTENTIAL
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.
FINANCIAL CONSTRAINT
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 CONSTRAINTS
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.
PUMPED-STORAGE
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
| 
