Hydro Conference shows sector’s willingness to explore new opportunities

Flexibility, inventiveness and a willingness to explore new markets were all hot topics at Scottish Renewables’ Hydro Conference on Tuesday.

Shifts in the sector – from cuts to Feed-in Tariffs to the recent Business Rates revaluation and beyond – have brought a long-awaited ‘cliff edge’ closer than ever.

But moves to adopt novel power purchase agreements, consider the addition of storage to existing schemes and even enter into new markets overseas are tactics which could all bear fruit.

Highland Eco Design’s Jamie Wallace told delegates the potential removal of the FiT – a threat looming over the horizon in 2019 – could provide an incentive to introduce storage, or even small-scale pumping at new and existing schemes.

He said a failure to explore these opportunities around smaller pumped storage schemes would mean

“we risk missing a huge opportunity”,

adding:

"For every 400MW pumped storage scheme there might be ten 40MW schemes, one hundred 4MW schemes or a thousand 400kW schemes.”

Jamie also highlighted the scale of planning fees faced by developers, telling his audience:

“It can take two years’ of exports to pay off the planning fees on a typical 100kw scheme.”

Intelligent Land Investments’ Mark Wilson described his company’s ambitious plans to “potentially bring 2GW of energy storage to the market” in the form of new Scottish pumped storage sites, but highlighted policy issues:

“There are a lot of unknowns on funding and political certainly.

“There is so much that still has to unfold in the energy system and no one has a crystal ball.

“Could it be batteries, could it be pumped storage? No-one knows for sure.”

Mott MacDonald’s Tom Pendrey spoke later on pumped storage, referencing Scottish Renewables’ paper on the subject and the capacity which exists in Scotland for the development of more sites.

But it was business rate changes which dominated the conference’s second session.

Alex Reading, Development Director of Green Highland Renewables, described the issue as “the elephant in the room” at the Perth Concert Hall venue.

Rates relief for the sector were removed in 2016 and then

"the revaluation was a bit of a kidney punch",

he said, adding that

“this system is not fit for the sector”.

The Scottish Government’s Sue Kearns, Deputy Director, Energy Deployment, addressed the conference on Scotland’s draft Energy Strategy – a consultation into which closed on May 30.

She described the Government’s position now as “a period of analysis and reflection” – but stressed discussion on key issues would remain open for some time, saying:

"[Respondents were] generally positive with the ambition and about the whole-systems approach but are looking for more sense of a timeline and the milestones for delivery.”

Brodies Partner Sarah-Jane McArthur told how she’d analysed both the draft Energy Strategy (“more mentions of hydrogen than hydro”) and the party manifestos ahead of tomorrow’s General Election and found scant mention of the hydro sector, saying:

“Hydro will have to continue to vie for attention with other energy technologies”.

Both Kenny Hunter, Business Development Manager of MEG Renewables, and Dan Hammond of Dulas discussed the opportunities presented by O&M as Scotland’s hydro fleet matures.

Kenny:

"There are fixed O&M costs which are unavoidable and there are optional costs, and it's right to look at those optional costs as an investment.

“O&M including insurance could make up 10% of turnover. That's money that needs to be spent to prevent a really big cost coming along in future.”

And Dan:

“Getting the basics right pays dividends.”

Beyond the basics, though, the hydro sector continues to evolve.

Gilkes’ Gareth McMann presented case studies from the firm’s 160-year history of exporting hydro turbines and expertise around the globe, including one project in Sarawak, Malaysia, which had brought power to a village for the first time.

Another 7MW scheme in Turkey had been developed jointly with a local company, allowing both to access an 18% boost in tariff rates which justified the project for both parties.

In the same session Scottish Development’s International’s Paul O’Brien presented figures on the world’s untapped hydropower potential.

Africa, he said, offers huge opportunity with minimal competition, while those wanting to work in the USA would face legislation demanding local company registration – but a vast market.

In the day’s final session Scottish and Southern Electricity Networks – the event’s headline sponsor – discussed improvements to grid connection processes.

Euan Norrington, SSEN’s Lead Commercial Contract Manager, also suggested the company’s heat map may soon be updated more frequently, giving renewables developers wanting to connect a better view of their chance of success.

In all 2017’s hydro conference once again demonstrated the positivity of a sector which has been assailed on all fronts of late.