IT WAS always the government's intention to reduce the support available for renewables as the technologies matured and the costs came down – but in the case of hydro-power, there is some concern that planned 'degressions' are too much too soon.
Kenny Hunter, of MEG Renewables – a subsidiary of M and Co, the Scottish-based retail chain which has committed to powering its 250 high street stores with renewable energy – argues that hydro might now suffer for the sins of the solar sector.
The boom in solar PV which followed the introduction of the feed-in tariff resulted in 'budgets being blown and policies being revised', noted Mr Hunter, quite fairly so, as the cost of solar panels has also plummetted in parallel with their huge uptake.
But for other technologies the cost reductions have been much less dramatic – indeed where hydro is concerned, there is no evidence of any cost reductions whatsoever.
"Nonetheless, all technologies face the spectre of degression, with the Government indicating that they would expect the tariffs to fall by 5% per annum in real terms," reported Mr Hunter.
While this 5% reduction in FiTs was far from ideal, the consensus within the hydro sector is that most schemes could live with it. The trouble, noted Mr Hunter, wass that thanks to another wrinkle in the rules, the FiTs for new hydro schemes is set to fall by 20% as from January, 2014.
In an effort to provide investors with a degree of confidence, hydro projects which had the necessary planning consents, CAR licence and a firm grid connection offer have been allowed to pre-register for FiTs, thereby securing the rate applicable at the date of registration, on the condition that generation commenced within two years.
Degression levels to be applied from January 1 each year are triggered by the deployment levels of the previous 12 months – and the decision to include these pre-registered, but not actually operational, hydro projects in that deployment total, means that a whopping 100 mW of consented capacity will be factored in, regardless of whether there is any prospect of the schemes being built within the two-year window.
Mr Hunter said that the commensurate FiT degression had the potential to devastate further investment in hydro,and there was now a concerted lobbying campaign involving both trade bodies and individual developers trying to persuade the DECC to de-couple degression from pre-registration.
"In the absence of any policy reversal, the key is to try and get projects to pre-registration readiness by December, 2013," he added. "It is probably not possible to achieve this from a standing start, however many farmers and landowner with hydro potential are likely to have explored this previously and may well be some way down the road to having the necessary approvals.
"One of the great ironies about the situation now facing small scale hydro, bearing in mind the constant furore about wind, is that it is probably the least contentious of all renewable technologies.
"It has been around in Scotland since the 1890s, it is based on proven technology which itself can last for up to a century yet it is the single renewable category facing the greatest threat as a result of what has been described as the law of unintended consequences."