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Abstraction licence fees rise for small scale hydroelectric schemes

Posted by Tasha Kosviner on 23 March 2015 at 4:30 pm

I was chatting with Peter Downs from Itteringham Mill about his hydroelectric project when the matter of abstraction licences came up.

An abstraction licence is a legal requirement for anyone who removes more than 20 cubic metres of water from a public source per day. This covers pretty much all hydroelectric schemes from the smallest to the largest.

It turns out that the rules have recently changed so that the cost of obtaining a licence in the England is going up from £135 to £1500. A similar fee rise is currently under consultation in Wales where their licensing body, Natural Resources Wales (NRW), has indicated they will follow the Environment Agency’s lead. In Scotland a licence costs £2,500.

It is an issue that has got under the collar of interested parties at the British Hydropower Association who say high fees are going to prevent small scale projects from coming to fruition.

“For a big developer £1500 can be absorbed into the cost of a scheme but for a small scale scheme it’s a significant amount,” says BHA CEO Simon Hamlyn. “I have no doubt that it will deter people who are considering such a scheme.”

Peter Downs paid £30,000 for his personal 5kW hydroelectric installation in 2005.

He has now been asked to apply for a licence retrospectively after being misadvised about needing one when he first set up his project back in 2005. He is fortunate enough to have paid for the licence before the fees went up, but he still has a thing or two to say about the increase specifically and the application process in general.

“This fee increase will indeed discourage new applicants, together with the significant bureaucratic requirements now imposed regarding analysis of hydrological impacts of turbines, impact on water turbidity, siltation, ecology and so on,” he says.

Peter’s experience got me thinking – does a one-size fits all abstraction licence fee make sense for a small domestic hydroelectric scheme, particularly when the abstracted water is being immediately pumped back into the river from which it was taken?

Simon Hamlyn at the British Hydroelectric Association has begun lobbying for more discretion on pricing when the Welsh regulations come into effect. In his most recent newsletter to BHA members, he writes:

“We have asked NRW what plans they have to address the opportunity to consider payment options to lessen the impact of the increase [on small scale hydropower development] and officials have confirmed they are investigating a number of options to assist, which may include the possibility of –

1.    A form of grant scheme to aid applicants
2.    Structured fee payments
3.    Tiered payments possibly based on generation potential and/or water usage
4.    ‘Negotiated payment terms’
These are not formally agreed, approved or consulted upon. NRW are now apparently drafting these options into formal proposals for discussion with stakeholders.”

A quick call to NRW confirms that the matter is currently under discussion with the minister. But their statement hints that budget considerations may yet win out over fairness.

“Hydropower can help small businesses and communities be more economically and environmentally sustainable, and we continue to work with the industry, through the stakeholder group we established, to provide that support for the future.
“Over the past year we have streamlined our process, improved our advice and reduced our licence application requirements which has led to significant savings for applicants and reduced the time it takes to process applications.
“We have carefully considered the responses to our consultation on changes to our charging scheme. At a time of pressure on our budgets we have to rebalance our charges so they are a better reflection of our costs and we provide the best value for money for the fee payer.
“We have made a recommendation to the Minister for Natural Resources and await his response before we can continue developing our future charging scheme for hydropower licences.”
It may be too late for small hydro projects in England and Scotland but we will be watching with interest to see what happens in Wales and would urge the minister to consider the smaller players when making his decision.

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