From April 2021, the Welsh Government has changed its Non-domestic (business) Rates Support for Hydropower grant scheme to only supporting community owned hydropower projects with their rates bills, a scheme that has previously provided £1m of support to the sector over the last four years.
The grant gives businesses in Wales relief from high business rates that hydropower schemes are eligible for.
The timing of the withdrawal of this support will have a significant and detrimental effect. The British Hydropower Association (BHA) believe this will affect some 50 non-community schemes - 75% of the small scale hydropower sector - and could result in many becoming unviable.
This is a short-sighted decision and undermines the Welsh Government’s own commitment to tackle climate change. The Welsh Government is clear in telling farmers that they need to diversify to be more resilient and also promotes renewable energy as being critical to meeting our climate change obligations, making the decision to remove support from those farmers who have diversified, and who are producing renewable energy both confusing and concerning. This is even more relevant given that COP26 is being held in the UK this year.
The Welsh Government decision came at a time when the Welsh Affairs Committee was undertaking an inquiry into how the UK and Welsh Governments can best support the development of renewable energy in Wales.
Hydropower is a mature and proven technology that can provide a predictable source of energy. The 2017 revaluation of business rates also impacted the sector, with many schemes seeing a large increase in their rateable value. The rates grant scheme was introduced following this increase, which saw rateable values for some operators soar by nearly 1000% compared to a previous valuation in 2010.
The FUW has sent a letter to the First Minister and the Minister for Environment, Energy and Rural Affairs, Lesley Griffiths warning against such a shortsighted move, and more recently followed this up with a joint letter with NFU Cymru.
The letters outline the above and draw focus to the Scottish Government’s commitment to extend their current 60% relief scheme until March 31st 2032.
The reply from Minister Lesley Grifitths explained that the grant scheme introduced in 2018 was a short-term measure whilst Welsh Government identified the reasons behind the impacts of the 2017 revaluation on hydropower projects. It was not intended as a long term solution or as an incentive for new generators. Welsh Government will have the opportunity to consider options for longer term support for hydropower and other renewable technologies when the next revaluation takes place in 2023.