We had a Hydro Conference and this is what we learned
Past and future revenue streams – and the problems with both – were laid bare for Scotland’s hydropower sector on Tuesday.
Scottish Renewables’ annual Hydro Conference and Exhibition heard that challenges for the sector are many and varied.
But changes to the way the UK uses power mean opportunity knocks, too.
And as always at this event, doom and gloom couldn’t keep this resilient sector’s fighting spirit down.
Most bullish was Local Energy Scotland’s James Buchan, who summed up his presentation with a slide on boosts the sector could expect from both reduced costs and increased revenues.
James even suggested hydro could see a return to grant funding, with communities able to apply for cash from sources like the Big Lottery Fund to enable development.
Also talking up hydro’s future was SmarterGrid Solutions’ Rob Luke, who began by saying:
“Only a third of the world's hydro potential has been developed.”
He pointed to the technology’s inherent characteristics as its strengths:
“The flexibility and storage element of hydro allows us to go out and really optimise the embedded benefits which are available.
“The changing marketplace for energy and the increased price volatility we have been seeing around system events like the Beast from the East are a real opportunity here.”
Rob also spoke about opportunities to capture corporate PPA-style contracts between hydro developers and “tier two” businesses – the UK high street chains with strong balance sheets, a solid demand profile and a desire to go green.
While opportunity beckoned for both James and Rob, Deja Blue Consulting’s Andrew Smith was one of many at the event to discuss the end of the Feed-in Tariff (currently looming in 2019).
He pointed out a flaw, which was apparent from an early stage, saying:
"The Feed-in Tariff rewards innovation and this was a fundamental structural problem from the start.
“Hydro has been around for 70 years and all the innovating has been done, but no one complained when the returns were high."
Andrew also pointed to the opportunities afforded by collaborating, both with communities and other businesses:
“In hydro, you as a sector have one of the most publicly-loved technologies. It’s a sector which lends itself to deep involvement with local communities.
“Collaboration is one way businesses will survive and grow, and if you do not innovate you may not survive.”
Both Andrew and an earlier speaker, the Scottish Government’s Deputy Director of Economic Strategy Uzma Khan, referred to one of the day’s over-arching themes – the imperative to spell out the whole package of benefits provided by hydro.
Speaking about the Scottish Government’s commitment to inclusive growth, Uzma said:
“Hydro builds on Scotland’s natural assets. Its development depends on strong communities, and it’s a technology which has a positive impact in rural areas, providing opportunities for growth where they might not otherwise have been found.
“We want to see the impact sectors have beyond economic growth. We want to see the impact they have on places and people, and I would urge you as an industry to make the narrative really strong.”
Also of note at the Hydro Conference was a presentation by Loch Lomond and the Trossachs National Park CEO Gordon Watson.
He reflected Scottish Renewables’ Claire Mack’s recent blog by praising the commitment shown to developing hydro assets in the national park by both planners and communities. There are now 37 operational projects, which together provide 25MW of capacity – enough to meet the equivalent needs of every household in the national park.
Alex Reading, Development Director of Green Highland Renewables, produced a scorecard for the industry’s handling of recent issues - pointing to work done by Scottish Renewables and other organisations to tackle many problem areas for the sector.
And Sean Kelly, Generation and Development Project Manager at SSE, ran delegates through the latest developments at the Coire Glas pumped storage scheme. Its capacity has been increased for a new planning application which shifts its economics away from arbitrage.
Grid was, as ever, a hot topic for the conference.
James Greenhalgh, Electricity Customer Connections Manager at National Grid, set out the scale of change across the networks and the challenges faced by the System Operator in managing large volumes of embedded generation.
Event sponsor Scottish and Southern Electricity Networks also discussed this theme, with Catherine Falconer presenting on the many initiatives SSEN have underway to help projects in highly constrained areas connect.
Jill Cox from Flexitricity provided further optimism, outlining the range of grid services that hydro and pumped storage are ripe to provide.
The day ended with a discussion on the future prospects for the sector.
Brodies' Kirsty MacPherson delivered a presentation on the scale of change to be expected with Brexit, which was keenly debated by ScottishPower and Tom Pendrey, Project Manager at Buccleuch, as well as export agencies.
Paul O'Brien of Scottish Development International suggested hydro's future may lie in working with novel technologies such as hydrogen, while James Beal of HM Government’s Department for International Trade pointed to Scottish expertise which could be exported to connect rural Africa to smart grids and sustainable energy sources.
Both Buccleuch’s Tom Pendry and Ian Kinnaird of ScottishPower reflected that their technologies needed to compete on a level playing field if they were to have a bright future.