Scot-govt. buckles under pressure to provide 12-month rates-relief package for small-scale Scottish renewable hydro power operators

A small-hydro power scheme
A small-hydro power scheme

The Scot-govt. has today announced that 9,500 more businesses across Scotland will benefit from a tailored package of additional business rates support in a move it hopes will extinguish the eruption of commercial fury from, among others, renewable energy businesses in the ‘small’ hydro energy sector.

However, the 12.5% limit on business rates increases for hydro schemes up to 1MW only applies for the next 12 months until 31 March 2018.

As exclusively reported in Scottish Energy News on 7 Feb 2017, operators of Scottish small hydro schemes were warned by tax experts at CKG Galbraith to ‘brace themselves’ for business rates rises of up to 400%. **

The Scottish renewables sector was stunned by what later become 500% and 600% increases in business rates, while the new regime of business rates in Scotland marked out hydro power for “special punishment”, threatening to end independent development of schemes north of the border, Scottish industry representatives at Alba Energy warned.

A spokesman for Alba Energy – which represents around 50 small-scale Scottish hydro power firms – said: “We have been offered a year-long cap of 12.5% on increases for hydro systems of under 1MW. This is a step in the right direction. The Scottish Government has recognised that independent hydro was being hit by extremely distorted rates valuations.

“But fundamental questions remain. What happens to schemes over 1MW? What happens to new hydro sites receiving their first valuation?

“Hydro operators plan ahead not in years, but in decades. A broken system of valuation needs to be mended so that it reflects the economic reality of small hydro in the long term.

“We now want to work with government and, crucially, with Scottish assessors, to achieve that realistic and equitable model, so that hydro can be economically sustainable while paying its fair share in rates.”

The new Scot-govt rates-relief package also includes;

  • Relief for renewables companies, including hydro
  • Confirmation of free revaluation appeals – with no fees or restrictions as in other parts of the UK
  • Early Government action on the findings of the Barclay review into Business rates – due in July
  • Working with any local authority to introduce a local rates relief scheme to support key sectors or localities

Simon Hamlyn, Chief Executive of the British Hydropower Association – which is holding its flagship UK conference in Glasgow next month –  said: “Along with other renewables associations, we have been engaging with the Scottish Government for some time and we are pleased they recognise the impact the rates revaluation, as originally proposed, would  have on the Scottish hydro sector.

The new limit helps address the very real concerns of small hydro scheme owners, but there is still a question mark on how relief will apply to larger schemes, or those which have not yet had a rateable value set.
“We still believe the rateable value system is not fit for purpose for hydro, and look forward to meeting with government officials, to understand these proposals in greater detail, and  work constructively with them and the assessors to find a long-term solution for the whole industry – which supports a significant number of local jobs across Scotland, many of which are in rural communities.”

Scottish Finance Minister Derek Mackay said: ““In addition offices in Aberdeen and Aberdeenshire will see any rise capped at 12.5% in recognition of the effect of the drop in oil price on the local economy.

“Companies working in the renewables sector, including in hydro, will also receive further support, with continuing relief for those projects with a community ownership model.

“Under existing support seven out of ten premises are expected to pay the same or less in rates next year and more than half of all premises will pay no rates at all. 

“The tailored package will help businesses in the key sectors of hospitality and renewables nationwide and those with offices in Aberdeen and Aberdeenshire to deal with increases to their property values under the forthcoming national revaluation of business rates.”

Liz Cameron, Chief Executive of the Scottish Chambers of Commerce, welcomed the 12-month rates-relief measures on businesses, but warned:

“What this doesn‘t do, however, is get to the root of the problem. That is why we have proposed a full expert review of the methodology and the valuations in hospitality and renewable energy sectors.”

** See also:

Scot-Govt. faces Scottish renewable energy crisis as business rates ‘fiasco’ threatens to sink small-hydro power in Scotland

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