Scottish hydro schemes hit by new business rates boorach

New valuations are ‘madness without a method’, say furious hydro operators

Renewable energy operators have been left stunned and angry by yet another massive and unfair hike in rates on their businesses, of up to 579% next year.

The latest bombshell, trickled out by the Scottish Assessors this week in 2023 Rateable Valuations, is out of all proportion to other renewable energy sources, or any other business sector in Scotland.

As a result, dozens of Small Hydro schemes will be hit by steep new hikes in business rates while still in legal dispute over the historic increases imposed in 2017, which saw hydro singled out for special punishment in Scotland’s renewable energy sector.

One Scottish hydro scheme now faces increases that have accumulated from 2010 to more than 500% in 2023.

John Lithgow, director of Inver Hydro, Jura, said: “What does the Scottish Assessor have against us – and why this continual assault on our green businesses?

“Inver Hydro on the Isle of Jura has seen its rateable value rise from £104,000 in 2010 to £264,000 in 2017, to a ridiculous £565,000 for 2023. That’s an increase of 543%, with no explanation or justification.

“Inver’s two-megawatt hydro scheme now has a larger Rateable Value than the two neighbouring local windfarms combined, which have a total capacity of 16 megawatts. Business rates of this level cancel out all the benefits of the Scottish government’s temporary reliefs. No business based on debt financing can survive such punishment.

”Inver is a producer of clean, green, efficient, long-lasting electricity – and it is essential to the energy security of Islay and Jura. This latest shock is one which we might not be able to survive.”

Attempts to explain the system by which hydro rates are calculated by Scottish Assessors have been further confounded this week by a small number of hydros receiving extraordinary reductions, without any change in the valuation methodology used by assessors.

One scheme will see its bill drop by more than £60,000, to just £14,000.

Alex Linklater, executive director of Alba Energy, which represents Scottish hydro operators, said: “In 2017, the Assessor inflicted rateable valuations on the Small Hydro sector that were on average 240% of those applied to onshore wind of similar capacity. These represented rates on a scale beyond any normal business.

“Yet now Scottish assessors have decided to increase these even further, not just by a few percentage points but sometimes doubling or trebling them. And to make a mockery of their own system, they have also chosen to reduce a few selected schemes by equally extraordinary amounts. The schemes have not changed, the data has not changed, the method of valuation has not changed. The Assessor has produced a madness without a method.

“There does not appear to be any reasonable logic or rationale for the extreme and inconsistent range of valuations the Assessor has produced across the small hydro sector.”

Industry representatives say that the 2023 draft valuation busts the myth of a level playing field for green energy businesses and makes a mockery of Scotland’s pretensions to being a pioneer of European renewables.

Martin Foster, chairman of Alba Energy, said: “Hydro is the cleanest, most efficient, least obtrusive and longest-lasting renewable source. It is a sector that the Scottish Government claims to support. We have been in dispute with the Scottish Assessor since 2010 and are due to take them to court over their 2017 valuations. The 2023 valuation adds insult to injury. We are not seeking special treatment. We demand to know why a green industry has been singled out for special punishment.”

There are still more than 200 appeals outstanding at the Lands Court in Scotland over the 2017 valuation.

Kate Gilmartin is the newly appointed CEO of the British Hydropower Association. She says she will be working shoulder to shoulder with Alba to champion a proportionate and fair rateable vale for Hydropower operators, which falls into line with other renewable energy generators.

She said: “This excessive tax on Hydropower will discourage new developments at a time when we need to be accelerating this low impact, low visibility, clean energy generation technology.”

There are around 500 small hydro schemes in Scotland. A 60% Scottish Government relief scheme which was extended in 2021 means some, but not all operators, receive a reduced business rates bill.