The new UK coalition government is committed to produce 15% of our energy needs from renewable sources by 2020. However this is a huge challenge given that we currently stand at around only 3%. We expect the majority of this huge growth in renewable generation to come from onshore and offshore wind and biomass, but the scale of the challenge is such that we will need all forms of renewable energy to contribute, including hydro, solar and wave and tidal.

I believe that hydro has a small but useful contribution to make to our overall ambitions and, given constraints on public spending and other competing priorities, we will endeavour to assist its further deployment across the whole country.

In 2009, installed hydro capacity in the UK was around 1.6GW, generating some 5000GWhr of electricity, equivalent to 1.4% of electricity demand. This may not sound much, but it translates into the electricity use of more than one million homes or the output of one new generation nuclear power plant.

We are unlikely to see any new large-scale hydro schemes being developed because of the economic and environmental constraints, so this means that future exploitation of hydropower in the UK will focus on micro and small scale hydro schemes.

A number of studies have been undertaken in recent years to try to estimate the remaining hydro potential in Scotland, England and Wales. We estimate that there could be a remaining viable hydro resource of around 1GW, with the potential to contribute up to a further 1% of current UK electricity demand. This is a prize worth fighting for, and it might be possible to develop half of this over the next ten years.

First things first

The first thing the Government is doing to realise this potential is to make investing in this established technology more attractive by providing financial incentives. The Renewables Obligation, which benefits small and medium scale schemes up to 20MW, has been in place since 2002. After a slow build up, it has routinely been rewarding hydro generators with an average £90M (US$144M) of income a year, with a total of £730M (US$1172M) since it began. This is a considerable fillip to any industry, and even more so to a small sector like hydropower.

However, ROCs are sometimes not suitable for micro-scale hydropower. That’s why the feed in tariffs (FITs) for low carbon microgeneration schemes were introduced in April this year. I am conscious that the introduction of FITs has not been straightforward, because micro hydro is still a nascent industry and there are some circumstances that are specific to hydro and its developers. But my department has been working flexibly to provide wider eligibility for FITs, without compromising the standards which will build consumer and community confidence in a sector which has the opportunity for rapid expansion.

We have also been working hard on developing the Microgeneration Certification Scheme (MCS) standards with industry. MCS transitional and installer standards, agreed by the majority of the MCS working group, have been published, and listed installer companies and products already have access to FITs. Work is ongoing to finalise an affordable MCS product standard using test data from other installations, including from Europe. This is to ensure that consumers and developers wanting FITs receive accurate information on the likely durability and performance of their installation.

The introduction of FITs has stimulated a huge increase in applications for environmental permits and planning consents. In England and Wales alone, the Environment Agency used to receive an average of 10 applications a year, but in 2009 this increased ten-fold to around a hundred. In 2010, they are expecting a further doubling to 200, and they expect that level of demand to continue, largely due to FITs. Similar levels of interest have been experienced in Scotland and Northern Ireland, though we will have to wait to see how much of this interest converts to new schemes on the ground, and how much it will add to our hydro generating capacity.

Government also has a role to play in helping to address some of the potential barriers to renewables deployment such as environmental permitting, planning consent and access to the grid. My department has been working very closely with the Department of Environment, Food and Rural Affairs (Defra) and the Environment Agency over the past year on the Hydro Permitting Review and other initiatives to facilitate the deployment of sustainable micro and small-scale hydro schemes in England and Wales.

The Environment Agency has already started implementing some of the changes, which my department has been involved in. The intention behind the review is to provide a more user-friendly application process, which also makes the most effective use of agency resources at this time of increased interest in hydro.

Other initiatives the EA have been pursuing are the updating of the Hydro Good Practice Guide for developers, the second phase of the hydro resource mapping study, and the further training of their staff to deliver a better service to hydro developers and stakeholders.

Enthusiastic development

Since taking up my post in May, I have been impressed by the enthusiasm shown by mill owners, communities and commercial developers to bring dormant and new sites into use generating clean, sustainable and affordable electricity. I have been particularly struck by the number of new organisations entering the field, such as the Forestry Commission, the National Trust, British Waterways and a number of National Parks, albeit on a smaller scale to the traditional players – the energy companies and the water utilities.

In their hydro resource mapping survey the Environment Agency identified some 4-5000 ‘win-win’ sites, where the development of hydro schemes could go hand in hand with the enhancement of the river environment, particularly for fish. This may sound a lot, compared to the 400 or so registered sites in the UK as a whole, but if we look back a thousand years the Domesday Book listed some 6000 water mills in England alone.

I see a bright future for hydro in the UK, provided we all work together to make it happen.