POWER generation accounts for

over 50% of all water usage in

the industrialised and developing world. As most forms of electricity production, specifically hydro power, return the majority of the abstracted resource to

its original water body, the industry is

not the largest consumer of water per se. However, discussions on sustainable water management are not as clear-cut for

hydro operators.

A problem resulting from the high volume water requirements of hydro power stations is that they can prevent the

development of other water dependent

businesses within the same catchment,’ says John Aldrick, water resources policy

manager at the Environment Agency (EA) in England and Wales. ‘A hydro power abstraction can amount to most of

the water available within a catchment.

This may mean that we are unable to issue further licences even though the water is returned to the river, as the new user may reduce the flow slightly. Hydro power

stations can effectively sterilise upstream water availability,’ he adds. ‘We have a duty to protect licence holders from future abstractions that would impair their ability to fully utilise licensed quantities.’

Affecting business

As Aldrick highlights, water resource allocation has become a headache for policy makers across Europe. Tough decisions have to be made to satisfy the demands of all water users, including the environment.

Thorough restructuring of European water policy has led to the creation of the Water Framework Directive (WFD). Described by the European Commission (EC) as an operational tool to set the objectives for future water protection, the Framework has to be turned into national legislation within each Member State by December 2003.

The implications for the power industry are presently unclear but the Association of Electricity Producers (AEP) believes the Directive will affect its members in a number of significant ways.

The industry is taking the view that the Directive could seriously affect business,’ says Andy Limbrick, energy policy advisor at the AEP. ‘We believe that the implementation of the Directive should not be allowed to adversely affect the future

development of hydro, wave and tidal flow generation projects. So much legislation is pouring out of Brussels and affecting the power industry at present. The devil is in

the detail of these things. Industry is taking a cautious view.’

Described as the most substantial piece of water legislation to come from the EC to date, the Water Framework Directive

sets out to promote sustainable water

consumption based on the long term

protection of available water resources.

It deals with the whole spectrum of inland and coastal waters and adopts a river basin approach, requiring all water to reach at least ‘good status’ (relating to chemical and ecological quality) by 2015. Through river basin management plans, decisions will be made at basin level about the measures needed to tackle pollution, proportionate

to the problem.

A major driving force behind the new Directive will be the introduction of pricing. The EC believes that adequate water pricing will act as an incentive for the sustainable use of water resources and so will

help to achieve environmental objectives.

The Commission is keen to ensure that prices charged for abstraction and discharge reflect true costs.

Bending the rules

Derogations can be sought for various water uses that adversely affect the status of water but are considered essential on their own terms. Although article 14 of the Directive clearly identifies power generation as an essential water use, the EC has described it as being a ‘less clear cut case’ in comparison to essential drinking water supply and

flood protection. It says in cases such

as this, where the activity is open to

alternative approaches (ie other forms

of power can be used), derogations can be provided but must be subject to three tests. The alternatives must:

Be technically impossible.

Be prohibitedly expensive.

Produce a worse overall environmental result.

The AEP in the UK welcomes the assessment and approval of derogations but urges that the process should be made as efficient, transparent and inclusive as possible. In addition it strongly supports derogations that exempt hydro schemes from abstraction charges in recognition of their positive

environmental impacts.

‘In many cases,’ the AEP says, ‘if hydro stations were charged for the water they abstract, the charges would outweigh

revenues received from schemes. In view of the fact that hydro schemes replace the majority of water they abstract; have little impact on the water’s hydro morphological state; and help towards Government targets for carbon dioxide reduction, such an exemption is fully justified.’


The AEP believes that much of the significance of the Directive is contained within the detail of its implementation rather than its overreaching framework. And concern has been expressed about potential impacts for generation plants that utilise surface and ground waters.

‘In establishing the quality objectives required by the Framework and regulating their achievement, the Government must ensure the full range of social and environmental costs and benefits are taken into account when considering the potential effects on water users,’ the AEP states.

Through the AEP, hydro industry members have expressed their concerns that the implementation of the Directive could place restrictions on hydro stations, putting unreasonable limits on permitted off take of water. Estimates even suggest that the Directive could reduce output from hydro stations by as much as 3-5%.

‘Restriction on permitted off takes would directly affect a planned hydro station’s

projected electrical output and would reduce the scheme’s projected revenues,’ the AEP states. ‘The economics for developing new hydro stations are often marginal and additional limits on a plant’s output could make marginal schemes uneconomic to develop.’

‘We do not predict major problems for sites other than our hydro plant,’ says Jane Telfer, generation environment manager at Scottish Power. ‘We are concerned that reductions in capacity/generation and income will result from requirements to implement mitigation measures such as increased compensation flows and changes in generation patterns. We’re concerned that these may take place without proper consideration of the economic impacts and the wider environmental benefits of renewable hydro power over fossil fuel generation that would replace it.’

Costly business

Price hikes are a concern for any industry but the power industry is particularly

fearful about the economic implications of the new Directive. ‘Wholesale electricity prices have been at an all time low over the past year and the industry is in a hard pressed state,’ says Andy Limbrick from the AEP. ‘If you put up the cost of water this will have to be reflected in increased costs to power customers.’

Article 9 of the Directive on recovery costs for water services is primarily aimed at charges for public water supply. But as David Crookall, policy development advisor at the Scottish Environment Protection Agency (SEPA) acknowledges, this could have implications for the energy sector.

‘The polluter pays principle will be reflected by the need for water users to pay for any investment required to meet improved environmental standards. The charging scheme that SEPA is currently developing may attempt to relate licence fees to some measure of

efficient use or to the scale of regulatory effort needed, but it will only be used to recover costs that SEPA incurs in regulating these activities.

‘It is very unlikely that the scale of these charges will be sufficiently high to have a measurable impact on water use within the energy sector. There are no plans to levy an additional incentive charge in order to try to reduce water use,’ he adds.

John Aldrick from the EA explained that although the Agency is still working on the requirements of the Water Framework Directive it is envisaged that abstraction licensing and pricing will continue in its present form in England and Wales.

‘Licence fees are currently charged on

a cost recovery basis,’ he says. ‘When

calculating the cost to the abstractor our

primary considerations are the quantity of water licensed, the amount to be returned to the source and the time of year. Hydro power generators generally pay 200 times less per cubic metre of water than public water supply companies because much more of the water is returned relatively unchanged to the environment.’

The Water Environment and Water Services (Scotland) Act 2003, which enacts the Water Framework Directive into Scottish law, has created new controls on abstraction and impoundments and this will affect many industrial sectors. ‘The new legislation will not have a great impact on the standards that would be placed on new water use

proposals, but it will allow the operation of older sites to be reviewed in light of current best practice,’ Crookall said.

Time will tell

Although all Member States of the EC must translate the Water Framework Directive into national law by the end of this year, many industry members agree it is still too early to predict possible impacts on power generators in the UK. Jane Telfer from Scottish Power estimates that companies such as her own will be in a much better position to identify what the likely impacts on various types of plant will be in two to three years.

And it is during this time, that the

AEP urges the government to ensure that implementation of the Directive does not mean that costs become unreasonable and disproportionate to environmental benefits.

According to David Crookall, SEPA remains confident that all objectives can be achieved. ‘We believe that the Directive will deliver

significant improvements to the quality of the water environment whilst still allowing water users, including the energy sector, to meet the needs of society and the economy.’

Who, what, where?

• Transposition and implementation of the Water Framework Directive in the UK is a devolved matter but the Department for the Environment, Food and Rural Affairs (DEFRA) has ultimate responsibility for its implementation. Much of the work will be undertaken by the UK environment agencies: the Environment Agency in England and Wales; the Scottish Environment Protection Agency in Scotland; and the Environment and Heritage Service in Northern Ireland.
• The Association of Electricity Producers has over 100 members in the UK ranging from small firms to large vertically integrated companies. It is a member of the Water Framework Directive stakeholder group which was established by DEFRA in June 2001.
For more information log on to:

Heavily modified water bodies

Article 4 of the Water Framework Directive allows Member States of the European Commission to identify Heavily Modified Water Bodies (HMWB). This has been introduced into the Directive in recognition of the fact that many European water bodies have undergone major physical alterations to facilitate a range of water uses, such as water storage and flood defence.
The EC recognises that restoring such water bodies to the Directive’s specified ‘good ecological status’ is highly unlikely in the long term, without having an effect on the various water uses which provide valuable social and economic benefits. Instead, the Directive requires such HMWBs to reach ‘good ecological potential’ – similar but not quite the same as ‘good status’.
‘Both hydro power and public water supply are specifically mentioned in Article 4 of the Directive as examples of important sustainable human development activities,’ says David Crookall, Policy Development Advisor at the Scottish Environment Protection Agency. ‘This means that both may qualify as HMWB and this will facilitate the continued use and development of hydro power.’
A working group has been established to give guidance on the process of HMWB designation. The group is jointly managed by the UK and Germany and involves the participation of all 12 Member States of the EC, plus Norway. Thirty-two case studies have been undertaken to give details about physical alterations caused by various water uses and any resulting ecological impacts. Two case studies from the hydro power group in the UK include:
• River Dee
The main pressure on the River Dee in Scotland is the Galloway hydro power scheme, which comprises a sequence of six hydro power stations with a total installed capacity of 109MW.
• River Tummel
The single pressure on the River Tummel basin in Scotland is a scheme of five hydro power stations and an extensive channel system to direct water from other catchments towards the stations. Habitat creation associated with water bodies in the scheme has an acknowledged nature conservation value. These parts of the water bodies have been designated as Sites of Specific Scientific Interest.
• River Great Ouse
This catchment in England is a heavily regulated lowland river. Modifications for flood defence and navigation include artificial cut-off reinforcement, channel re-alignment, bank reinforcement, weirs/locks and loss of floodplain diversity. Resulting drainage has transformed the area from wetland into some of the most productive arable land in the UK.