Hydroelectric Power: Licensing

Department for Environment, Food and Rural Affairs written question – answered on 29th November 2021.

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Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

To ask Her Majesty's Government why they have increased hydropower licence fees for run-of-river schemes by 895 per cent since 2016; and how this aligns with their ambition to generate more renewable energy.

Photo of Lord Goldsmith of Richmond Park Lord Goldsmith of Richmond Park The Minister of State, Department for Environment, Food and Rural Affairs, Minister of State (Foreign, Commonwealth and Development Office)

The Environment Agency (EA) is responsible for managing water resources in England to ensure there is a sustainable supply of water for the public, businesses and the environment. This work is funded by licence fees charged to businesses which abstract or impound water, including hydroelectric power (HEP) operators.

The EA is proposing to reform its water resourcing charging scheme from April 2022 so that the scheme is fairer and recovers the full costs from customers for the services they require. The EA will continue to invest in the key foundations that deliver water resource management as well as in maintaining and operating infrastructure, modernising the licensing system and protecting water stressed catchments, particularly chalk.

On average it costs the EA nearly £13,000 to assess a HEP permit application due to the significant, wide-ranging, and complex risks these schemes can pose to the environment. The EA currently charges £1,500 for HEP permit applications, which means HEP applications are currently subsidised by fees paid by other businesses. To fully recover the costs of the services HEP operators require, the EA is proposing to change HEP permit application fees, depending on the volume of water required. Unlike most other abstractors, HEP operators generating less than 5 megawatts will continue to be exempt from annual subsistence fees. The charges for HEP permit applications were last increased in 2014.

The EA ran a public consultation on the proposed charges between 18 August and 10 November 2021. It is now analysing all consultation responses to consider whether any changes to the proposals are necessary. It will publish a response document within 12 weeks of the consultation closing.

The Government acknowledges the valuable contribution of hydropower to the UK energy mix over many decades, and it is important that it operates in a way that safeguards the environment.

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