The Scottish Government issued a draft budget for 2017-18 in December last year, which included legally-defined rateable value revaluations for non-domestic Scottish buildings. Businesses must then pay rates based on a proportion of that value, which is set by Scottish Ministers as the “poundage” to better reflect the property market. The poundage is currently set at 47.1p per pound of rateable value.

The changes come into effect in April 2017 and revaluations from the Scottish Assessors Association released last month could see bills on renewables sites reach a quarter of a firm’s annual turnover.

Figures released by Scottish Renewables today (8 February) reveal that hydro schemes such as the 500kW Buckny Hydro in Perthshire could be hit with a rise from £32,000 to £93,000 under the revaluation. This is despite the Scottish Parliament’s building in Edinburgh seeing its valuation rate drop from £7,715,000 to £6,960,000.

Scottish Renewables policy manager Hannah Smith said: “We acknowledge that business rates are a normal part of any company’s expenditure, but the leap in costs is causing many of our members significant concern.

“It is unrealistic to expect a company of any size to absorb increases of this scale overnight, particularly in the context of the likely Feed-in Tariff closure in 2019, which has already made it harder to justify investment in new projects.”

The Government announced in 2012 that the next revaluation would be postponed to 2017. The launch of the new revaluation has caused conern for Scottish Renewables, and other industry bodies, that the new costs could lead to dented investor confidence or even closures on certain sites because of overnight changes.

The Scottish Government previously introduced a relief scheme to assist renewables generators, but the support ended in 2015 and no replacement initiative has been introduced to ease concerns. A fixed £100m budget was agreed for Feed-in-Tariffs on new spends from January 2016 across the UK, but this looks set to expire in April 2019.

‘Special punishment’

Scotland has often been viewed as a “prime candidate” to accelerate the UK integration of renewable energy, largely due to its rich heritage in hydropower. Indeed, Scotland’s hydropower sector has thrived in recent years, with the Scottish Affairs Committee recently revealing that the UK is sourcing 85% of hydro capacity from the country. 

The new valuations could derail new and existing small-scale hydrogen schemes and Alba Energy – the “collective voice” of independent hydro producers in Scotland – has criticised the proposed rates, claiming the hydropower has been singled-out for “special punishment”.

Alba Energy’s chairman Martin Foster said: “We are not seeking special treatment. We want to know why we have been singled out for special punishment. Hydro is the original renewable energy source: the cleanest, most efficient, least obtrusive, and longest-lasting. Yet the Scottish Government has facilitated a rates regime that will cripple the independent hydro industry it once claimed to support – while leaving the big energy companies unaffected.”

Scotland has a new target to deliver 50% of its energy needs from renewable sources by 2030. The target could be hindered by the “state of flux” of its renewables sector, which the Scottish Affairs Committee has attributed to policy amendments regarding financial support for low-carbon technology.

Matt Mace

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