The future of new small hydropower development in England could be at risk following an almost 900% increase in licensing fees by the Environment Agency, the British Hydropower Association (BHA) has warned, describing the cost increase as the “the final nail into the coffin of the small hydro sector”.

New abstraction charges, which are £12,000 higher than previous charges, were confirmed by the EA on 9 March and come into force on the 1 April. This timescale gives potential new hydropower developers no time to avoid an unaffordable hike in costs, said the BHA. The price hike came less than 48 hours after the UK Prime Minister Boris Johnson promised “much more use of renewables” and a fresh UK energy supply strategy to reduce reliance on Russian oil and gas, as a result of the war in Ukraine.

“This unprecedented and unaffordable hike in charges for those simply applying for a licence to build a small hydro scheme is not only a sign of appalling inefficiency within the Environment Agency but flies in the face of the government’s commitment to net-zero and the Prime Minister’s promise just two days ago,” commented Simon Hamlyn, chief executive of the BHA.  “The agency is actively slamming the final nail in the coffin of an important renewable energy source which should be a key focus for the government as energy prices soar. This unwarranted hike in cost of 895% is a staggeringly senseless move which will deter landowners, community groups and small businesses from developing new hydro schemes. We urge the Prime Minister to intervene and the Environment Agency to urgently rethink their decision.”

The Environment Agency is increasing the current fee for new abstraction licences for hydropower from £1500 to up to £13,392, depending on the size of the scheme. An abstraction licence is required by all new hydro schemes and is in addition to other initial assessment costs. The application fee had already increased 11-fold in 2014 from £135 to £1500, said the BHA. The Environment Agency claims that the key principle of the new charging scheme is to set charges that re-cover costs.

The BHA says that since March 2020, 75 small hydro developments in England would have been deemed unfeasible as a direct result of these new costs.

Olly Paish, Director at Derwent Hydro Developments, in Derbyshire, which assists those developing new hydro schemes, said: “Since Sept when energy prices were starting to soar, the level of interest in hydro has gone up significantly. As a result of these ludicrous new costs proposed, interest will plummet. No one will go any further. It is a massive financial disincentive at a time when we need newer, greener energy sources.”

The BHA is now urging the government to delay the hike for 12 months, to allow developers to decide whether to progress current plans for hydropower projects. It estimates that there are a significant number of schemes planned that will now not go ahead as a result of the fees.