The Association believes investment of as much as £100M is being held back while the UK Government considers changes to rates paid under the Feed-in Tariff (FiT) support scheme, which provides guaranteed financial returns from investment in renewable energy projects. An announcement on the outcome of the review of the FiT scheme is expected shortly.

New figures released today (20 June) have highlighted the contribution already being made by smaller-scale hydro to the Scottish economy.

SmartestEnergy, a purchaser of electricity from independent generators, estimated that some £5.1M has been paid to hydro projects in Scotland under the Feed-in Tariff scheme over the past year.

“SmartestEnergy alone paid out more than £2.8M in Scotland which highlights the potential of the technology to provide a valuable income stream from a natural resource,” said Iain Robertson, the Glasgow-based Deputy Head of Generation for SmartestEnergy.

“In many cases the returns being generated are used to support employment – often in remote rural areas – and contribute to the upkeep of land and property.”

David Williams, Chief Executive of the British Hydro Association, said the latest figures underlined the importance of the outcome of the FiT review to provide long term confidence for investors.

“These figures demonstrate the contribution small-scale hydro is already making to landowners, businesses and communities in Scotland which is home to an estimated 90% of the UK’s hydro resource.

“We believe that if the uncertainty over future FiT rates was removed that would unlock a significant amount of fresh investment in hydro. Many potential schemes have been in limbo for more than 18 months as lenders won’t give them the financial backing they need until things are clearer.”

SmartestEnergy’s hydro customers in Scotland include the Conaglen estate near Ardgour in the Highlands where owners Broadland Properties have built and commissioned three run-of-river schemes.

The schemes, ranging from 250KW to 1MW, provide around 40% of the power needs of the 40,000 acre West Coast estate with the remaining electricity exported to the grid.

As well as reducing energy bills, the revenue generated is providing a valuable income stream to support the estate’s operation and its 25-strong staff.

In total during 2011/12, SmartestEnergy paid out more than £17.8M across the UK under the FiT scheme across wind, solar, hydro and anaerobic digestion projects.