The Employment Potential of Scotland's Hydro Resource

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Executive Summary

Scotland's undeveloped hydro potential has been re-evaluated using Hydrobot ® remote hydro modelling software to incorporate the micro-hydro resource, by means of updated costing models, and to account for the effect of the proposed Feed-In Tariffs. The revised financially viable resource is estimated at 1,204 MW of potential installed capacity, across 7,043 schemes, compared with 657 MW across 1,019 schemes as identified in the 2008 Scottish Hydropower Resource Study.

The baseline scenario in this study employed a discount rate of 8% on future cashflows. Increasing this to 10% reduced scheme numbers to 5,447 with a total potential installed capacity of 1,049 MW. At 12%, 4,102 schemes would yield 875 MW of potential installed capacity.

The increase in site numbers compared to the 2008 study is largely in the sub-100kW range due to the favourable tariff available for micro-hydro generation and the implementation of a revised cost model. However this range is also the most sensitive to financial uncertainty. The greatest contribution to the predicted capacity occurs in the 100kW to 500kW band, where there are half as many schemes but the mean scheme size is several times greater. The positive impact of the proposed Feed-In Tariffs can also be seen on schemes of up to 1 MW.

The majority of the work required to develop hydro projects was found to be in construction, though the skills bottlenecks are more likely to occur in hydro engineering and electrical network engineering. Over half of the new jobs created as a result of Scottish hydro schemes could be in Scotland, particularly in the micro-hydro sector where much of the work and manufacturing can be carried out by local entities.

Job growth is expected to follow a Normal distribution (or bell curve), rising as the value of renewable energy becomes increasingly competitive, then falling as suitable sites are exhausted and environmental constraints become more restrictive. Three growth rates are modelled, resulting in total Scottish job numbers detailed below. There are currently an estimated 82 Scottish full time equivalent jobs resulting from hydro developments.

Table 1: Summary of potential hydro installations achievable between now and 2020. Table includes resulting job creation in Scotland, under three growth scenarios. These three scenarios were modelled using an 8% discount rate on future cashflows - the baseline for this study. For results using other discount rates, see Annex A.

Scenario

A

B

C

Peak in development activity

2020

2025

2030

Installed capacity by year-end 2020

720 MW

300 MW

180 MW

Total capacity utilisation by year-end 2020

60%

25%

15%

Scottish full-time equivalent jobs created by year-end 2020 (Baseline scenario)

1400

710

360

Scenario A is unrealistic due to environmental and regulatory constraints. It is also undesirable because of the potential for negative consequences in the long term. Scenarios B and C are realistic but will only be feasible with educational and business support to ensure skilled hydro engineers, working particularly in the micro-hydro sector, are trained and retained in Scotland. They also depend heavily on a rapid acceleration in successful planning/abstraction consents and improved availability of electricity network connections.