Going with the flow for hydro success

21 June 2017

Charlotte Maclean reveals how to navigate the potential complications surrounding a hydro project.

In an effort to improve their green credentials, a Galbraith client was looking to identify viable renewable energy projects on their land.

A potential small-scale hydro scheme was identified on a burn they own and, while the owner was in the fortunate position of not requiring bank funding for this project, there were various other hoops to jump through to enable the project to happen.

The scheme planned to make use of a redundant weir for which there was no record of ownership. Galbraith investigated the weir's ownership, and ultimately arranged the transfer of title and CAR licence (water abstraction rights) to our client as the owner of the surrounding burn and land. 

A special purpose vehicle (SPV) was set up for the project. This was granted a lease of the hydro site, on the basis that the build costs would be privately funded but the eventual profits would be given as rental to the landowner, who is a charitable trust.

Hydro Power

The area required for the scheme was let under a secure agricultural tenancy which meant that, while the tenant was agreeable in principle, he needed compensation for losses suffered during both the build phase and operation of the scheme. 

Galbraith negotiated the formal resumption of the hydro site from the site from his tenancy, an appropriate rental reduction, granted rent-free grazing rights over the pipe route once it has grassed over, an annual disturbance payment to compensate him for his additional maintenance of the access track and disturbance by vehicles visiting the hydro.

In future, the tenant may also be employed as a contractor to undertake some of the basic maintenance of the turbine and intake, given his immediate proximity to the remote site.

The local community council was initially strongly against the development due to a concern that is had not been properly consulted. Galbraith therefore arranged for the hydro developer to explain the scheme to the community and run through their concerns. 

Following this meeting the community's concerns were addressed, including moving the outfall from the power house further up the burn to ensure maximum flow over the waterfall at the community's viewing platform, agreeing an annual contribution to the community from the profits, fitting larch cladding to the power house to help it blend into the surroundings, and installing a public information board at the viewing platform. These were relatively low cost items to the landowner, but ensured that the good relationship between the landowner and community was preserved.

Hydro Power Cladding

The power house was clad in larch to help it blend into the surroundings.

The burn itself was a prime candidate for hydro, but the potential complications were many and varied. By persevering through what initially seemed a complicated project and gaining sound professional advice, the landowner, community and tenant farmer have succeeded in achieving a scheme which operates to the benefit of all parties.

Charlotte joined Galbraith in August 2013. Based in the Stirling office she works in rural management primarily at Caledonian Estate, north of Glasgow and Elderslie Estate in Renfrewshire.

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