Liquid assets

Liquid assets

Our most familiar natural resource coupled with 2,000-year-old technology represents the future of energy production. Peter Baber investigates hydro power.

If there is one symbol of just how changeable the whole business of “going green” can be, it’s those sinister white things you see churning around on the horizon if you go walking in the Pennines. Yes, wind turbines.

Not more than ten years ago they were seen as more or less the saviours of planet Earth, a noiseless way of making copious amounts of renewable energy that was ideally suited to the island of Britain. Not any more. There are now just as many people who say they are a blight on the horizon, don’t actually produce much energy, and do, in fact, make a noise. Any application to build a wind farm these days usually ends up inciting as many vociferous opponents as enthusiasts. Ah well.

But now we’re up here, take a look around. There is another equally omnipresent feature of the Pennine landscape that some people right here in Yorkshire are now thinking could be adapted to produce energy at relatively little cost, and with no blight on the landscape. It could also be done without using untested new technology – using apparatus, in fact, that has been around for many centuries. We are talking about water – running water. Hydro electric power is normally something you learn about in school geography lessons, when you get to hear about the mighty Hoover Dam or some project in Canada where they have literally moved a mountain or something to get raging torrents down a channel.

What we are talking about here is something of a much smaller scale, although it does use similar technology. On just about every river in the north of England and even further afield you will find a weir that was at one time in the past used to generated power. The Environment Agency believes there are in total about 25,000 of them.

Steve Welsh, director of Water Power Enterprises, is perfectly right to describe the landscape of much of the Pennines as “industrial”. You may think it’s romantic moors and heather, but you never have to look very far when you get up here before you find some kind of evidence of former industrial use, and these weirs are a good example of that. The social enterprise Welsh has set up will hopefully restore many of these weirs to working order and produce power for the local community using the simplest of processes.

Water is taken out of the river at the top of the weir, fed down what is knownas an Archimedean screw, and then let back into the river again. The Archimedean screw drives a turbine which then generates the power. The H2OPE project that Water Power Enterprises is running has already worked with two community groups to get what Welsh terms “community hydros” up and running outside Settle and at New Mills in Cheshire.

He is currently working on one project in Bainbridge in North Yorkshire and two in Stockport. Next year they plan to open five, while six are planned to open in 2012. “There is no way all those 25,000 will be usable,” he says. “There’s the state of weir to consider and access to site and, of course, getting planning permission. But we have around 100 sites on our books at early stages of development. We used to use a map to spot them, but we are now working instead with community groups.

“We have so far done workshops with 250 people from 85 community groups around the country to go through whole process of getting one built.” The community hydro set-up would have been perfectly familiar to local communities in the north of England in days gone by, he says. How does he know this? He has met a fewpeople who used to work for such power projects in the past.

“At the Bainbridge site there was a man we met called Peter Leyland, who has in fact just died,” he says. “But he used to go around collecting money from people who used to buy power off the old hydro scheme. He remembered being sent down when people complained of their lights dimming to remove the leaves from the weir.” Yes, by the very fact that hydros rely on nature, the power they produce is not totally reliable. And that is probably what did for the old hydros when the National Grid came along after the Second World War.

“We are still coming across sites that were decommissioned in the 1950s,” says Welsh. “After the war the electricity industry was nationalised and, with loads of taxpayers’ money going into the National Grid, pylons started going up. The electricity they produced was cheaper, so little by little the villages abandoned their hydro sites.” Now, however, thinking has changed, and, in a bid to encourage carbon reduction and energy efficiency, both the previous government and the new one have been encouraging people to set up smaller networks, which Welsh claims his schemes are a great example of.

The hydros do not directly power local houses. Partly because of unreliability, and partly because of expense, the power they produce goes to the nearest electricity substation, although Welsh claims that from that the physics of electricity is such that the energy created by the weir is still being used to power local houses from that substation.

And it is residential properties that so far stand most to benefit, with one notable exception. “A wire directly connects our hydro at New Mills to the local Co-op,” he says. “It is one of their really big stores, and we supply about 70 per cent of their needs.” The Co-operative Group is actually one of H2OPE’s backers, along with the Joseph Rowntree Charitable Trust and the Key Fund for Yorkshire. The Yorkshire Dales National Park Trust has also funded the Bainbridge scheme to the tune of £50,000.

Although he says he prefers to run community enterprises from “ideological conviction”, Welsh says he has chosen to go down the social enterprise route partly to ensure the project gets funding from these kind of grant bodies.

He says: “Also the scale we are looking at with these hydros – from 10kW to 150 kW – the private sector is not really interested.” That, however, is starting to change, as more private enterprises become aware of the advantages to be reaped from new Government incentives to encourage more people to introduce renewable energy schemes by paying them for any surplus energy they provide to the grid.

This system, previously administered through Renewables Obligation Certificates, or ROCs, was considerably strengthened last year and renamed as Feed-In Tariffs (FITs), and Welsh says the extra drive FITs have given to the project has been considerable.

“All new schemes from July last year eligible for FITs,” he says, “and they have been increasing revenue by 30 per cent, making many schemes far more viable.” While there may be as yet no private enterprises involved, there certainly are private individuals. H2OPE’s model involves financing each scheme with what is termed a share offer. Although such offers have to be sanctioned by the FSA, they are not share offers of the kind that anyone familiar with the London Stock Exchange would know about.

Set up under industrial provident society rules – roughly the same rules that set up the Co-op – you can apply for shares in a scheme on the basis of one member one vote, so it doesn’t really matter how much you put in, you get the same voting power. You can invest anything from £250 to £20,000, although Welsh says the bottom limit may be revised downwards as a result of the recession.

Then, each year each shareholder gets what is termed an interest payment once overheads such as insurance and maintenance have been accounted for. Welsh says these interest payments have a certain advantage over traditional dividends as they are handed out before tax is levied on them, making them a very tax efficient way of investing.

You can’t trade the shares, however, and although you technically can sell them back after three years, you can only do so with the agreement of the community hydro itself, and even then you will only get back what you paid. So, although the scheme has proved popular with local people wanting to put some money away ethically – Welsh claims they are currently getting one person applying for shares for every four prospectuses downloaded from the website – he thinks in the long term it is more likely that ethical investment funds will be the majority shareholders.

Some of them have already been acting as underwriters for the share offers. In fact, setting up such a hydro scheme is more complicated than it looks, which is why it is not surprising to hear about larger and more commercial organisations getting involved. For one thing, there are all the legal issues to consider.

“That’s where all the fun starts,” says Welsh. The schemes need planning permission, even though in many cases the structure itself is already there. They need an abstraction licence from the Environment Agency – something that was designed for farmers and industries for removing water from rivers – and still applies to hydros, even if they put back all the water they take out. And you need to document the impact any such scheme is likely to have on all manner of wildlife.

“There are white-clawed crayfish, he says. “They are a highly protected species. And bats. And of course the fish themselves.” Although it has been proven that fish can survive swimming down an Archimedean screw, permission will often only be granted if the scheme includes a fish ladder – a structure that allows the fish to swim over the weir (provided, of course, that it knows it is there).

The cost of employing consultants to work up such reports can be prohibitive, as much as £30,000 with no guarantee you will get planning permission at the end. That is one the reasons why Welsh has come across many community groups who have been trying to implement such schemes for five years and have got nowhere. H2OPE aims for a time limit of two years, but even still, he says, you are lucky to find a grant body that would be willing to fund such a risk.

There is risk to Welsh’s enterprise itself, too. Water Power Enterprises hasn’t so far owned any of the schemes it had advised on. They have all been owned by the community, and Water Power Enterprises gets paid by the shareholders once the project is complete. But that can mean many years before payment. So in the future Welsh may look at some form of part ownership instead. But he says the overall possibilities the hydro schemes have to offer make the risk worth it. “We are now entering worlds that are very uncertain politically and economically,” he says. “So it makes sense to take hold of what you’ve got. If the community is owning energy assets, that could be some leverage. Because if Mr Putin can stop energy supplies to Ukraine, what can you do? On top of that, the Archimedean screw is 2,000 year-old technology; river weirs are sometimes 250 years old, and the legal structure of industrial provident society is 150 years old.

We are not using anything new, we are reusing what’s gone before. It’s far less threatening to the local communities than wind farms.” You can sense hear that he is gearing up for the end of what he calls the “honeymoon” period, a time when the schemes he is proposing may come under attack in just the same way as windfarms have done. Potential opponents could include anglers, even though with every scheme H2OPE has to prove that fish will not be harmed. He is ready. But, as it happens, he supports wind farms too. He says he doesn’t believe claims written about them in the press being white elephants, partly because he has his own wind turbine on the ten-acre farm he owns above Todmorden. He is so convinced about its potential to make him money in the future that he no longer has a pension.