3 Results and Analysis
3.1 Scotland's Resource Revised
The Hydrobot ® survey carried out for FREDS in 2008 identified 657 MW of untapped hydro potential across Scotland under its baseline scenario. The input parameters reflected the preferences of typical hydro developers, such as an 8% discount rate on future cashflows; a reduction in installed capacity if passing through environmentally sensitive areas and a design flow equal to 1.5 times the annual mean flow in the river. The total was broken down into size categories, revealing that almost all of the schemes were larger than 100kW (Table 4). This finding confirms the fact that hydro development companies have traditionally sought schemes above 200kW.
Table 4: Updated Assessment of Scotland's Untapped Hydro Resource
100kW - 500kW
500kW - 1 MW
1 MW - 5 MW
Total power ( MW)
Total power ( MW)
Total power ( MW)
Total power ( MW)
Reduction in installed capacity between 8% and 12% scenarios
The revised total for Scotland's untapped hydro potential is 1,204 MW at 8% discount rate, the majority of which is comprised of schemes smaller than 500kW (Table 4). Some of this increase can be attributed to more accurate costing at the micro and pico-levels following refined calibration as well as using more conservative design flows for micro-hydro, resulting in better system efficiency despite lower output. The main impact has been the application of Feed-In Tariffs as described above. The Tariff is highest in the sub-10kW range and 817 schemes were identified with a total installed capacity of 6.4 MW. Although there are suitable burns all across Scotland, the total is not higher at this level because smaller schemes are increasingly vulnerable to transmission distances.
The impact of using higher discount rates is also apparent from Table 4. The micro-hydro resource halves as the discount rate increases from 8% to 12% in this study, though the impact on the resource above 5 MW installed capacity is not as marked - the reduction is due to the loss of just one 12 MW scheme. In total, the number of schemes reduces by almost half, though the total installed capacity reduces by less than a third, and is still greater than the FREDS study total which relied on ROCs rather than the proposed feed-in tariffs.
The financial sensitivity of the 0-500 kW band indicates that small changes to the final Feed-in Tariff structure or tariff levels, as outlined in Section 2.3, could have a significant impact on the economically viable resource of Scotland.
Figure 1 below shows the distribution of the un-tapped resource between the different capacity ranges for the 8% discount rate scenario, while Figure 2 shows how the number of potential systems varies with capacity range.
Figure 1: Untapped Resource by Share of Total Power
Figure 2: Untapped Resource by Number of Potential Installations
The greatest increase in scheme numbers is in the micro-hydro range (up to 100kW) while the greatest increase in installed capacity is in the 100kW - 500kW category. In addition a large number of sizeable schemes, previously just below the threshold of financial viability, now appear profitable and boost the total significantly.
The tariff has the effect of increasing scheme numbers right up to the 1 MW size threshold, as such schemes should still fare better than through trading Renewables Obligation Certificates. Predictions for the categories above 1 MW are virtually unchanged in number and total installed capacity.
The FREDS study results were further broken down into rainfall catchment areas. For the purposes of this study, a simplified geographical breakdown is given below, using the Scottish local government regions, in use until 1996.
Table 5: Breakdown of Hydro Potential by Scottish Region
Total power ( MW)
Dumfries & Galloway
3.2 Total Employment Potential
To develop and construct all of the identified sites would require approximately 4.7 million man-days (almost 21,000 man-years) in the baseline scenario. How this figure translates to actual full-time equivalent jobs is dependent on the rate at which the systems are installed. Figure 3 below illustrates the number of potential man-years of employment available through the development of Scotland's hydro resource, broken down by system capacity.
Figure 3: Distribution of Development/Construction Employment Potential by System Capacity. Three quantities are shown for each capacity range, representing discount rates applied to cashflows: 8%, 10% and 12%.
It is clear that the sub 500 kW sector is critical in relation to the overall employment potential of the hydro sector and the sub 100 kW sector in particular is very sensitive to financial pressures.
In addition to the development and construction work there is the potential to create around 630 full-time equivalent jobs to deal with the ongoing maintenance and overhaul of the systems once they are installed. Figure 4 illustrates the distribution of these additional full-time jobs with respect to system capacity.
Figure 4: Distribution of Maintenance Employment Potential by System Capacity. Three quantities are shown for each capacity range, representing discount rates applied to cashflows: 8%, 10% and 12%.
The sub 500 kW sector is less critical but still dominant in relation to the maintenance employment potential of the hydro sector.
3.2.1 Geographical Distribution of Jobs
As outlined in Section 2.4 only a portion of these jobs will be in Scotland itself. To assess the employment potential by region we have split the results into four categories:
- Global - Jobs outwith the UK, typically related to large turbine fabrication
- UK - Jobs within the UK but outwith Scotland, typically related to material supply such as pipes and civils materials but also relating to smaller turbines
- Scotland (national) - Jobs within Scotland but not necessarily local to any given hydro development, typically related to expert services and electricity network connection
- Scotland (local) - Jobs local to any given hydro development, typically associated with consents, environmental surveying and general construction. Will also include on-site maintenance.
Figure 5 shows the distribution of development/construction jobs across these areas. Note that this does not include long-term maintenance jobs (primarily local) or overhaul jobs (primarily UK/Global) since the contribution of these to the total will depend on the speed of development. Figure 6 shows the geographic distribution of the potential maintenance and overhaul jobs.
Figure 5: Geographic Distribution of Development/Construction Employment Potential
Figure 6: Geographic Distribution of Maintenance/Overhaul Employment Potential
It can be seen that the majority of development jobs, and around half of maintenance jobs, could be created within Scotland. The proportion of jobs that will be created within the locality of the hydro schemes is higher during the development phase due to the possibility of using local semi-skilled labour for construction. The other necessarily local resource base is local authority, SNH and SEPA officers.
The geographic distribution of jobs varies by less than 1% between the discount rate scenarios.
3.3 Scotland's Employment Potential
This section relates to the employment potential, both local and national, within Scotland and does not factor in the contribution of sectors from the UK or beyond.
3.3.1 Sector Breakdown
Construction forms the largest proportion of total man-hours in most hydro schemes, as shown in Figure 7, though the mobile nature of this sector should not cause bottlenecks.
Just under one fifth of the potential work falls to hydro specialists. Given the small number of engineers operating in this field, particularly at the sub 200kW level, the growth of this sector is key in achieving high levels of deployment. Schemes cannot be installed without them.
The role of public bodies, representing 5% of the total employment potential should not be over-looked. Again a failure to grow the knowledge base and expertise in this sector will result in a bottleneck as schemes simply cannot be consented without this resource.
Although manufacturing could provide a significant proportion of jobs a failure to grow this sector is not likely to cause a bottleneck in development since developers can source the equipment from farther afield. Similarly the employment contribution of the electricity networks should not cause a bottleneck as it is reliant on easily transferrable skills.
The sectoral distribution of jobs does not appear to vary between the discount rate scenarios.
Figure 7: Employment Share of Industry Sectors
3.3.2 Skills Breakdown
Civil works construction teams and their associated management account for over two thirds of the skills base required to develop the identified potential, as identified in Figure 8. This requires a skills set common to other infrastructure construction projects and so the infrastructure is already in place to train this work-force.
Manufacturing and fabrication as well as electrical engineering requires specialist trades, although the relatively small proportion of these trades required should not pose a problem.
The remaining skill sectors all require a minimum of degree level expertise and ideally require a number of years experience beyond that. In addition to degree-level qualifications SEPA and SNH area officers as well as local planners will need to complete additional training to assess hydro applications.
The only skill sector where there is a shortage of degree level qualifications is hydro-power engineering. As a result it is difficult for firms to expand the specialist hydro sector rapidly since they have to take on the burden of training new engineers from scratch. This skills shortage is likely to be the primary constraint on the growth of the industry, particularly at the micro-hydro level.
The distribution of jobs by skill-set does not vary between the discount rate scenarios.
Figure 8: Skills Distribution
3.4 Growth Scenarios
3.4.1 2020 Peak
To achieve a peak of installation activity in 2020 would require a 100% growth in the industry in 2010 (doubling the employment in the sector in a single year), diminishing to zero growth in 2020. This distribution is defined by a standard deviation of 3.8 years. Figure 9 below illustrates the growth in jobs under this scenario.
Figure 9: Hydro Employment Growth (peaking in 2020)
This scenario would result in over 60% of Scotland's remaining financially viable hydro resource being utilised by 2020, representing approximately 720 MW of capacity if an even spread of system sizes is assumed.
It would also see the equivalent of approximately 1,400 new full time jobs, including around 190 new permanent maintenance positions, created in Scotland by 2020 before the employment potential begins to contract.
This scenario is unrealistic as it represents an extremely ambitious target, furthermore the short timescale could lead to unforeseen environmental issues and a painful market contraction post 2020. In order to achieve this target the number of planning/abstraction consents would need to almost double in 2010 alone and continue to grow from approximately 45 consented and connected schemes over the last three years, to 740 in the year 2019 - a total of approximately 3850 consents and electricity network connections in the next 10 years.
3.4.2 2025 Peak
A target peak of installation activity in 2025 would require a growth in the industry of 50% in 2010, reducing to around 13% in 2020. This distribution is defined by a standard deviation of 6 years. Figure 10 below illustrates the growth in jobs under this scenario.
Figure 10: Hydro Employment Growth (peaking in 2025)
This scenario would result around 25% of Scotland's remaining financially viable hydro resource being utilised by 2020, representing approximately 300 MW of capacity if an even spread of system sizes is assumed.
It would see the equivalent of close to 710 new full time jobs, including around 80 new permanent maintenance positions, created in Scotland by 2020 with the market still growing.
In order to achieve this target the number of planning/abstraction consents would need to increase by a half in 2010 alone and continue to grow from approximately 45 consented and connected schemes in the last three years to 330 in the year 2019 - a total of approximately 1540 consents and electricity network connections in the next 10 years.
The primary constraints to this growth scenario will be regulatory (planning permission and abstraction licensing) and electricity network related with the lack of specialist skills also being a key issue.
3.4.3 2030 Peak
A target peak of installation activity in 2030 would require a much more modest growth in the industry of 30% in 2010, reducing to around 15% in 2020. This distribution is defined by a standard deviation of 8.5 years. Figure 11 below illustrates the growth in jobs under this scenario.
Figure 11: Hydro Employment Growth (peaking in 2030)
This scenario would only result in around 15% of Scotland's remaining financially viable hydro resource being utilised by 2020, representing approximately 180 MW of capacity if an even spread of system sizes is assumed.
It would also see the equivalent of over 360 new full time jobs, including around 45 new permanent maintenance positions, created in Scotland by 2020 with the market still growing strongly.
In order to achieve this target the number of planning/abstraction consents would need to increase by a third in 2010 alone and continue to grow from approximately 45 consented and connected schemes in the last three years to 165 in the year 2019 - a total of approximately 850 consents and electricity network connections in the next 10 years.
The primary constraints to this growth scenario will also be regulatory (planning permission and abstraction licensing) and electricity network related. The lack of specialist skills is less of an issue at this level of growth as hydro-specialists could be trained in-house by the existing firms. However in the interest of competition some form of specialist training might be made available so that new entrants to the sector do not compromise the quality of systems being installed.