| Policy Powering the future
The British Hydropower Association explains how policy reform can unlock the full potential of UK hydropower
THE BRITISH HYDROPOWER ASSOCIATION (BHA) is the UK’s only membership body dedicated to hydropower, pumped storage and tidal range. Representing the full spectrum of the sector, from small community schemes to large, pumped storage hydropower projects, the BHA works to ensure that these proven renewable technologies are recognised as vital for achieving Net Zero and energy security. Through evidence-based lobbying, stakeholder engagement, events and member support, the BHA ensures that the industry’s voice is heard across government, regulators and the wider energy sector. Its mission is to secure a fair, stable policy and market environment that allows hydropower to thrive as part of the UK’s clean energy transition.
Pumped storage breakthrough In recent years, the most significant breakthrough for
the UK hydro industry has been the government’s commitment to support Long Duration Energy Storage (LDES) through a ‘cap and floor’ mechanism for pumped storage hydro (PSH). Once implemented in 2026, this mechanism is expected to unlock the largest wave of hydropower development in half a century, enabling long-awaited investment in large-scale storage projects. This represents a transformative step, but one not without challenges. Uncertain timelines for final decisions, questions over the level of revenue floor, and ongoing grid connection delays continue to deter investors. The potential is enormous, but so are the risks if policy delivery falters. The BHA continues to press for clarity, consistency and urgency from government to turn this landmark policy into real-world infrastructure.
Creating a level playing field Despite progress, much remains to be done to ensure
hydropower’s full contribution to Net Zero is realised. Three key areas stand out.
1. Capacity market reform Originally designed 14 years ago to ensure supply security, the UK’s Capacity Market remains dominated by fossil fuel generation, which provides around 60 percent of its capacity. It urgently needs reform to recognise the unique attributes of low-carbon, long-duration storage such as hydropower. Future iterations of the market must value duration, flexibility and locational benefits, ensuring hydropower can earn fair revenues for the essential stability it provides to a renewable-led system. The latest consultation has begun the pathway to that, but there is still considerable work to go.
2. Local energy markets Local Energy Markets (LEMs) could transform how decentralised renewables like small hydropower are valued. Current national pricing mechanisms ignore local benefits such as reduced grid losses, avoided
reinforcement costs and improved resilience. By enabling local trading between generators, businesses and communities, LEMs would deliver fairer returns for producers, lower bills for consumers and stronger regional economies. They also support Net Zero by reducing curtailment and keeping energy spend within communities, helping to strengthen local and national energy security.
3. The ROC cliff-edge Many long-established hydro schemes are now reaching the end of their Renewables Obligation Certificates (ROC) support period. As subsidies expire, revenues drop sharply from around £100 per MWh to wholesale prices closer to £60 per MWh, creating a financial cliff edge. This fails to recognise hydropower’s enduring value, including reliable winter-peaking generation, grid stability and long- term service. Without reform, valuable assets risk declines just when the UK needs them most.
4. Financing tidal range projects Tidal range energy offers century-scale renewable generation, but current market frameworks make investment almost impossible. A Regulated Asset Base (RAB) model, already proven for nuclear and water infrastructure, could reduce risk by allowing developers to earn regulated revenues during construction. Adopting RAB for tidal range projects would unlock private finance, enabling the UK to lead globally in tidal innovation while delivering jobs, regional regeneration and reliable, long-term energy.
A local asset undervalued Coniston Hydro is a 315kW community hydro scheme
in Cumbria which illustrates the challenges small-scale generators face under current policy. Built under the Renewables Obligation, it is now nearing the end of its support period. Without ROC income, its revenues will fall to around £60 per MWh, the same as a 40MW solar farm, despite providing local resilience, stable winter generation and grid support. Because there is no framework for local energy trading, the community cannot sell power directly to local users at a fair rate. The result is financial strain and reduced reinvestment, jeopardising assets that could continue generating clean power for decades. This case illustrates the urgent need for market reform to recognise hydropower’s full system and community value.
Hydropower’s enduring value Hydropower remains one of the UK’s most reliable and
enduring renewables, with schemes that have delivered clean electricity for more than a century. With the right policy frameworks, fair market access and recognition of its long-term value, hydropower and its associated technologies can continue to power the UK for generations to come.
www.waterpowermagazine.com | November 2025 | 39
Above: Will Gallimore, Policy and Advocacy Lead
Above: Kate Gilmartin, Chief Executive Officer of the BHA
Below: Coniston Water in Cumbria is a community hydro scheme which illustrates the challenges small-scale generators face under current policy
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