A Scottish renewable energy business owner is challenging the SNP and Green administration over what it believes are the highest business rates in Scotland proportionate to turnover.

One of the country’s most remote companies that provides key employment and economic benefits has been calling for the Scottish Government to review non domestic rates that are averaging around £500,000 a year and have led to the loss of jobs.

Hugh Raven, of Ardtornish Hydro, Morvern said the rising rates bill for which the business has to set funds aside is also halting critical investment in the rural West of Scotland area.

He is to meet with SNP MP Ian Blackford amid claims the policy is disadvantaging a number of smaller-scale hydro renewable energy business operators.

The Herald: A small number of hydro businesses have fallen through the rates relief netA small number of hydro businesses have fallen through the rates relief net (Image: Ardtornish Estate)

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Mr Raven said: "It is a significant matter of concern that the Scottish Government has chosen to use its discretion under the Subsidy Control Act 2022 to disadvantage Scotland’s hydropower producers, by limiting their access to full non-domestic rates relief.

"Consequently, Some of Scotland’s hydropower producers are probably the largest ratepayers in Scotland, proportionate to turnover, which is now restricting investment in hydropower in pursuit of net zero. Aside from the very direct impact this has on producers, it also limits the number of valuable employment opportunities which hydropower has the potential to deliver in some of Scotland’s most remote communities.

"Jobs have been lost through redundancy as a direct result of Scottish Government policy in this respect."

In a letter to Mr Blackford, he said: "The UK Government intended that the Scottish Government and other devolved authorities should enjoy discretion in applying the Act in pursuit of net zero. Many hydropower producers are passionate about their communities, and the potential for these systems to support Scotland’s transition to a greener future, and create much-needed jobs in socially and economically fragile parts of Scotland."

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Mr Raven told The Herald: "In 2021 we first found ourselves paying rates of £525,000 on our hydro schemes which was about a fifth of the enterprise turnover.

"At 20% of turnover it would be the highest level of rates levied on any enterprise in Scotland, I believe.

"The result of that was that we had to make a significant proportion of our staff redundant, entirely and solely because of that rates demand. There were four jobs lost in one of the remotest communities in Scotland as a consequence of the Scottish Government’s unreasonable demand."

Even with a relief scheme for some hydro businesses, "in two of the last four years we have paid rates of £500,000", Mr Raven said. It was up from a "not completely unreasonable" £200,000 to £300,000 a year.

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"The question is why is the Scottish Government determined to penalise remote rural businesses that produce renewable energy in line with the Scottish Government’s intentions.

"At every stage when we developed our hydro schemes we were advised that this was completely consistent with what Scottish Government ministers wanted us to do, and at no stage did they warn us they were then going to hike us with these enormous rates.

"I’ve had 10 meetings with ministers over the course of the last three years."

A legal challenge has also been raised against the Scottish Assessors who set the rates amid claims bills were 240% higher than equivalent wind energy businesses.

Mr Raven, who sells energy from the estate's hydro schemes to the National Grid, said Ardtornish was responding to encouragement from the Scottish Government and the UK Government when it set up its renewables business.

A Scottish Government spokesperson responded: "The Scottish Government values the contribution that the hydro sector makes to the Scottish economy and to our low carbon ambitions, which is why it offers the most generous rates relief in the UK for renewable generators, including hydro schemes.

"Valuations are carried out by independent Scottish Assessors with appeals on valuations made to the Scottish Tribunals and ultimately Lands Valuation Appeal Court.

"Following the independent Barclay Review of Non-Domestic Rates, the Scottish Government commissioned the Tretton Review on small-scale hydro plant and machinery in Scotland, which reported in 2018, following which the Scottish Government committed to maintaining relief for hydro schemes up to 2032, subject to subsidy control requirements."

The spokesperson added: "Non-domestic rates are administered and collected by local authorities who must have regard for the UK’s Subsidy Control Act 2022 when awarding reliefs, in particular the subsidy control requirements set out in that Act, which limits the amount of financial support businesses can receive from government."