A major rise in business rates could threaten future investment in smaller renewable energy schemes, according to industry body Scottish Renewables.

New figures published by the organisation has revealed smaller projects are facing a 650% rates increase due to a revaluation of how businesses pay rates, as set out the Scottish Government's draft 2017/18 budget.

Developer GreenPower, which has a 500kW run-of-river hydro project near Kinloch Rannoch, Perthshire, could see its rates bill rise by £24,500 per year, an increase of 154%.

James Simpson, Finance Director of GreenPower, said: "These planned increases will have a devastating impact on our business and its future ambitions.

"We had hoped to employ someone to help us maintain the site over its lifetime but we cannot make that kind of commitment when so much of our capital will be spent on rates.

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"The wider impact to our business will be that we will have to think twice about widening our portfolio and building new hydro schemes and wind farms in Scotland."

Hannah Smith, Policy Manager at Scottish Renewables said while business rates are a normal part of any company's expenditure, it is "unrealistic" to expect a company of any size to absorb increases of this scale overnight.

"Projects which are affected are not only contributing to meeting our energy and carbon reduction targets but are also supporting jobs and investment in communities across Scotland," she said.

"The Scottish Government has big ambitions for small-scale renewables, but these increases in rates will make it even more difficult for smaller hydro, solar and wind projects to go ahead.

"We urgently need the Scottish Government to intervene on this issue to ensure that renewable energy rates are proportionate and affordable and don't undermine future investment."

The industry body has now written to Finance Secretary Derek Mackay calling for the Government to; extend its renewable energy rates relief scheme to cover small-scale, commercial renewable energy installations, to provide appropriate relief to district heating schemes and to reconsider its decision not to introduce transitional relief.

(LM)