Work is about to start on a new hydro in the Highlands, amidst warnings that the next two years could see the last schemes built because of UK Government subsidy cuts.

Perth hydro firm Green Highland Renewables is building the Loch Eilde Mor hydro, in the hills above Kinlochleven.

The £13.6 million project, is fully funded by the hydro firm’s owners Ancala Renewables and is one of a number of developments it is pursuing across the Highlands before 2018, when the impact of changes to government support will be felt.

The company's CEO Mark Mathieson said “This is a really exciting project and marks the start of an extremely busy two years for our firm. In the last four years we have constructed and commissioned 25 schemes totalling 17MW across the Highlands and in the process have invested £62m, the majority of this going to local construction firms and contractors.

“Add to this the £25 million we have committed so far to new schemes this year, and it is clear our hydro projects will make a significant positive impact on the Highland economy. We have well over a dozen active schemes in our build pipeline with further investment to come, and the nature of our projects means the majority of expenditure goes on civil engineering, much of which is carried out by local firms."

He said all of these schemes had secured a feed-in tariff from the UK Government, the Department of Energy and Climate Change's (DECC) main subsidy vehicle, but continued:

"The only sad note is that the recent cuts to hydro tariffs announced at Christmas mean we will see next to zero new Highland schemes come forward for construction from 2018 onwards. It will be the end of an era.”

The Loch Eilde Mor project will start later this month with part of the works access via a bridge over the River Leven which is on the of the West Highland Way long distance walking route. A temporary diversion has been agreed and the bridge will be ready for public use by the beginning of April.

DECC said the changes were necessary as there was a projected overspend of £1.5 billion on the £7.6 billion allocated for renewable energy projects by 2020/21.

The government's priority was to keep bills as low as possible for families and businesses, while reducing our emissions in the most cost-effective way. DECC insisted that government subsidies had driven down the cost of renewable technologies significantly and more than the promised amount of subsidy had been delivered to the industry.