Abhainn Greadhain Community Hydro Scheme for Lochaber
LEG are looking at an exciting new project in Lochaber, one that would generate large amounts of renewable energy and provide funding for environmental projects for many years to come!
This information is intended to answer some common questions about the scheme, if you want any further information, have a question, or would like to be kept informed please contact Lochaber Environmental Group (LEG) on 01397 700090, or email Hydro@lochaberenviro.org.uk
The Abhainn Greadhain community hydro scheme for Lochaber is in Glenachulish, to the south of the Ballachulish bridge. The water intake will be at an altitude of 150m and of a relatively low design, due to the shape of the river. The penstock (pipeline) route is still being finalised but it will be buried and head down the glen to the powerhouse near the forestry car park.
The scheme will produce about 500 kW when running at full power and is expected to generate over 1.7 GWh of electricity per year This is enough electricity for 420 homes and will save 850 tCO2e compared to a gas power station. This is a ‘run-of-river’ scheme so there is no reservoir at the top as in in the large schemes around Lochaber. These are among the cleanest forms of energy generation available.
The financial surplus from the Scheme once the loan repayments and operational costs have been met, will be gifted to Lochaber Environmental Group to support its sustainability and that of its environmental projects across Lochaber. A proportion of the surplus, yet to be agreed, will be given to the local communities of Ballachulish and Glenachulish. LEG’s work on sustainability, energy efficiency, local food production, education and other areas is a great way to use surpluses from a renewable energy scheme.
During construction there will be some felling of trees to get machinery in for laying the penstock. The vast majority of the trees to be felled are commercial plantation, and are nearing their ‘harvest’ time. These are expected to be replaced 1 for 1, though Forestry and Land Scotland (previously Forestry Commission) has the authority to say where they go and what species are planted.
All tree and river work is closely controlled and appropriate environmental surveys, will be carried out and followed through. The powerhouse will also have special features to reduce noise, which is necessary when sited near people’s homes.
LEG has secured support for the scheme through the Feed In Tariff (FITs), which pays a small amount per kWh to help renewable generation. The scheme was in the last round for FITs and there is no longer support of this kind available for small hydro schemes. We must be generating by September 2021 in order to get the FITs, so we are on a tight timescale! The electricity generated by the scheme will be sold to the grid, and then be part of the mix we use in our homes and businesses.
LEG are hoping to use a Community Share Offer (see overleaf) to raise some of the funds required. We are also speaking with various lenders to provide top up funding to complete the construction of the Hydro scheme. We have been supported by Local Energy Scotland with a grant and loan through the Community and Renewable Energy Scheme (CARES). Their support is essential to enable small community groups take on such a large project.
Community Shares are a practical way of supporting a local enterprise that serves your community, and have been used by communities across Scotland. The share capital will help finance the business and in return you might receive limited interest on your investment. And if you want your money back you have the right to withdraw some or all of your share capital, subject to terms and conditions.
Community shares can only be issued by co-operatives or community benefit societies. Lochaber Environmental Group (LEG) will set-up a new community benefit society, to be known as LEG Power, to take forward the hydro-electric scheme at Glenachulish to raise funds for the community. LEG Power, will be able to issue community shares as part of its plan to raise the funds needed to build and operate the hydro-electric scheme. As the Scheme begins to generate a financial surplus, this money will provide finance to Lochaber-wide environmental projects as well as a proportion being allocated to the community in which the Hydro scheme is situated.
The primary motivation for buying community shares is usually different from that of shareholders in companies: it is to support the social purpose and objects of the enterprise which benefit the community. Financial motivation is at best secondary though the rate of return is expected to be reasonable.
Community shares refer to a distinct type of share capital called Withdrawable Shares and they behave differently to conventional share capital, (which are also known as ordinary or transferable shares). The difference is explained below:
Transferable Shares: most companies financed with equity use a form of share capital known as transferable or ordinary shares, which can be transferred or sold by shareholders to a third party. Investors buy shares in the expectation of two types of financial return: a regular dividend on shares, and the possibility of capital appreciation, in which case they would expect to sell the shares at a higher price than they paid for them. This is the most common form of share.
Withdrawable Shares: withdrawable share capital is completely different. This type of share capital cannot be transferred between people. Instead, the society allows shareholders to withdraw their share capital, subject to terms and conditions that protect the society’s financial security. Shareholders in LEG Power will be allowed to withdraw their share capital, and therefore it provides a straight forward way of getting your money back when you want to cash-in your shares.
Shareholders are members of the society and have only one vote, regardless of the size of their shareholding, so the society is democratic.
The value of shares is fixed and not subject to speculation. There is a limit on personal shareholdings, and there is also a limit on the interest paid on share capital, based on the principle that interest should be no more than is sufficient to attract and retain the investment.
For more information visit www.communitysharesscotland.org.uk
We hope many people in Lochaber (and beyond!) will support this project, which is truly transformational for LEG and in time our entire region. In addition it will add much needed renewable energy to the electricity grid as we change to a low carbon economy.
We even made front page news over the holidays! See the article in the Lochaber Times below.