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River Avich Community Hydro Scheme

19 March 2018

Nestled on the western shores of Loch Awe, Argyll, the village of Dalavich has a population of around 70. The nearest main town is Oban, some 30 miles away and the village is connected there by single track road to the villages of Tayniult and Kilcrennan. Poor access to services and out migration of young people are key challenges facing the community.

In response, Dalavich Improvement Group (DIG) was established in 2002. The organisation exists to manage community land and buildings and conduct activities that contribute to the sustainability of the area, including the villages of Dalavich and Inverinan and the hamlets of Kilmaha and Lochavich. DIG owns and manages the local community centre, village green, children’s playground and land along the foreshore.

DIG set up Awesome Energy (Dalriada) Ltd (AED), a community benefit society, to install and manage a community hydro scheme on the River Avich, adjacent to Dalavich. AED will donate all profits for this scheme to support local projects, including those identified in DIG’s Community Action Plan.

The Community Action Plan established a clear mandate for allocation of the funds generated by the Hydro Scheme.

The 350kw Avich Hydro Scheme is located on the River Avich and is a run of river system (it does not require a dam). The design involved constructing a new intake channel beside the existing intake weir on the river. The new turbine house is located alongside the ruins of an earlier turbine house and utilises a similar pipeline route as the earlier scheme, with due consideration for the heritage of the area.

The project is the first Scottish community scheme to use an innovative Active Network Management (ANM) solution to overcome a severely constrained grid connection. The solution was the result of partnership working, with a number of organisations and groups working together to deliver a long term, reliable revenue stream for the community.

The hydro scheme became operational in January 2018. The full financial package for the £1.55m cost was made up of a £250k loan from CARES, a £200k community share offer and the remaining £1.1m came from Social Investment Scotland's Social Growth Fund. Awesome Energy Dalriada are launching a second share offer later this year in order to reduce its debt burden.

In October 2016, DIG received a grant of £8,800 from the An Suidhe Wind Farm Community Fund.  The Panel proposed to DIG that an investment in equity (share ownership) in the project was preferable to a grant, providing financial support to the project while enabling a return to the An Suidhe Wind Farm Community Fund, anticipated at around 4%. The shares are held on behalf of the four communities by Foundation Scotland and any returns from them will go back into the Fund. This is a long term investment of community funds as it is unlikely that the shares can be withdrawn in the short term. That decision rests with the Board of AED.

Meanwhile, profits from the Hydro Scheme itself are anticipated to start flowing to AED from April 2019. The Boards of AED and DIG are working with Foundation Scotland to establish a community fund arrangement that brings impartiality plus the skills and capacity needed to administer these funds, while ensuring the local community is in control of decisions about how and to where funds are disbursed.

This is the first investment in a community-owned renewables from a community benefit fund in Scotland and an exciting example of a very clear ‘win-win’ for the community. Not only has it been able secure investment from its local community benefit fund but the project is also enabling establishment of an additional community benefit fund for Dalavich In addition, the An Suidhe Wind Farm Community Fund will be enhanced by additional income from its shareholding sin the hydro.

It is worth noting however that there are some restrictions in Community Benefit Agreements around not using the Fund to further the interests of other competitor Renewables bodies. In this case Innogy Renewables and Green Gecco (the owners of the wind farm linked to the An Suidhe Wind Farm) were delighted to see this opportunity progress. Innogy also happen to be the primary users of the grid connection that the hydro scheme will share, and have been key to making the enabling the Active Network Management arrangement.


Peter Thomas, AED’s Company Secretary & DIG Board Member, said: 

“This has been an exciting, inspiring, and sometimes challenging project. We are delighted that a significant proportion of the work went to local companies, which is in keeping with DIG’s and AED’s desire to improve local sustainability, including those based in Oban, Lochgilphead, Fort William and Doune. It was really gratifying to receive share investment from An Suidhe Wind Farm Community Fund as it reinforced our belief in the hydro scheme. The scheme is now generating power and we are excited by the potential it offers the local communities. Initial generation figures are very promising and we are confident that our community income projections will be met and probably exceeded.”

 

 

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