Scotland's first community-owned wind farm will boost the regeneration of an island owned by its residents.

Sales of electricity from three wind turbines on Gigha are expected to generate up to £80,000-a-year, paying for their own upkeep and funding development projects on the island.

The wind farm will be a prototype scheme for the community energy company being formed by Highlands and Islands Enterprise (HIE) to ensure communities throughout its area gain direct financial benefit from renewable energy generation.

The £400,000 project will be run by Gigha Renewable Energy Ltd, a new company, limited by shares, being set up by the Island of Gigha Heritage Trust (IGHT), which has owned the majority of land and assets on the island since its community buy-out in 2002. The trust, a limited company with charitable status, uses the same model to operate a hotel and other commercial activities for the benefit of the island.

The project is being backed with an £82,000 grant from the Scottish Executive's Scottish Community and Household Renewables Initiative, which HIE administers. In what will be the enterprise network's first shareholding in a community-owned company,  HIE will purchase £80,000 of shares, which it is intended will be bought back by IGHT within five years with revenue from the wind farm.

HIE chairman Dr James Hunter announced the groundbreaking project today (Tuesday June 22) as the enterprise network's board met on Gigha.

Dr Hunter said: "This is a highly significant step for us that underlines our determination to capture the benefits of the renewable energy generation sector for communities throughout the Highlands and Islands.

"Achieving a national first in a sector which has such huge potential for Scotland is absolutely in keeping with the remarkable renaissance that has occurred on Gigha in the short time since the community achieved ownership of the island.

"Where Gigha is leading, I hope many more communities will quickly follow."
The announcement was welcomed by Scottish Executive Deputy Minister for Enterprise and Lifelong Learning Lewis Macdonald MSP.
Mr Macdonald said: "I am delighted that this innovative scheme on Gigha is benefiting from the support available through our Scottish Community and Householder Renewable Initiative. 
"This reinforces our message that renewable energy is a practical and sustainable means of meeting energy needs across Scotland's communities.  I wish the project and the trust every success."
Alan Hobbett, community development manager with IGHT, said: "This is a flagship project for the island and one that we and our partners at HIE and Alienergy have worked very hard on for the last year.

"The wind resource here and throughout Scotland is exceptionally good, matched only by the needs of our communities. We are very hopeful, therefore, that the model developed here may be replicated elsewhere benefiting communities the length and breadth of the land."
 
IGHT has secured a £148,000 loan from Social Investment Scotland and £50,000 from the Big Lottery Fund's Fresh Futures scheme. The trust will purchase £40,000 of equity from its own reserves.

Social Investment Scotland chief executive Scott Anderson said: "This is an exciting and innovative venture that we believe could be used as a model for similar community-owned renewable energy schemes in other areas of the Highlands and Islands. We are delighted to have been able to assist IGHT with a project that is a good illustration of how the use of loan finance can help to turn sound ideas into action."

Big Lottery Fund Scotland Board member David Campbell said: "We are delighted to be a part of this clear step forward for the people of Gigha. The islanders have achieved so much in the last two and a half years since they took ownership and the wind farm is a creative and clear way for them to use some of Gigha's natural resources to create not only energy but income as well."

The development has been approved by Argyll and Bute Council planning department and no objections have been raised by Scottish Natural Heritage. A quote for connection to the grid has been requested from Scottish and Southern Energy and is due in mid July.

Gigha Renewable Energy Ltd will buy the three 225 kilowatt turbines second hand, allowing a larger generating capacity to be installed for a reduced project cost. Manufacturers Vestas will dismantle the machines at their current site in Cumbria and rebuild them on the island.

Once commissioned, the wind farm is expected to produce a net annual income for the IGHT rising from £40,000 initially to £81,000. Electricity generated on Gigha will be sold to a registered power supply company and will be eligible for Renewable Obligations Certificates, which will create additional income.

It is hoped the wind farm will be operational by October.