The Morvern Community Development Company (MCDC) has agreed a loan of a £4.26m from Triodos Bank and £2.23m in funding from the Energy Investment Fund, which is administered by the Scottish Investment Bank.

The finance will be used by MCDC to support the development of a 1.6MW capacity high-head (142m) hydropower scheme on the Barr River near Teacius, Morvern.

The community has been exploring the potential for a shared-ownership hydropower scheme since 2013. Once installed, the scheme is expected to have a 1.6MW capacity and generate approximately 4,269,000 kilowatt-hours of electricity a year. It will take 14 months to build and is expected to operate for at least 50 years.

The local development officer post at MCDC has been funded by HIE for ten years and is tasked with delivering projects such as the hydro scheme to benefit the community. These all provide a sustainable source of income for the community company and are mainly asset-based income generating developments, which also create employment. Other projects include the expansion of Lochaline Harbour, development of marina shore facilities, a community allotment garden and refurbishment of the community-owned filling station.

Projects currently under construction by MCDC include the community business hub and affordable housing – both being supported by HIE.

Ian Philp, account manager at HIE, said: “The hydro scheme project supports our aim of developing resilient rural communities, particularly in fragile areas like the Morvern peninsula. Income generated from it will contribute to the sustainability of MCDC and helps it fund other projects that deliver numerous socio-economic benefits to the fragile Morvern community.

“Securing a significant revenue stream from the hydro project will have a huge impact within the community. This is a great example of a community energy project – bringing people and organisations together to do something for both people and planet.”

Jane Stuart-Smith, chair of MCDC, said: “We are delighted to have reached financial close and can now begin building the scheme. Getting to this point has taken a huge investment of local volunteer effort sustained over many years.

“Morvern is a delightful place to live and work but it faces challenges to maintain a sustainable community in a remote rural community location. MCDC has a strong track record in creating and delivering local infrastructure projects. The income from the scheme will be an important source of investment into the local development priorities.

"There is an increasing focus on community involvement in energy networks. The scheme also gives the Morvern community a strategic stake in the energy supply on the peninsular.”

Paul Wheelhouse, Minister for Energy, Connectivity and the Islands, said: “I am pleased that Morvern Community Development Company’s MorVolts Barr Hydro scheme has reached financial close. Morvern is a fantastic example of what an empowered community can achieve, with a great track record in project delivery and actively engaged in planning for their future.

“At 1.6MW, the scheme is, I understand, the largest hydro in the UK to be entirely community-owned and that is a tremendous achievement for Morvern.”

The funds will go towards the construction and operation of the hydropower scheme by MorVolts Ltd, a wholly owned subsidiary of the MCDC, a registered charity that aims to benefit the community of Morvern.