Scheme capable of powering 280 homes and reducing island’s carbon footprint by 450 tonnes

Green Energy Mull (GEM) is to complete construction of its first community hydroelectricity scheme at Garmony on the Isle of Mull, after securing a loans from Scottish Enterprise’s Renewable Energy Investment Fund (REIF) and from Charity Bank, an ethical bank that lends solely to social sector organisations.

The 400KW small-scale scheme, which is scheduled to open in spring 2015, is being built on the Allt Achadh na Moine burn in the Garmony Forest on the Isle of Mull, on a 40 year lease under Forestry Commission Scotland’s National Forest Land Scheme. Expected to generate more than 1,000MWh of electricity annually, sufficient to power 280 homes, the scheme will reduce the island’s carbon footprint by 450 tonnes.

Conceived by Sustainable Mull & Iona and Mull and Iona Community Trust, the project received overwhelming majority support in a local community ballot. They formed Green Energy Mull, an Industrial and Provident Society operating as a Community Benefit Company, to ensure that the assets will be used for the benefit of the community now and in the future. Investors have equal voting powers irrespective of the size of their investment and all net profits will be invested in the local community through the charitable Waterfall Fund. The management of GEM will always remain in the control of the local community.

The total cost of the project will be over £1 million. GEM raised over £450,000 through a community share offer (a means of raising finance for a local project by offering shares to members of the community), Charity Bank has agreed to lend £500,000 and the Renewable Energy Investment Fund (REIF), which is administered by Scottish Enterprise on behalf of the Scottish Government, is lending £443,000. The loans will also be used to repay existing loans from Mull and Iona Community Trust and CARES that funded development costs. Income will come from electricity sales and Feed in Tariffs (FiTs), with profits being invested entirely within the communities of Mull and Iona.

Derek Mackay MSP, Islands Minister, says: “The Garmony Hydro Project is an impressive venture – with the ability to power 280 homes once complete – and will be a real asset to the Isle of Mull. Through Green Energy Mull, it is estimated that over the first 20 years of the life of the project, the scheme will generate a turnover of over £5 million, with nett proceeds of up to £2.4 million going into the Waterfall Fund for a variety of projects that will benefit the community.

He added: “The Scottish Government is defining a distinctive approach to Scotland’s future energy provision; putting communities at the heart of decisions about their local energy system; and empowering them to take an economic stake in new developments.

“Organisations like Green Energy Mull are an important part of defining our distinctive approach to Scotland’s future energy provision by providing vital learning across extremely challenging areas, such as adding value to local economies, matching local supply and demand, and addressing fuel poverty.”

Andrew Smith, head of REIF, said: “Green Energy Mull is exactly the type of innovative project that REIF was set up to support. By leveraging private and public sector investment, it’s supporting a development with both a strong community benefit and a long term environmental legacy. Schemes such as this are an important part of Scotland’s growing renewable energy mix and are making a significant contribution to the development of a low carbon economy.”

David Jardine, Forestry Commission Scotland, added:“This is an excellent example of how the National Forest Estate is helping to empower communities.Through this partnership, public land is being used to generate renewable energy and provide an income to a rural community.”

Moray Finch, chairman of GEM, says: “We are grateful for the work that Charity Bank has put in to make this important project happen. We are hoping to complete the project and commission the scheme early in 2015. Charity Bank – a social enterprise itself – was set up to finance social sector organisations like ours and has a long history of lending on the island.”

Charity Bank has previously lent to the Mull Fishermens’ Association to restore its pier at Tobermory and Mull and Iona Community Trust to acquire premises for the former Mull Butcher’s Shop. The bank is currently lending to the Hebridean Whale and Dolphin Trust, enabling it to make essential repairs to its visitor centre.

John Barnett, Charity Bank’s lending manager responsible for Scotland, says: “The loan to GEM is our first to a community renewable energy scheme in Scotland and we hope to be able to support similar initiatives in the future. Our savers know they are putting their money towards the work of organisations with charitable purposes and our borrowers know that when they repay a loan, their money will be used to support like-minded organisations working to benefit society. ”

Charity Bank has lent to renewable energy schemes in the North of England: Heron Corn Mill in Cumbria, Settle Hydro and River Bain Hydro in Yorkshire and Stockport Hydro in Greater Manchester.

Source: Scottish Enterprise

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