Author: Alicia Webb
A social enterprise in the UK has so far helped four communities to build their own hydro power infrastructure, and they're not even close to finished. Water Power Enterprises, or H2oPE intend to utilise disused industrial revolution mills and weirs that are dotted all over rivers in the UK and bring them back to life as hydro plants.
So far, h2oPE has raised half a million pounds through community share issues and completed three of the community-owned hydro-schemes, with a fourth currently under construction.
Projects so far
The first community owned mini hydro project in the UK was Torrs Hydro, completed in 2008. During 2006 and 2007, H20PE took on much of the project development work, including finding grant funding and supporting the set-up of the Torrs Hydro, New Mills Ltd Industrial and Provident Society.
In November 2007, after community consultation and feasibility assessments, Torrs Hydro launched its community share offer. The project started generating electricity in September 2008, and Torrs Hydro took over full responsibility for the scheme's operation.
The second project, completed in 2009 was Settle Hydro. The project cost was around £410,000, and a share offer was opened to raise £100,000 - with the rest of the money coming from grants and a bank loan to be repaid from revenue generated by selling electricity to the national grid.
For the third project, Bain River Hydro, £250,000 was raised through a share offer to part-fund the scheme. The rest of the money was raised through loans from the Charity Bank and in grants. The River Bain Hydro scheme was financed by over 200 individual shareholders with grant funding and a loan from The Charity Bank, which invests purely for social change. William Hague, MP for Richmond (Yorkshire) officially switched on the River Bain Hydro on Friday 13 May 2011.
The fourth project, Stockport Hydro has been created to develop a number of hydroelectric schemes. The first of two sites identified on the River Goyt is completed with the second under construction. The scheme has been funded by a 100k grant from the North West Development Agency, a community share offer and bank loan. Stockport Hydro is keeping the share offer open to help fund the Otterspool scheme until September this year as it wishes to raise as much equity as possible and use any additional equity to substitute for the bank loan.
Financing community hydro
For each project, money raised through a share offer is used to purchase and install a hydro generation plant, which uses a modernised version of a 2,000-year-old Greek invention – the Archimedean screw. The green electricity is sold, giving the company an income, which eventually provides a return for investors.
The projects aim to provide a return of around 3% per annum after the first two years, rising to 5% per annum in later years. The minimum investment is just £250 and the maximum is £20,000.
These projects offer Enterprise Investment Scheme tax relief on investments of at least £500. Under this scheme, shares must be held for three years and 20% of the value of the investment can be used as an "income tax reducer" in the year that the shares are purchased.
Like an Australian co-operative, shares can not be traded on a stock market but must be sold back to the owners of the project. As such, investors tend to view the projects as a social rather than financial investment.
More information
An article in the Guardian