Harlaw Hydro’s small green energy scheme will generate income for the benefit of the local community.
Harlaw Hydro is a community business formed in 2012 to set up and manage a 65KW water turbine on the Waters of Leith at Balerno, near Edinburgh. The project emerged as an idea from the directors of Balerno Village Trust Board, a local group focused on developing and improving Balerno for the benefit of residents.
Much of the capital required is now being raised by a community share issue. Income generated from electricity sales to the grid will cover the running costs of the plant and provide a surplus to support local community projects.
Project beginnings and getting advice
The support from CDS was vital in helping us set up Harlaw Hydro. They brought free expert support and a depth of experience. It’s difficult to imagine where we would be now without their input
Martin Petty, director of Harlaw Hydro
The group started meeting in 2010 and received support from Co-operative Development Scotland, Community Energy Scotland and the Co-operative Enterprise Hub. This enabled them to be supported through the three-year development process.
To let community members invest in the project, Harlaw Hydro was established as an Industrial and Provident Society (IPS) rather than a limited company. Under the IPS model, ‘community shares’ can be offered for sale publicly — not allowed for limited companies other than PLCs. The share price was set at £50 with the aim of raising £150,000 from community shares. The balance of funding needed (£163,000) was sourced from a bank loan and donations.
The IPS model was particularly well-suited as a legal structure because of its ‘in-built’ co-operative constitution. This ensures that democratic processes are strictly followed – ideal for many community-owned businesses.
Running the Co-operative
Harlaw Hydro Limited was registered as a Society for the Benefit of the Community in September 2012. The Board is elected by the Society’s members (i.e. its shareholders), with the exception of three directors appointed by Balerno Village Trust. Distribution of profits is the responsibility of the Village Trust, which is also managed by an elected board and run on a democratic basis.
Progress and benefits
Community energy projects tend to have a long lead time and usually require real determination to succeed. The group started meeting in autumn 2010 and the ‘golden spade’ event, to mark the start of the construction phase, took place in September 2014.
The turbine will generate approximately 260,000kWh (units) of green electricity per year – enough for approximately 56 average houses. It will save 129 tonnes of carbon dioxide each year — a worthwhile local contribution to national targets for renewable energy.
Importantly, it is expected to generate at least £600,000 during its first 15 years of operation - a considerable resource for the community to use.
To find out more about setting up a community co-operative, contact Co-operative Development Scotland.
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