Wales Co-operative Centre

Canolfan Cydweithredol Cymru

Micro hydro – the key to building sustainability

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We’ve received the following guest blog post from Llangattock Green Valleys, an organisation that is taking co-operative approaches to developing sustainable energy projects in the Brecon Beacons….

Back in 2010 our group, Llangattock Green Valleys, set itself the mammoth target of becoming carbon negative (that’s negative, not neutral), by the end of 2015.

A key part of our plan is micro hydro. Here in the Brecon Beacons we’re blessed with good annual rainfall and plenty of steep mountain streams – perfect for small-scale high-head schemes.

Our aim is to build a raft of these schemes to generate clean, green renewable energy. This will help offset our local energy requirement, significantly contributing to our carbon- negative goal. Better still, these schemes will enable us achieve a whole lot more.

Our plan is to ‘bundle’ micro hydro schemes together in batches and to finance each bundle through a co-operative share offer. We completed our first share offer last autumn, successfully raising the full £270,000 we needed to fund the cost of our first two schemes within just two months. Construction of these schemes is due to start in the next few weeks.

Meanwhile, we’re in the closing stages of our second share offer, with an ambitious target of £690,000 to build an additional four schemes. Closing date for this share offer is 3 June, and we are currently 72% subscribed.

The co-operative structure is ideal because it enables a number of things:

1. It gives people a chance to invest in and become part of a local project.

2. It also allows them to benefit. Our business modelling projects an average annual return of 5% for subscribers over the 20-year life of the schemes. And for subscribers who are also UK taxpayers, there’s potential for generous tax relief through the Enterprise Investment Scheme.

Llangattock Green Valleys director Andrew Fryer at the Nant yr Hafod stream, one of four micro hydro schemes the group is planning to build as part of its second co-operative share offer.

Llangattock Green Valleys director Andrew Fryer at the Nant yr Hafod stream, one of four micro hydro schemes the group is planning to build as part of its second co-operative share offer.

3. It allows us to recoup a good proportion of the risk capital we have spent developing the schemes to date. We were lucky enough to start this project with a £100,000 pot of risk capital, thanks to the British Gas Green Streets Competition. It’s a precious commodity, and our goal is to recycle this money as much as possible, so it does good for our community not just once, but over and over again. By structuring the share offer to cover both the development and construction costs, we can recover the risk capital for reuse developing other schemes.

4. It allows us to share the profits between subscribers and a special community fund that will be used to support further sustainable projects. According to our business models for the two co-operatives, micro hydro will generate some £1 million for the community fund over the next 20 years. This income is crucial, as it will help ensure the ongoing sustainability of our organisation, which runs almost exclusively on volunteer time. It will also open the door for other exciting projects that, to date, have simply been beyond our means.

It’s a win all round: more renewable energy and less CO2 for Wales, a fair return for subscribers, and a community fund that will help us develop further sustainable projects over the coming years.

If you’d like to find out more about our current micro hydro share offer, please download the share offer document from our website – www.llangattockgreenvalleys.org. You can also call us free on 0800 206 1915 to request a copy by post.

Written by Mark Smith

May 22, 2014 at 5:13 pm

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