Charity Bank lends £500,000 to help launch Mull’s first community hydro-electric scheme

Charity Bank logoGreen Energy Mull (GEM) is to complete construction of its first community hydroelectricity scheme at Garmony on the Isle of Mull, after securing loans from the Scottish Government and from Charity Bank – which lends solely to social sector organisations.

The 400KW small-scale scheme, which is scheduled to open in this summer, is being built on the Allt Achadh na Moine burn in the Garmony Forest on the Isle of Mull, on a 40 year Forestry Commission lease.

It will generate more than 1,000MWh of electricity annually –  sufficient to power 280 homes. 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.

The total cost of the project will be over £1 million, towards which GEM raised £450,000 through a community share offer.

Kent-based Charity Bank has agreed to lend £500,000 and 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.

“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.”

Moray Finch, Chairman of GEM, said: “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.”

John Barnett, Charity Bank’s lending manager responsible for Scotland, added: “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. ”

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