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Community Hydropower Funding – Development and Construction

Community hydropower funding - Development and Construction

Community hydropower funding – Development and Construction

If you are looking for information on how to fund your community hydro turbine project, you’re in the right place. This page offers a comprehensive list of community hydropower funding sources for renewable energy projects and community projects across the UK. Check the symbols to see what help is available, which stage the help applies to, and which part of the UK is eligible.

Hydro projects have two major phases; ‘Development’ which covers the feasibility and planning consent stages and ‘Construction’ which is buying the turbine and getting it installed. From a financing perspective the two phases have very different levels of risk and therefore normally use different sources of funding.

At the Development phase typically 60% of sites pass the feasibility process to go onto the planning phase. Applying for planning consent also comes under ‘Development’, with around 95% of good quality applications ultimately gaining consent, some via the appeal process.

Once planning consent is obtained and assuming the initial feasibility works were good quality, most of the risk is then removed from the project and it becomes easier to obtain loan finance for the construction phase.

Community Hydro projects are slightly different from more conventional hydro projects in that there are grants and non-secured loans available to help with the development phases and more options to raise the construction funding from the local or wider community.

See below for a list of sources of grants, loans and investment which may be able to assist in finding your community hydropower funding for your proposed development. Some of these organisations also provide useful general reference information or community project management services.

Community Hydropower Funding Key

Project Stage : F – Feasibility, P – Planning, C – Construction

Funding Type : G – Grant, CL – Contingent Loan, L – Standard Loan, I – Investment

Fund Name/Link Description Region Project Stage Funding Type
RegenSW Devon Accelerator Funding Seed funding available for community energy projects in Devon only. The second round closed on 27th February 2015 but another round may be announced if there are any remaining funds. Devon F G
NI Government Funding Database Information from the Northern Ireland Executive on various grants available, some of which may be applicable to renewable energy projects. Northern Ireland F, P, C G
Ynni’r Fro Programme The Energy Saving Trust administers the Welsh Government’s Ynni’r Fro community programme, which offers feasibility & planning grants of up to £30,000 plus construction cost grants of up to £300,000. Wales F, P, C G
Rural Community Energy Fund (RCEF) Administered by charity ‘WRAP,’ RCEF is a funding programme from Defra and DECC for early-stage renewable energy projects in England. .
RCEF Stage 1 A grant of up to £40,000 for initial investigation into the feasibility of a renewable energy project. England F G
RCEF Stage 2 A grant of up to £100,000 for business development and planning of feasible schemes. England P CL
Community and Renewable Energy Scheme (CARES) CARES is operated by Local Energy Scotland and administers Scottish Government funds for community renewable energy projects. For details of post-planning loans, see Renewable Energy Investment Fund (REIF).
CARES Local Energy Challenge Fund The Challenge Fund is available to pilot project which demonstrate an innovative approach to local energy generation. Grants of up to £20,000 are available for feasibility works (Phase 1), and successful projects can later go on to bid for up to £6m (Phase 2) to complete the project. Scotland F,P,C G
CARES Enablement Grant Up to £25,000 is available to cover feasibility studies, community consultation and other preparatory costs. Scotland F G
CARES Development Loan Contingent loans of up to £150,000 are available to community groups and rural businesses. Applicable to non-community projects (rural businesses who have carried out community consultation) Scotland F,P CL
CARES Innovation Grant Grant to support projects which provide innovative links between local energy generations and local energy use. Applicable to non-community projects Scotland F G
NatureSave Trust A charitable arm of NatureSave Insurance, the Trust provides minor ‘seed corn’ grants to community renewable energy projects across the UK. Nationwide F,P G
Big Lottery Fund Using funds raised by the National Lottery, the Big Lottery Fund has a range of grants available to community projects, some of which may be applicable to renewable energy. Check regularly to keep up-to-date with what’s on offer. Nationwide F,P,C G
Energy Efficiency Financing Offered jointly by Siemens and The Carbon Trust, this fund provides short term loans for renewable energy projects which can be repaid using the income from the project once operational. Only available to businesses and charities which have been trading for at least 36 months. Nationwide F,P,C L
Carbon Trust 0% Business Loans For existing high energy users, The Carbon Trust offers interest-free loans of up to £1,000 per 1.5tCO2 saving when compared with existing energy usage, for purchase and installation of renewable energy equipment. See the Carbon Trust website for their Loan Calculator and further information on company eligibility. Wales Northern Ireland C L
Renewable Energy Investment Fund (REIF) Provided by the Scottish Government and delivered by the Scottish Investment Bank (SIB), this fund offers construction loans and equity investment and is currently expected to run until March 2016. Scotland C L,I
CO2Sense An independent not-for-profit CIC offering loans and investment in renewable energy projects via a UK Government fund. Nationwide P,C L,I
Pure Leapfrog This charity provides advice on community projects, including a useful document summarising the benefits of community energy to local authorities. Funding is also available, particularly for deprived areas. Nationwide F,P,C L
Ashden Awards for Sustainable Energy These post-completion awards provide grants to a handful of renewable energy projects each year, recognising significant achievements and innovation. Nationwide O G
Triodos Bank Independent, ethical bank providing loans starting at £25,000. Nationwide F,P,C L
Charity Bank Independent, ethical bank providing loans starting at £50,000. Nationwide F,P,C L
FSE Community Generation Fund Part of the not-for-profit organisation FSE, which invests in various SMEs. The Community Generation Fund aims to provide supplementary funds to community renewable energy projects, particularly in deprived areas.
FSE Development Loans Contingent early-stage loans, for design, environmental and planning works. Nationwide F,P CL
FSE Construction Loans Long term loans for construction and commissioning works. Nationwide C L
Green Investment Group Broadened in November 2014 to include community-scale renewables, offers construction financing and equity for community renewable energy projects across the UK. Nationwide C L,I
Assetz Capital Peer-to-peer lender with an emphasis on ‘green’ investments Nationwide F,P,C L
Trillion Fund Online crowdfunding platform for renewable energy projects, via peer-to-peer loans, bonds, debentures and shares. Nationwide F,P,C L,I
Sharenergy An independent co-operative offering community project setup services, particularly related to arranging share offers to source investment. Nationwide F,P,C I
Energy4All This well-known co-operative provides assistance with community project management and share offer setup, plus some general facts on renewable energy. Nationwide C I

Multiple sources of funding

Remember that it is normally fine to use multiple sources of funding, so when aggregated you may be able to get grants or unsecured loans to fully-fund the development stages.

Funding the construction phase

Once you have secured the relevant consents you are ready to order the turbine, complete the foundations/groundworks, onsite electrics and grid connection upgrades, and then install your hydro turbine.

At this point it would be normal to raise the money for the construction phase via a community share offer, which could be to the immediate geographic community (usually the first port of call), then a progressively wider net is cast if additional funding is needed, sometimes even inviting investment for ethical private investors nationwide.

The whole area of community energy ownership structures and how they are funded is currently being reviewed under the government’s new Community Energy Strategy, so it is possible that as part of this the government will provide standard structures and legal frameworks (including template documents) to facilitate setting this side of projects up without having to use lawyers too much.

Are you considering a hydropower project ?

Renewables First have considerable experience as a hydro consultant and have a full project capability, from initial feasibility study through to system design and installation.

The first step to develop any hydropower site is to conduct a full feasibility study.

Contact us about a feasibility study today!

Once complete, you will understand the site potential and be guided through the next steps to develop your project. You can read more about hydropower in our Hydro Learning Centre.

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