A community-owned renewable energy project is amazed to find that it achieved its investment target of £250,000 from local shareholders in just 10 days of fund-raising.

This means that work on the micro-hydro scheme, which will be on the River Thames near the centre of Oxford, will be able to commence in just a few weeks.

The target was achieved despite the fact that the return on investment offered is just 4%.

The Osney hydro scheme will utilise an 'Archimedes screw' turbine, a design which is becoming increasingly popular because it is favoured by the Environment Agency as it is more 'fish-friendly' than other designs.

The project, to be sited at Osney Lock, will generate a projected output of 49kWe, or 159,000 kWh per year, from the flow of the river.

It will have a capacity factor of around 37%. With a price tag of £600,000 this makes the cost per kilowatt £12,000.

Chris Goodall, a member of the scheme's developers, West Oxford Community Renewables (WOCoRe), admits that this is expensive, "more than the £8-£10,000 I estimate for the easiest locations, and certainly more than the £500 a kilowatt for new large gas-fired power stations".

Goodall was at pains to thank the Environment Agency for speedily facilitating the project. Most of the electricity generated will be sold to the Agency for local use.

Total income, including the 21p per kilowatt-hour from the Feed-In Tariff, will be £50,000 per year. An additional 7.75 kWp of photovoltaic modules on the roof of the building will generate an additional 6,665 kWh per year and part of the income.

Chris speculates that the reason why investors were so keen to finance the project is that "opportunities to invest are limited at the moment". But he believes this is not the only reason, citing the corporate structure for the Osney project owners, Osney Lock Hydro Ltd, as a factor.

This is an ‘Industrial and Provident Society for the benefit of the community’ or ‘bencom’. It means that shareholders receive tax relief based on the Enterprise Investment Scheme, and that the business must be run in the interests of the community at large.

Profits must not be distributed to members; instead they should be ploughed back into the business. It is a model chosen by retail cooperatives, community associations, housing associations and credit unions.

In this case, the intention is to return share capital to investors after 20 years, after which the weir will continue to generate for at least the same amount of time; profit will all go to community energy and efficiency projects. It's estimated that the community will receive £2 million over the whole lifetime of the project.

Goodall says that it has taken West Oxford Community Renewables (WOCoRe) 12 years to bring the project to its current position. This is a major challenge for community projects, which need huge, unpaid commitment from volunteers.

"Nevertheless," he says, "this complex scheme shows the scale of the latent demand for genuinely community-based renewable energy".

Story: David Thorpe, News Editor