The first project in a £60 million boost for UK community-scale renewable energy projects is in Loch Lomond National Park.
Business Secretary Vince Cable will announce the new source of finance in a visit to the UK Green Investment Bank headquarters in Edinburgh today.
The source will fund up to 30 projects generating around 24MW of new renewable energy, enough to power 17,500 homes.
The first project, to be developed by Green Highland Renewables of Perth and the Strathclyde Pension Fund, is a 2MW run-of-river hydro-power project on the River Allt Coire Chaorach near Crianlarich, 10 miles north of Loch Lomond.
The £8.5m project will generate 8 GWh of electricity per year, equivalent to the power requirements of about 1,900 homes.
Run-of-river hydro projects use the natural river flow.
Capacity exists for an additional 800MW of new hydro-power projects across the UK, enough to power more than 500,000 homes with renewable energy.
Building-out this capacity, 80% of which is in Scotland, would see an investment of more than £3bn in remote rural communities.
The £60m through Albion Community Power plc is the largest single source of equity funding available for UK community scale renewable energy schemes.
GIB has committed to provide up to £50m, with SPF investing a further £10m. ACP is working to attract a further £40m to take the total sum of investable capital to £100m.
The finance will be used to provide equity funding for a broad range of community-scale renewable construction projects including run-of-river hydro-power, onshore wind on brownfield sites and landfill gas.
Mr Cable said: “Renewable energy is the future, and we must continue to use all of the new and established technologies at our disposal to power our homes and businesses in a way that doesn’t damage the environment.
“Hydro power has a vital role to play in this. The first project to be funded from a new investment by the Green Investment Bank will use the natural flow of Scotland’s rivers to generate electricity.
“This project in Crianlarich will also provide high-skilled jobs for the rural communities in Scotland. The Green Investment Bank is at the heart of our industrial strategy, creating sustainable jobs and growth.”
Lord Smith of Kelvin, chairman of UK Green Investment Bank, said: “The UK is in the process of transforming how it generates its power. In future we will see less reliance on a small number of large power stations and more focus on a network of smaller, locally generated, renewable sources of power.
“Hydro is one example of how we can do this.”