'We see electricity fall from the sky'

Residents of the North Yorkshire town of Settle - and the rest of the UK - are being invited to buy shares in a community hydro scheme that plans to generate enough electricity to power almost 50 homes.

For years, the tiny town on the edge of the Yorkshire Dales has been mostly known for its fine tea rooms and access to the Victorian railway viaduct at nearby Ribblehead. Now its population of 2,500 are hoping it will become better known as one of northern England's greenest centres.

Community groups have set up Settle Hydro as an "industrial and provident society" to build and operate the plant on the town's weir. Although they have yet to receive planning permission for the £300,000 project, the group launched the appeal last week for investors.

The group is hoping to raise £100,000 from its share issue - each share costs £1 - with the rest of the money coming from grants and a bank loan to be repaid from revenue generated by selling electricity to the national grid. The money will be used to purchase and install the 50kW plant, which uses a modernised version of a 2,000-year-old Greek invention - the Archimedean screw. Given sufficient rainfall, the plant will generate an annual 184,000kWh of green, renewable electricity - enough to power around 50 homes.

"We were looking for ideas on how to best regenerate the local economy, when our local MP suggested we become a green or eco town, and the concept soon gathered pace," says one of the founding directors of Settle Hydro, Steve Amphlett. He says the new group, Green Settle, was then approached by H2ope, a social partnership company that has set up a hydro scheme in Derbyshire and had identified the Settle weir on the river Ribble as a suitable site.

A feasibility study suggests the scheme will work well. Concerns that it would have a negative effect on local salmon have also been allayed, Amphlett says. "This has really grabbed the local imagination and everyone in the town has been talking about the scheme. We're hoping construction will start in January, and the plant will be up and running as early as the middle of next year."

He says the fact the summer has been something of a washout has almost been welcomed in the town. "Normally we would all be complaining about the rain - now every time the heavens open all we can see are kilowatts of electricity falling out of the sky."

The groups behind the scheme are hoping that most of those buying the shares will be local people, although the offer is open to everyone. Two bodies, Future Energy Yorkshire and Yorkshire Future have pledged grants of £50,000 and £75,000 respectively. A bank loan of £100,000 is being taken - the rest will be funded through the share offering.

Investors are being promised a "fair" return on their money - up to a maximum of 7.5% a year. Founding director Ann Harding says such projects offer Enterprise Investment Scheme tax relief on investments of at least £500. Under this scheme, shares must be held for three years and 20% of the value of the investment can be used as an "income tax reducer" in the year that the shares are purchased.

Ideally, the organisers say, investors should be prepared to lock their money away for at least 10 years. The minimum investment is £250 and the maximum £20,000. Cheques will not be cashed until the project gets the full planning go-ahead. Shares will not be traded - investors who want to get out at a later date must sell them back to the owning society.

The organisers stress that funds raised from the share issue will fund a not-for-profit organisation and investors should see it as a social rather than financial investment. They have promised any excess profits will be used to fund other green projects in the town.

"At the end of each year we will decide what would be a fair return for investors, and what would reasonable to spend on other community projects," Harding says.

Meanwhile, Amphlett says there has been so much interest locally that other towns in the area have expressed an interest in following Settle's lead.

"We have identified a second site we think may be suitable for another hydro scheme - the way electricity prices are going simply makes schemes like this even more attractive to communities like ours," he says.

· For more information on the scheme go to greensettle.org.uk or call Ann Harding on 01729 823 155.

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Hydro spreads its water wings

Settle is by no means the only community looking at using small-scale hydroelectric generating schemes as a way of providing revenue and reducing carbon emissions.

H2ope, the Co-op funded social enterprise company behind the scheme, pioneered the model with a plant at New Mills in Derbyshire. The 7kW plant was funded in the same way as is planned for Settle. It has just begun to power the nearby Co-op supermarket directly.

H2ope has now identified a number of other sites in the Huddersfield area that are suitable. Another is being considered by a community group in Sheffield. The plants are relatively cheap to install and require a relatively small drop in water level, offered by many weirs around the country. The main risk to the viability of such projects is drought - although given the amount of rain we've had over recent summers, this may not be as big a risk as previously thought.

For more info go to h2ope.org.uk.