Lael Forest Community Hydro Project · feasibility study. This indicated that both burns offer viable locations for small-scale hydro projects. The Trust is now lodging a National

Lael Forest Community Hydro Project

Business Plan

September 2013

2

CONTENTS

Chapter Pages

1. Executive Summary 3

2. Introduction 4-8

o 2.1 Project objectives

o 2.2 Project overview

o 2.3 Project development

o 2.4 Geography of the site

o 2.5 The Ullapool community

o 2.5 Project fit with regional and national policies

3. Organisations and Management 9-10

o 3.1 Ullapool Community Trust Ltd

o 3.2 Lochbroom Community Renewables Ltd

o 3.3 Supporters

o 3.4 Working partners

o 3.5 Stakeholders

4. Communication strategy 11-12

o 4.1 Public ballot

5. Managing the land 13

6. Financial assessment 14-16

7. Procurement strategy 17

8. Project resources 18

9. Risk assessment register 19

10. Summary of benefits 20-21

o 10.1 Long-term benefits

o 10.2 Short-term benefits

o 10.3 Educational benefits

o 10.4 Sharing knowledge

o 10.5 Employment benefits

o 10.6 Green energy

11. Project timeline 22

Appendix 1 – Maps

Appendix 2 – Ullapool Community Growth Plan and community survey report

Appendix 3 – babyHydro preliminary feasibility report

Appendix 4 – Ballot result and supporting ballot information

Appendix 5 – Letters of support

Appendix 6 – Resume of UCT directors

Appendix 7 – Memorandum and Articles and evidence of incorporation/recognition

3

EXECUTIVE SUMMARY

Over the last 12 months Ullapool Community Trust (UCT) has been progressing the Lael

Forest Community Hydro project. If developed the project would establish a significant

revenue stream which will support community initiatives and projects in the Ullapool area.

The Trust has been seeking to progress renewable energy projects since the development of

community-owned wind or hydro schemes was strongly supported by local residents during

the consultation for a community growth plan for the Ullapool area.

The Lael Forest Community Hydro project was established when the Forestry Commission

Scotland (FCS) invited communities to express interest in developing hydro projects on local

burns. As a result the Trust was able to secure exclusivity on the Allt a’ Mhuilinn and Allt a’

Bhriaghe for 12 months and appoint consultants babyHydro to carry out an outline

feasibility study. This indicated that both burns offer viable locations for small-scale hydro

projects.

The Trust is now lodging a National Forest Land Scheme application with the FCS which will

enable the community to secure the land and to reappoint babyHydro to carry out in depth

feasibility study and work up a detailed design. These costs will be primarily paid for by a

Community and Renewable Energy Scheme (CARES) loan from the Energy Savings Trust.

If the detailed feasibility demonstrates that the project is viable and appropriate it will be

developed by Lochbroom Community Renewables Ltd who will be set up as a wholly-owned

trading arm of UCT. babyHydro will manage the project with contractors employed to

supply, install and commission the project.

The schemes will be small run-of-river installations which do not require a dam. On each

burn a small weir will divert water into an intake. From there the water is transported down

a buried penstock (pipeline) into a turbine located within a power house. The water will

then be returned to the burn.

The power output for each burn is currently estimated between 100-464kW for the Allt a’

Bhraighe scheme and 100-319kW for the Allt a’ Mhuillin scheme. The capital costs for each

scheme is estimated at between £500 000 and £1 million while 20 year simple profits will be

between £1 million and £3.8 million per burn. All income generated would be retained

within the area and used to implement the Ullapool Community Growth Plan and support

community groups, initiatives and projects.

4

1. INTRODUCTION

2.1 Project Objectives

The key objectives of the Lael Forest Community Hydro project are –

1. to establish a long-term and sustainable income stream which will be used to

support community groups, initiatives and projects throughout the Ullapool

Community Trust (UCT) remit area (see appendix 1 for map 5 for area).

2. to increase the production of renewable, low carbon electricity in the UCT area.

Achieving the objectives will enable the community to ‘match-fund’ or even self-finance

local initiatives and projects that benefit residents. Moreover attaining the objectives will

also reduce the area’s carbon emissions and contribute toward the Scottish Government

targets of –

producing 100% of Scotland’s gross annual electricity from renewables by 2020.

establishing 500 MW of community/locally owned renewable energy production.

2.2 Project Overview

The Lael Forest Community Hydro project will result in two separate, small run-of-river

schemes being developed on the Allt a’ Bhraighe and Allt a’ Mhuilinn. The land would be

leased from the Forestry Commission Scotland (FCS). Water will be diverted from the burn

into an intake via a weir and then flow down a buried pipeline into a powerhouse where it

will power a turbine. The electricity generated will be exported to the grid via new power

lines connected to the national grid. Water will then be returned to the burns via a tailrace.

The income generated will be used to support local community groups and projects with a

specific focus on implementing the Ullapool Community Growth Plan (UCGP) which is

included as appendix 2. A committee will be set up to examine and approve applications for

funding from local groups and projects.

2.3 Project Development

UCT recently developed the UCGP (see appendix 2) which sets out local issues and

opportunities that were identified by residents. It also includes the projects and results that

the community want delivered over the next five to ten years. Developing the plan required

extensive community consultation, including a survey (see appendix 2 for survey report),

open day and various focus group meetings that identified, amongst other things, strong

local interest in renewable energy, with specific support for the development of community-

owned hydro or wind projects. As a result investigating local options for community

renewable energy projects and taking forward opportunities was included as a key priority

5

in the plan. Since the adoption of the plan investigations have been led by a renewable

energy focus group (REFG) that was set up during the consultation process.

Initially the REFG contacted private landowners to discuss potential partnership projects

with limited success. However in spring 2012 the group became aware that the FCS was

inviting local community groups to express interest in developing hydro projects on burns

and rivers in state-owned woodland. As a result the REFG began examining FCS land in the

local area to determine possible opportunities for hydro projects and found the Allt a’

Bhraighe and Allt a’ Mhuilinn in Lael Forest to be the most appropriate locations. The group

then expressed interest in the two burns on behalf of UCT to the FCS which was accepted on

the 23rd of July 2012.

Under the FCS schemes communities are given 12 months to investigate the watercourse(s)

and lodge a National Forest Land Scheme (NFLS) application. This gave UCT until the 23rd of

July to formalise a NFLS bid. However a three month extension, until the 23rd of October,

was agreed by UCT and the FCS which has now been met. If the NFLS application is

successful UCT will be given an 18 month option on the burns. At the end of the 18 months

UCT will need to decide whether to lease the burns.

Once the initial expression of interest was approved by the FCS, UCT contacted Community

Energy Scotland (CES) to discuss options for carrying out hydro power feasibility studies. CES

suggested a two stage process with a preliminary study carried out to de-risk the project

prior to a NFLS application with a more detailed feasibility study carried out during the 18

month option if the burns appear viable and the NFLS application is successful.

UCT agreed to this approach and following a tendering process selected babyHydro as the

preferred consultant to carry out the preliminary feasibility work. The Trust then secured a

Community and Renewable Energy Scheme (CARES) Grant to finance the first phase of

investigation work. babyHydro, who have an extensive track record of carrying out detailed

feasibility work on small-scale hydro schemes, visited the sites in November 2012 and

provided a preliminary feasibility report on both burns to UCT in December 2012. The report

(which is included as appendix 3) found that both sites offered potentially viable locations

for small-scale hydro projects. These findings coupled to the results of a community ballot

(see section 4) which showed strong support for developing the hydro schemes has

encouraged UCT to lodge a NFLS application alongside this business plan with the FCS.

2.4 Geography of the site

The proposed sites for the Lael Forest Community Hydro project are two burns within Lael

Forest. The burns are around 14 kilometres South of Ullapool on the A835. Both are located

between Braemore Hall and the Woodturning Centre (please see map 1 and 2 of appendix 1

6

for location). The burns run parallel to one another with the Allt a’ Mhuilinn around 750

metres north of the Allt a’ Bhraighe.

As shown by map 2 in appendix 1 the source of the two burns is upland moorland that is

located to the west of Beinn Dearg. This land, which borders the FCS plantation, is

designated as a Site of Special Scientific Interest (SSSI) and Special Area of Conservation

(SAC). The burns then flow into Lael Forest and down through the steep woodland before

crossing beneath the A835 and into the River Broom. Both burns can be accessed via

forestry access tracks which lead off from the A835.

Due to the topography of the Allt a’ Bhraighe, which is contained for long sections in a steep

gorge, an intake is difficult within FCS land. Therefore page 6 of the attached feasibility

study (appendix 3) identifies that the ideal intake location is within the neighbouring estates

land. This will require an agreement with the landowner and to address any implications of

the SSSI and SAC designations. The topography of the area also suggests that the Allt a’

Mhuilinn intake should ideally be within the neighbouring estate. However there is a second

option within FCS land. Both options are discussed on pages 11 and 12 of appendix 3. The

OS grid reference locations for the project infrastructure identified by babyHydro are listed

below and also shown in appendix 3 -

Table 1. Grid locations of project infrastructure

Burn Intake Grid Reference Powerhouse Grid Reference

Allt a’ Bhraighe NH 2009 8192 NH 1940 8138

Allt a’ Mhuilinn Option A - NH 1953 8221 Option B - NH 1930 8211

NH 1916 8204

The Allt a’ Bhraighe burn at the point of intake has a catchment area of just over 2.8 km2

and average slope of around 0.33 with some steeper sections. The scheme on the Allt a’

Bhraighe will have a penstock length of around 716 metres with a gross head of 228 metres.

The Allt a’ Mhuilinn has a catchment area of 2.7 km2 at intake A while the slope is around

0.55 also with some steeper sections. The penstock on the Allt a’ Mhuilinn will be 355

metres with a head of 181 metres. Previously the Allt a’ Mhuilinn was used to generate

energy through a small-scale hydro scheme which directly powered a nearby sawmill. Some

of the scheme’s infrastructure is still visible including the intake, penstock and turbine.

Lael Forest is an area with a long history of tree cover. Conifers dominate the woodland

however around half of it has been felled since 1985 with third rotation crops now being

planted in some areas. The land between the two burns was clearfelled around 2009 and

has not been replanted since. The Forest District has plans for it to be replanted in the near

future.

7

2.5 The Ullapool Community

Ullapool is a small fishing village on the north-west coast of Scotland. It is around 60 miles

from Inverness the largest city in the Highlands. The village, which is on the banks of Loch

Broom, was designed by Thomas Telford and established in 1788 by the British Fisheries

Society as a herring port. Since then it has grown and changed and whilst the harbour is still

active, tourism has come to play a vital role in the local economy. This is demonstrated by

the large number of hotels, guesthouses, cafes and tourist shops within the village. As a

result a significant proportion of local employment opportunities are temporary, seasonal

positions with limited long term job prospects particularly for young and unemployed

residents. At the time of the 2001 census the village had a population of around 1300

people.

The wider area within UCT’s remit includes a number of outlying communities to the north,

south and west of the Ullapool. These communities include Elphin, Strathkanaird, Rhue,

Braemore, Lochside, Dundonnell, Durnamuck and Scoraig amongst others. While some

shops, cafes and hotels and other amenities are located within these communities they are

generally more fragile than Ullapool with fewer opportunities or services available. In 2001

the outlying communities had a combined population of almost 850 which brings the total

local population to around 2200. Ullapool and the outlying communities are within ward 6

of the Highland Council with the exception of Elphin which is in ward 1.

Alongside issues regarding job opportunities and service delivery the area also experiences a

range of other problems including high fuel costs, limited public transport and poor

provision of social housing. The area also suffers from issues related to remoteness with the

nearest population centres of Dingwall and Inverness both over 45 miles away via the A835.

This road also links Ullapool with smaller northern communities including Lochinver. Several

of the outlying communities are also located on the A835 with some also on the A832

(which links Braemore Junction with Gairloch) or local single track roads. Ullapool is also

linked to Stornoway via a daily Caledonian MacBrayne ferry service.

2.6 Project fit with regional and national policies

The project would complement the Scottish Government’s target for 50% renewable energy

by 2020. It is also supported by the Highland Council’s 2006 Highland Renewable Energy

Strategy and Planning Guidelines which states – ‘The Council supports the concept of local

involvement and ownership of renewable energy projects. Participation of local

communities and individuals in renewable energy developments helps to ensure that they

are appropriate, that they are supported locally and that their benefits remain to a greater

extent within the local community’.

8

The project also fits within the Ullapool Community Growth Plan which supports the

development of community renewable energy projects where possible and appropriate.

9

3. ORGANISATION AND MANAGEMENT

3.1 Ullapool Community Trust Ltd

Ullapool Community Trust (UCT) is a company limited by guarantee with charitable status

which seeks to develop projects that benefit the community and local residents. The Trust

has a board of 8 volunteer directors (see appendix 6 for résumé) and employs 4 members of

staff (3 full-time equivalent positions) who are taking forward a range of projects.

The Trust began developing the Lael Forest Community Hydro project as renewable energy

is a key focus of the recently adopted Ullapool Community Growth Plan (UCGP). Thus far

UCT has led the project development. However if the National Forest Land Scheme (NFLS)

application is successful UCT will set up a wholly-owned trading arm, Lochbroom

Community Renewables (LCR) Ltd, to progress the project further. All income generated will

be gifted by LCR to UCT to be used to support community groups, initiatives and projects

and to implement the UCGP.

The Trust has a strong track record of developing capital projects and already has an active

trading arm, Lochbroom Woodfuels Ltd. UCT will offer support to LCR in developing the Lael

Forest Community Hydro project which will be primarily through investing Trust

staff/director time and resources into the project.

3.2 Lochbroom Community Renewables Ltd

Further investigation work will be carried out by Lochbroom Communty Renewables (LCR)

Ltd which will be set up if the NFLS application is successful. LCR will apply for a Community

and Renewable Energy Scheme (CARES) loan for pre-development work which will include

detailed feasibility and design work alongside a salary for a project officer. LCR will also be

the organisation that secures finance for the hydro project and develops the schemes.

LCR will have a volunteer board made up by local residents who meet monthly. Members of

the existing renewable energy focus group will form a key element of the LCR board,

supplemented by at least one UCT director and members of the community who have skills

relevant to running a business and/or developing capital projects. Several local residents

have already indicated an interest in being part of LCR if the NFLS application is successful.

The board will manage the project officer employed to assist LCR to progress the project.

LCR will be a trading arm of UCT. It will be established as a company limited by shares with

UCT the sole shareholder. All profits will be gifted, free of corporation tax, to the Trust.

10

3.3 Supporters

There are large number of active community organisations in the UCT area and a significant

proportion of the groups support the hydro project.

Local MSP Rob Gibson has visited the two burns and offered his support to the project while

Councillors Ian Cockburn and Richard Greene have attended meetings and also given the

project their backing. Letters of support from community groups and local elected

representatives are included in appendix 5.

Support has also been offered by Community Energy Scotland (CES) whose staff have visited

the site and attended public meetings. Moreover CES also funded the preliminary feasibility

study through the CARES Grant fund.

3.4 Working partners

babyHydro has worked on the Lael Forest Community Hydro project as consultants. They

have completed the preliminary feasibility study and will be reappointed to conduct the

detailed feasibility work.

An agreement will need to be reached with Inverbroom Estate for wayleaves to enable a

grid connection. Contact has been made with the landowner who is supportive of the

project and willing to discuss terms of an agreement.

To develop a project on the Allt a’ Bhraighe and/or at intake A on the Allt a’ Mhuilinn

scheme will require an agreement with Braemore Estate. Contact has been made at present

but no agreement has been reached.

3.5 Stakeholders

UCT has been working with the Forestry Commission Scotland (FCS) regarding a NFLS

application. This has included meeting with the NFLS programme manager and the Forest

District Manager. If the NFLS application is successful UCT and LCR will continue to work

closely with the FCS to ensure that the Lael Forest Community Hydro project fits within the

FCS land management commitments.

Scottish Natural Heritage, the Scottish Environment Protection Agency and the Highland

Council’s Planning Department will all be involved in any planning application and

associated consents. UCT has already held informal discussions with the three bodies who

have indicated that there is scope for developing a small-scale hydro schemes in Lael Forest

should certain requirements be met.

11

4. COMMUNICATION STRATEGY

Progress of the Lael Forest Community Hydro project has been reported by Ullapool

Community Trust (UCT) through a wide range of channels including –

Emails to UCT members and community groups

Letters to residents living within 1 mile of the sites

UCT Twitter and Facebook pages

UCT website page – www.ullapoolcommunity.org (which includes project info pack,

preliminary feasibility study report, etc)

UCT March newsletter – http://ullapoolcommunity.org/wp-

content/uploads/2012/03/UCT-March-2013-Newsletter.pdf

The Ullapool News (circulation 1200)

Regional Newspapers

BBC Highland (radio and website)

Two Lochs Radio

In the run up to the community ballot (info on ballot below) a consultation event was held

on the 18th of April 2013 in the Ullapool Village Hall. The event allowed people to learn more

about the project and raise any concerns. Over 70 people attended the meeting which

included presentations from UCT staff and directors and North Harris Trust who are already

generating income from projects, alongside a question and answer session.

4.1 Public Ballot

A National Forest Land Scheme (NFLS) application requires a public ballot for a project which

will generate over £50 000 a year (chapter 6 of the business plan demonstrates that the Lael

Forest Community Hydro project would breach this threshold). As a result UCT contacted

the Highland Council’s Elections Office to administer a ballot of all voters in the UCT remit

area. UCT selected the question ‘Do you support the proposal from Ullapool Community

Trust for hydro schemes at Lael Forest’ and compiled a covering letter and information

sheet which was sent to everyone on the electoral role in the UCT remit area by the

Highland Council with a voting paper.

UCT chose to ballot all voters living within the Trust’s remit area as they will all stand to

benefit from the project. The Trust remit area is included as map 1 of appendix 1 while the

Trust’s Memorandum and Articles (appendix 7) lists all the postcodes within the remit area.

A copy of all the paperwork sent out as part of the ballot is included in appendix 4.

12

The ballot was publicised through the consultation event, posters, flyers, the Ullapool News,

regional newspapers, BBC Highland, Two Lochs Radio and the UCT website and social media

pages.

The result of the ballot is listed below and shows very strong local support for the project.

Please see appendix 4 for the official ballot report from Highland Council –

Ballot papers issued: 1738

Votes in favour: 975

Votes against: 35

Spoiled papers: 6

Total returns: 1010

Total yes as % of those who voted: 96.53%

Total returns as % of electorate: 58.11%

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5. MANAGING THE LAND

Ullapool Community Trust’s (UCT) trading arm Lochbroom Community Renewables (LCR)

will lease the land from the Forestry Commission Scotland (FCS) if the project is found to be

viable after detailed feasibility.

At this stage UCT has already held outline discussions with the FCS about how the Lael

Forest Community Hydro project can be developed with minimum disruption to forestry

operations in the area during both construction and operation. This included UCT

representatives meeting with the Forest District Manager, Tim Cockerill, and foresters to

discuss the project in the FCS Dingwall office on the 13th of May 2013. The following points

were agreed:

Key consideration must be given by UCT/LCR to slope stability, drainage and culverts.

This will be examined closely during detailed feasibility.

Installing the penstock and new access routes will not mean that FCS has to rewrite

the forest plan.

Access agreement will be established that allows UCT/LCR unrestricted access

(during construction access would be closed to FCS). This will be written into the

lease and is a standard clause.

Native woodland will be planted between the penstock and the burn.

There will need to be crossing points on the penstock for commercial forestry

vehicles. This will be examined closely during detailed feasibility.

The hydro schemes will not impact on timber operations or supply.

This highlights that if certain steps are taken the project and forestry operations can operate

in harmony. Detailed feasibility will allow specific solutions to be identified while it will also

allow close examination of environmental impacts. This will ensure that any potential issues

and solutions to be identified and enable UCT/LCR manage the land in a sensitive and

sustainable manner.

14

6. FINANCIAL ASSESSMENT

The preliminary assessment completed by babyHydro (appendix 3) shows that there are a

range of output sizes possible on both the Allt a’ Bhriaghe and Allt a’ Mhuilinn. The options

are also shown below in Table 2.

The specific scheme(s) selected will depend on a number of factors including the findings of

the detailed feasibility study and capital finance available. However, having different options

gives Ullapool Community Trust (UCT) and Lochbroom Community Renewables (LCR)

flexibility to develop schemes that are most suitable and viable at the time.

Income will be made up from electricity sales and Feed-Tariff (FIT) payments and clearly the

selected option(s) will control what profit is produced. However table 2 shows that even the

smallest output options projects a 20 year simple profit of over £1 million pounds per burn.

Simple profit, however, does not take into account loan refinancing while rental is also not

included in the annual cost although the % of annual gross revenue that is likely to be

charged by the Forestry Commission Scotland for each option is listed for information.

Table 2 also demonstrates that some options offer far higher returns over 20 years which

highlights the lucrative financial opportunity this project offers to the Ullapool area.

Table 2. Output options available and financial implications

Allt a’ Bhraighe Scheme

Allt a’ Mhuilinn Scheme

However Table 2 includes the 2013 FIT tariffs and it appears that FIT payments for hydro

projects may well be cut by 20% in January 2014 which would impact on the income

generated by the Lael Forest Community Hydro project. babyHydro have provided UCT with

updated financial figures that take account of the 20% FIT payment reduction. The

Option Rated Power

Annual Energy (MWh)

Capacity Factor

(%)

Capital Cost (£)

Annual Cost (£)

Annual Gross

Revenue (£)

Simple Payback (years)

20 Year Simple

Profit (£)

Capital per kW

(£)

FCS Rent (% of gross

revenue)

1 100 kW 540 62 589 173 8015 134 632 4.7 1 943 161 5902 3

2 230 kW 920 46 759 230 10 201 191 747 4.2 2 871 681 3271 6.5

3 340 kW 1131 37 888 673 11 807 234 352 4.0 3 562 221 2552 7

4 460 kW 1229 30 1 009 308 13 278 254 667 4.2 3 818 484 2174 7

Option Rated Power

Annual Energy (MWh)

Capacity Factor

(%)

Capital Cost (£)

Annual Cost (£)

Annual Gross

Revenue (£)

Simple Payback (years)

20 Year Simple

Profit (£)

Capital per kW

(£)

FCS Rent (% of gross

revenue)

5 100 kW 480 55 517 260 7225 119 193 4.6 1 722 099 5175 3

6 159 kW 635 46 594 404 8238 131 689 4.8 1 874 630 3728 5.5

7 239 kW 777 37 685 562 9403 160 950 4.5 2 345 376 2867 7

8 319 kW 844 30 770 598 10 467 174 903 4.7 2 518 116 2417 7

9 100 kW - Intake B

370 42 553 212 7620 91 957 6.6 1 133 544 5431 3

15

implications of the new tariff are demonstrated in table 3 while a rental payment of 8% of

adjusted gross revenue, which was not included in table 2, has been added to the annual

costs figures.

Table 3. Output options available and financial implications (including 20%

FIT reduction from 2013 figures and 8% of annual gross revenue rent)

Allt a’ Bhraighe Scheme Option Rated Power Capital Cost (£) Annual Cost (£) Annual Gross

Revenue (£) – including 8% ABR

rent

Simple Payback (years)

20 year simple profit (years)

1 100 kW 589 173 17 297 116 021 6 1 385 314

2 230 kW 759 230 23 512 166 382 5.3 2 098 170

3 340 kW 888 673 28 075 203 351 5.1 2 616 840

4 460 kW 1 009 308 30 956 220 979 5.3 2 791 150

Allt a’ Mhuilinn Scheme Option Rated Power Capital Cost (£) Annual Cost (£) Annual Gross

Revenue (£) – including 8% ABR

rent

Simple Payback (years)

20 year simple profit (years)

5 100 kW 517 260 15 442 102 716 5.9 1 229 224

6 160 kW 594 404 17 379 114 269 6.1 1 343 391

7 240 kW 685 562 20 576 139 659 5.8 1 696 099

8 320 kW 770 598 22 608 151 766 6.0 1 812 554

9 100 kW – Intake B

553 212 13 838 79 246 8.3 765 938

While reduced FIT payments and rental costs mean that the gross annual revenues and 20

year simple profits are lower in table 3 than table 2, all options still offer the Ullapool

community an opportunity to generate significant income to support local projects and

initiatives. The financial robustness of the project is further highlighted by table 3 with

simple pay backs only increasing by between 1 to 2 years for all 9 options.

babyHydro have indicated that it will cost UCT/LCR between £28 000 and £37 000 to get

each scheme to the construction stage. This will include carrying out detailed feasibility

(environmental, terrain, viability), gaining consents, completing detailed design work and

managing the tendering process. To pay for these costs LCR will apply for a Community and

Renewable Energy Scheme (CARES) loan. Loans of up to £150 000 are available through

CARES and can cover up to 95% of predevelopment costs (which means managing tenders

will not be eligible, finance will be sought for this as part of the capital loan – see below).

LCR will be required to contribute a minimum of 5% which will be attained through local

funding raising initiatives. A project officer salary, to assist LCR to progress the project, and

grid connection application and deposit costs will also be paid for by the CARES loan.

Interest on CARES loans is charged at 10% per annum however if the project is prevented

from preceding due to an insurmountable reason the loan drawn down to that point can be

16

written off. This protects UCT/LCR and the community in the case of a ‘show-stopper’ being

identified during detailed feasibility work.

As of August the 1st 2013 the Energy Saving Trust (EST) has started administering CARES in

place of Community Energy Scotland. EST has encouraged UCT to make an application in the

event of the NFLS application being successful.

As shown by table 2 the capital costs of the project could be up to £1 million per burn. This

includes construction costs and the grid connection fee, however at this point it is very

difficult to determine how much the district network operator will charge for a grid

connection so a high estimation has been included. Grid connection and its implications will

be considered early within the detailed feasibility study.

The intention is for LCR to develop the project with loan finance from a bank. In addition

UCT/LCR may allow individuals to invest in the project through a community share issue or

crowd funding.

17

7. PROCUREMENT STRATEGY

There are a number of procurement options available to Lochbroom Community

Renewables (LCR) for developing the Lael Forest Community Hydro project including –

Design, build, finance and maintain

Design and management

Self-manage

At present the favoured option is design and management. babyHydro would be

reappointed to complete the design and management, which will include detailed

feasibility. A tender for supply, installation and commissioning will be issued.

LCR will finance the project and retain ultimate control. Community Energy Scotland (CES)

will be enlisted to help during tendering and selection. CES will also help LCR to manage the

contractors and the project.

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8. PROJECT RESOURCES

Ullapool Community Trust (UCT) has a volunteer board of 8 directors (résumés included in

appendix 6), 4 members of staff (3 FTE) and over 140 members. However few of the board

members have skills relevant to developing hydro projects. 2 members of staff are currently

taking forward specific projects which will not allow them to work on the Lael Forest

Community Hydro project. The 2 part-time positions will be committed to the project for as

long as required and possible. Both members of staff have worked extensively on the

project and therefore have a good understanding of the tasks required.

Lochbroom Community Renewables (LCR) will be set up and have at least 6 volunteer board

members who with skills and experience relevant to developing a hydro project. This project

team is still in the process of being constructed but will be in place once a decision is made

on UCT’s National Forest Land Scheme application and will lead the project. As part of a

Community and Renewable Energy Scheme (CARES) loan application funding will be sought

for a project officer. This member of staff will fully focus on the project and work with the

LCR board.

babyHydro will be retained for the design and management phase the project. The key staff

members working on the project are Gordon Black and James Hendry. Both have extensive

experience of working with community groups and progressing small-scale hydro projects

throughout Scotland.

Sarah Jones was Community Energy Scotland’s (CES) Development Officer for North

Highland throughout the initial development of the Lael Forest Community Hydro project.

However due to restructuring at CES Sarah has now taken a new position. A new staff

member should be available to assist with the project should the National Forest Land

Scheme application be successful.

The Energy Saving Trust (EST) is now administering the Community and Renewable Energy

Scheme (CARES) loan in place of CES. In addition to offering funding support, an EST

development officer, Karen Patterson, should also be able to offer support to the Lael Forest

Community Hydro project.

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9. RISK ASSESSMENT REGISTER

Ullapool Community Trust has identified several potential risks to the project. Each is

further examined in the risk register below:

Risk Probability Impact Overall Score

Mitigation Contingency

NFLS application is refused.

1 3 4 Viability of scheme and community support has been identified.

Lobby local politicians and Forestry Commission Scotland.

Detailed feasibility identifies ‘show-stopper’.

2 3 5 Preliminary feasibility already carried out.

CARES loan becomes a grant.

Braemore Estate rejects partnership.

2 2 4 Open discussions if NFLS is approved.

UCT will progress the Allt a’ Mhuilinn scheme fully within FCS boundaries.

Inverbroom Estate rejects wayleave request for grid connection.

1 3 4 Contact already made with estate owner.

Lobby local politicians.

Grid connection request is rejected/price is very high.

2 2 4 Contact district network operator early to scope situation.

Lobby local politicians and/or Community Energy Scotland

Planning permission or consents refused.

2 3 5 Informal discussions already held with all stakeholders.

Appeal.

Feed-in-Tariff payments change.

2 2 4 Schemes remain viable if FITs are reduced by 20%.

Lobby local politicians.

Finance is not secured.

2 2 4 Open discussions with potential financers at an early stage to scope opportunities

Examine other options such as community share issue and/or crowd funding.

Capital costs escalate.

1 2 3 Ensure input from Community Energy Scotland during the detailed feasibility and design work.

Realistic contingency funds built into project costs.

1 = low risk, 3 = high risk

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10. SUMMARY OF BENEFITS

10.1 Long-term Benefits

The Lael Forest Community Hydro project will generate income for the Ullapool community

over a period of at least 40 years and potentially far longer. Income will be used to support

projects and initiatives that meet the needs of the community with criteria selected by an

independent panel that is elected to manage the income generated by the project. It is

impossible to determine what issues will require to be addressed over the coming years and

decades, however using a local, elected panel with rotating members will ensure the

process is fair, transparent and open and that income is used to benefit the local

community.

10.2 Short-term Benefits

Initially income will be used for two key purposes –

1. to support the implementation of the Ullapool Community Growth Plan

2. to support community groups and initiatives in the Ullapool area

The Ullapool Community Growth Plan (UCGP) was developed by Ullapool Community Trust

(UCT) in partnership with local residents and will guarantee that revenue is focussed on

areas that were highlighted as issues by the community during the plan’s consultation

process. The plan will be reviewed every five years ensuring that it is kept up to date over

the coming years and that, therefore, funding is used to tackle appropriate, up-to-date

issues.

Local concerns, issues and opportunities can frequently and quickly change over short

timeframes. Therefore some of the revenue will also be used to support community groups

and initiatives in the Ullapool area. At present there are around 50 community organisations

in the UCT remit area that would be eligible to apply. Supporting groups in this way will

allow funding to quickly address emerging issues as community organisations have their

finger close to the pulse. Community groups will also often be the lead organisation taking

forward projects from the UCGP. Should they apply for an initiative included in the plan they

will be more likely to secure funding.

The exact criteria and application process for distributing funding is still to be determined

however it will be vital that applicants demonstrate a clear need for their activity or

initiative. There is likely to be two funding streams available, one for small grants (up to

around £500) and a second for larger grants (with no cap set). Application to the small grant

fund will have a higher chance of success alongside a quicker response time.

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As indicated in section 10.1 all decisions regarding the distribution of the revenue will be

made by a local, elected panel with rotating members.

10.3 Educational Benefits

The project will involve schools during the detailed feasibility, design and build stage.

Interested pupil groups will be encouraged to play a role in these stages and input wherever

possible. Education boards will be erected at the powerhouses to explain about the

projects, hydro power and how the schemes are benefiting the local community. There will

also be an information board demonstrating how the Allt a’ Mhuilinn previously powered a

hydro scheme for a small sawmill and how hydro power has progressed.

10.4 Sharing Knowledge

The project’s progress and processes will be closely recorded and documented by UCT and

Lochbroom Community Renewables (LCR). This will provide future guidance to other

communities developing similar projects. Directors, staff and volunteers engaged in the

project will also make themselves available wherever possible to visit and attend meetings

in other areas, assisting the progress of community hydro initiatives.

10.5 Employment Benefits

The Lael Forest Community Hydro project may offer employment opportunities to

companies in the Ullapool area who have been involved in major capital or hydro project

previously, should they be successful in the tendering processes.

Once commissioned, the scheme will create a part-time job for a local resident to maintain

the intakes and turbine houses.

10.6 Green Energy

The project will reduce the carbon footprint of the Ullapool area by displacing fossil fuel use

with renewable energy production. As there are a number of scheme outputs possible so

the exact level of displacement is not yet known, however carbon dioxide (CO2) emission

reductions have been estimated by babyHydro at between 235 and 528 tonnes for each

scheme per annum when compared to a traditional coal fired power station.

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11. PROJECT TIMESCALES

Assuming approval of the National Forest Land Scheme application the timescales for the

project timescales are -

Sign options agreement with FCS - November 2013

Secure CARES loan funding for predevelopment costs - December/January 2014

Reappoint babyHydro as consultants - January 2014

Commence detailed feasibility/scoping study - February 2014

Begin discussions with possible financers - March 2014

Apply for consents - June 2014

Complete detailed design work - September 2014

Finalise capital for project - October 2014

Sign Lease with FCS - October 2014

Prepare and issue tenders - October 2014

Commence construction - February 2015

Commissioning - July 2015