From the cost estimates received, the amount required to achieve the scheme is likely to be between £1.0 and £1.3 million. This will cover all expenditure required to construct the scheme plus leasing and initial operating costs.

Estimated Annual Income from the scheme

  • Once commissioned the scheme should achieve an annual income of approximately £200,000 per year. This revenue will be made up from the Governments Feed In Tariff plus the sale of the electricity
  • In the first 15 years
    • £90,000 pa will be used to repay the finance, (assuming that we only raise 1/3 needed from the share offer)
    • £80,000 pa used to cover operating and administration costs
    • £30,000 pa “waterfall” fund to be used on community projects.
  • Once the finance is paid,
    • The whole amount less operating, running, lease and administrative costs will be available as the “waterfall” fund.

Methods of financing being investigated are:

  • Loan Financing (70%)
  • Community Share Offer (30%)


The following assumptions were made in preparing this plan:

  • Forestry Commission Scotland (FCS) continues to give assistance and advice relating to the site and their forest operations.
  • Sufficient volunteers from the islands are available to offer expert services
  • Capital costs will be paid within 15 years of the scheme starting to generate. While these charges are being repaid the community will receive a gifted annual income of between £20,000, and £50,000. The remaining surplus will be retained to cover repairs, spares and for a decommissioning fund
  • The scheme should generate 1136MWh based on a 36.5% capacity factor
  • Interest rate for repayments to cover the loan/equity stake 8%pa and to cover share interest will be 4%
  • FCS lease costs £6,000 pa
  • 3% inflation in electricity prices
  • Feed in Tariff rate 12.48p per kilowatt
  • Contingency for planning stage 20%
  • Contingency for construction phase 15%

Expenditure and Income

Capital Costs


Planning, Development, Legal & Design




Contingency @ 20%





Annual Operating Costs




Maintenance and Operating


Decommissioning fund


Spares and repairs





Income (excl inflation) (based on 1136MWh)


From Power Sales (based on PPA of £55/MWh)


From Feed in Tariff based on £124.80/MWh




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