The project is in Udny, Aberdeenshire and has been five years in development.
Whereas many so-called community wind farms in the country are actually developed commercially and the developers give a share of the profits to the local community, there are very few examples of real community-led schemes of the sort pioneered in Wales by Bro Ddyfi Renewables and others in WAles detailed in this recent Daily Telegraph article.
A Community Trust Company has been formed to disburse the profits from the 800kW Udny scheme - an impressive 4 million over 20 years - which could go to fund projects such as a new community hall, a youth hut, a cinema or the expansion of a local paths network.
"The project serves two villages," Matt Kaye, its Development Officer, explains. "It's been installed in the last month and will soon be producing enough electricity to power 500 households."
The development of the project illustrates how hard it has been for pioneers of community energy so far to get projects off the ground although it is becoming much easier.
"The idea was introduced to the community council, the equivalent of a parish council in England, five years ago by one individual," Matt continues. "A group of five people then applied for a bridging loan of 50,000 from Social Investment Scotland with which we set up a grid connection which then enabled us to proceed with planning and negotiations, and apply for further money.
"We got half a million pounds in grant funds from organisations such as Community Energy Scotland (CES) and the Big Lottery and Aberdeenshire Council, which helped us to do a feasibility study.
"We have set up two limited companies: one, the Udny Wind Turbine Company is designed to operate the wind turbine, the other disburses the profits."
They then hit a snag, which was that they had to pay back the whole of the 137,000 grant to CES when it was found that if they wanted to be eligible for feed in tariffs, under European State Aid rules they couldn't also benefit from the grant.
Eric Dodd, of Community Energy Scotland, said this would ruin most companies but because they had already spent the money and it had done its work, they were then able to get a favourable 100% bank loan on the basis of the guaranteed income from the feed in tariffs and with the help of CES.
Dodd says, "The CES is currently supporting over 150 community energy projects in Scotland. Most of these are wind projects but about 15% are hydropower."
He attributes the recent increase in interest in community energy to the fact that many communities have now seen them become a success elsewhere and start generating significant funding for local projects. They want to do the same themselves to help them become more sustainable.
Dodd says Community Energy Scotland advises on funding and grid connection issues as well as obtaining planning permission.
In the Western Isles, for example, 900 kW of wind power is being installed without the need for agreed interconnector to the mainland by identifying how the local distribution system can adapt.
Dodd advises that "communities should start with an idea of where they're going, but things can change along the way."
BRITISH GAS SUPPORT FOR COMMUNITY ENERGY
In an attempt to make community energy projects easier to get off the ground, this week British Gas has launched a special tariff designed to help fund such projects and a website on which they can find support.
Geard Lane, managing director of British Gas New Markets, says its EnergyShare scheme will guarantee paying 10 into a fund for every year that the customer stays on the tariff. It is being run in partnership with Hugh Fearnley-Whittingstall's River Cottage.
Individuals and communities register their projects on a website and consumers who are on the tariff will vote for projects they want to support.
British Gas has pump-primed the fund with 500,000. It has a target of reaching 15 million, which means signing up 290,000 customers.
Preapproved community projects will be able to bid for up to 100,000 each, and it could eventually fund about 150 projects.
British Gas claims that between 300 and 400 groups have already registered projects on the site although they won't all be seeking EnergyShare funding, as it is also intended to help share best practice.
"We're seeing a genuine groundswell of interest around the country from communities wanting to do their bit to tackle climate change - and their own fuel bills - by generating their own clean, green energy and reducing the amount of energy they use," Lane said.
GoodEnergy already offers customers 100 per cent green energy tariffs and supports community renewable heatA and electricity projects, welcomed the initiative. Its CEO, Juliet Davenport, described decentralised energy as "the key to unlocking the potential for renewables" in the UK.
