The project is also expected to generate around £30,000 per year for community initiatives.
The renewable energy project is being developed by Aberdeen Community Energy (ACE), a community benefit society set up by members of the Donside Community Association (DCA).
The hydro scheme will draw water from the River Don to create clean, renewable electricity that will be sold to the national grid.
Surplus profits from the initiative will be channelled into a community fund that will be used
to achieve social and environmental benefits for local, deprived communities.
Sinclair Laing, Founding Director at ACE said: “We at ACE together with our partners at the DCA have been working towards launching the scheme for the past three years and we’re finally in a position where we can share the project with the world, and open it up to investment.
“The Donside Hydro will help Scotland on its journey towards 100% renewable electricity by 2020, and it will also create a sustainable community that truly works for its inhabitants and riverside setting.”
With construction planned for late May 2016, ACE will be launching a Community Share Offer within the next few weeks.