The backing is from the Scottish Government's Renewable Energy Investment Fund, delivered by Scottish Enterprise and will enable the community group to obtain a 20% stake in the £3.7m hydro development.
The 1.35MW hydro project is being built by Broadlands Energy (Donich) Ltd on the Donich Water and the land is being leased through a deal with Forest Enterprise Scotland and Scottish Water.
Fergus Ewing, cabinet secretary for Rural Economy and Connectivity said: “This project is a brilliant example of public bodies working together to enable communities to invest and benefit from renewable energy schemes.
“It is exactly the sort of approach I hope to encourage and nurture as Cabinet Secretary for the Rural Economy.
“I am delighted that the Scottish Government is contributing to the funding of the Donich scheme - the first Forest Enterprise Scotland shared ownership project to secure REIF funding. This is great news for the community and the local rural economy.”
Construction work is already underway on the hydro scheme, with the project set to become fully operational around September.
Pete Clarke, Lochgoil Community Development Trust’s energy project leader said: "This is a great opportunity for a small community to invest in a renewable project to develop the financial sustainability of the community and area.
“It also gives us the chance to contribute to an environmentally sustainable future not just for our small corner of Argyll, but for the planet."
Archie Macgregor, Scottish Water’s land and property development manager, said: “Engaging with communities to enable sustainable local development is a key part of our Vision to be trusted to serve Scotland.
“Scottish Water is absolutely delighted to be associated with this innovative and ambitious initiative by Broadlands Energy, Forest Enterprise Scotland and the people of Lochgoilhead.”
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