Over 100 homes in Aberdeen will soon be powered by Scotland’s first urban hydro energy scheme as the start date of construction was announced.

Called the Donside Hydro, the renewable energy project is being developed by Aberdeen Community Energy, a community benefit society set up by members of the Donside Community Association (DCA). The project is expected to generate around £30,000 each year for community initiatives and enough electricity to power around 130 homes annually.

The hydro scheme, which will be built on the site of the former Donside Papermill, now Donside Village in the Tillydrone area of the city, 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 are very excited to have reached such an important milestone in the project. 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 per cent renewable electricity by 2020, and it will also create a sustainable community that truly works for its inhabitants and riverside setting. We’re already working closely with members of the Donside and Tillydrone areas to identify priorities for the community fund, with our immediate focus being on improving the riverside for public use.

“We’re also looking at the longer term outcomes, and have set up a social enterprise called Sinergy that will route surplus income into projects that will deliver sustainable benefits for the wider area.”

With construction planned for late May 2016, ACE will be launching a Community Share Offer over the next few weeks, offering an ethical, low-risk investment opportunity to members of the immediate community and indeed country. Investors can expect around a 5 per cent return on their investment.

ACE is also inviting conversations with businesses or individuals who may be interested in supporting the initiative financially in the short term, as either a lender or investor.

The Community Share Offer will be available for investment from April 2016. A launch event will take place at an Aberdeen city centre location in the weeks after the share offer is live.