For all three, generating funding for community projects is an important part of the package. Bywater says, "We were impressed by what Talybont-on-Usk Energy does, in terms of harnessing water power for the community and by the way they use the income."

The scheme went from strength to strength. United Utilities gave an in-principle agreement to its going ahead, subject to approval of the final design. Oldham Council — whose motto is "working for a co-operative borough" — put its weight behind the co-op, and the Saddleworth Community Hydro Industrial and Provident Society share offer raised more than £120,000 ($193,500), just outside the four month deadline it set.

The share scheme offers interest of up to 4% from year two. Surplus funds will be granted to local environmental and education projects.

The society will sell electricity to the national grid, receiving a fixed price per unit. It will also be paid under the government's Renewables Obligation Certificate scheme.

Output from the hydro plant will depend on how efficiently the power of the water is converted. h2ope says efficiencies of more than 90% are possible, but for small systems like Saddleworth Hydro, 60% to 80% is more realistic.

Progress and challenges

Rebecca Wills, independent adviser on environment and sustainability and author of "Co-operative Renewable Energy: A Guide to this Growing Sector," says the team's progress has been impressive but warns there are challenges to come. "Generally, from the experience of other hydro schemes, the planning process won't be plain sailing," she says. "It's a balancing act. You have to be sure it won't be detrimental to the environment. It's a great thing to do and this is a significant achievement, but it's still very difficult.

"If you've got an electricity scheme, you have to find a way to feed that electricity to the grid. At the moment, the infrastructure is designed to go in one direction, to take electricity from big power stations to houses and businesses. This takes power in the other direction. The network operators aren't always clear about how you connect to the grid. It causes them a headache. We still don't have an energy system that supports these schemes."

A network of advice and support organizations is available to help, including Co-operatives UK, the Centre for Sustainable Energy, Key Fund, Energy4All and the Government's community energy portal Community Energy Online.

"Saddleworth Community Hydro will have to negotiate around several different agencies and lots of different types of legislation," says Willis. "These schemes are expensive and one of the reasons is that it's so difficult. It would be easy if you were a big company, but it's difficult for a voluntary-led Industrial and Provident Society. We want the Department of Energy and Climate Change to bash a few heads together. Planners, Environment Agency permitters and network operators need to get round the table and find ways to make it easier for communities to move these schemes forward."

Bywater says the team is prepared for obstacles, including uncertainty about the turbine wiring and whether the existing water pipeline needs lining.

Willis adds that, despite the challenges, co-operatively-owned energy generation in the UK is vibrant. "The first co operatively-owned wind turbines started turning in 1997," she says. "Since then, over 7,000 investors have ploughed over £16 million into community-owned renewable energy. The market for large-scale, commercial renewables is well-established. At the other end of the scale, it's now relatively easy for individuals with a bit of money to invest in energy generation, thanks to the feed-in tariff. But the community level is still problematic.

"Holding the group together and keeping the enthusiasm to stick at it can be challenging, as is going through the maze of requirements from different agencies, and managing a construction project on this scale."

Edwards says the scheme gives the local community control over what is becoming an increasingly rare resource — energy. "When conventional power supplies are under pressure, I believe renewable energy schemes such as ours can help provide an alternative solution," he says. "The powerhouse will be unobtrusive, we won't be using up natural resources. There'll be no environmental damage to either the surrounding countryside or to the ecology of the reservoir.

"People are aware of the negative impacts of climate change and want to help reduce CO2 emissions," he says. "Supporting a community hydro scheme is a great way to demonstrate your commitment to the environment, raise funds for environmental projects and receive interest on your hard-earned savings."

Marie-Claire Kidd is a freelance journalist covering energy and other industries.