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The £300,000 project is being carried out at the Kilmalieu Estate in Ardgour by the Abernethy Trust with the support of Highlands and Islands Enterprise, Community Energy Scotland and with European Leader funding.
The project, which could see electricity being generated for the grid by March, will offer a vital income stream which will allow the continued growth of the charity's core outdoor education business.
Director of the Ardgour Centre, Barry Edmondson, said it has been a "steep learning curve" but that exploring opportunities for energy production and renewables is definitely an option for those working the land.
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"The hydro scheme fits well with the activity side of our business. We are committed to the outdoor training but it is increasingly difficult for those running estates to rely on one income stream, like farming or tourism.
"It is a catch 22 situation - we can't publicise the opportunities we have without raising significant capital. The direct benefits from the additional income will allow us to move the business forward much more quickly, as well as improving the environmental sustainability of our facilities," he said.
In the longer term the Trust wants to be able to utilise its own electricity to power the outdoor centre and the homes in the community at lower cost, with any excess electricity being sold on to the grid.
Highlands and Islands Enterprise's Andrew Prendergast is working with the Trust in support of its ambition to increase earned income by 25% over the next three years, as well as creating more jobs.
He commented: "The Abernethy Trust is a significant social enterprise in such a fragile area and its innovative outlook is allowing it to grow and develop. It has a long history in the area and HIE is delighted to have provided support to help it to grasp this opportunity to generate an innovative new income stream."
(GK/KMcA)
