The 1.7 Megawatt (MW) scheme at Ederline, south of Loch Awe, will create around seven jobs during construction.
Cabinet Secretary for Finance and Sustainable Growth John Swinney said: "This hydro development follows Scotland's long tradition of harnessing green energy from our vast water resources.
"This scheme will feed enough green power into the grid for around 1,000 homes - while a relatively modest scheme, this will provide sustainable economic benefits and is an excellent example of using our natural assets in harmony with the environment to create new, low carbon jobs."
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Mr Swinney determined this application as it falls in the constituency of Energy Minister Jim Mather.
In April 2009, Hydroplan UK, submitted on behalf of Gilkes Energy Ltd an application for consent to construct and operate a hydroelectric generating station at Ederline, south of Loch Awe, with a generating capacity of 1.7 MW. Argyll and Bute Council supported the Application subject to a number of conditions and no public representations were received.
The Scottish Government's target is to meet 80 per cent of electricity demand from renewables by 2020. In 2009, 27 per cent of electricity demand came from renewables. There is around 7 Gigawatts (GW) of renewables capacity installed, under construction or consented around Scotland, which will take Scotland beyond the interim target of 31 per cent of Scotland's electricity demand from renewables by 2011.
The Scottish Government has now determined 46 energy applications, including approval for 38 renewable and three non-renewable projects since May 2007 - more than double the number of determinations than over the whole of the previous four years, in which 19 projects were determined.
The Scottish Government's Energy Consents and Deployment Unit is currently processing 33 applications (24 onshore wind, 4 hydro and 5 thermal).
(GK)
