British Waterways has inked an agreement with The Small Hydro Company to generate 210,000 MWhours of renewable energy per yearfrom its 2,200-mile waterway network.

The initiative will invest around £120m of private capital over the next three years to develop approximately 25 small-scale hydro-electricity schemes generating enough power for around 40,000 homes.

Backed by Climate Change Capital’s Ventus Fund, the process of gaining consents for the first five hydro schemes alongside river weirs will begin later this month.

The partnership with The Small Hydro Company follows British Waterways’ announcement in October 2008 of an agreement with Partnerships for Renewables to bring forward wind turbines on canal-side land over the next five years.

Income that British Waterways generates from both initiatives will be reinvested towards maintaining the nation’s historic waterways.

Energy and climate change secretary, Ed Miliband, said: 'By committing to build small hydro power stations and wind turbines, British Waterways is playing an important role in generating renewable energy from the UK’s natural resources.'

The Small Hydro Company funds and develops small-scale hydro-electric generation installations making use of the available energy in lowland rivers and tidal estuaries. The objective of the company is to harness this source of renewable energy at suitable locations, providing direct benefit to land owners and sustainable long-term benefits to the wider community.

The company will now start to discuss its proposals with local communities as it seeks the necessary environmental and planning consents for the schemes.