Community group Fair Isle Electricity Company are planning to develop three 60kW wind turbines, a 50kW solar array and battery storage to provide power to the three-mile long island.
The Highlands and Islands Enterprise (HIE) has now awarded £250,000 to help develop the project.
Since the 1980s, the island has lived without power from 11pm to 7am despite having a combination of wind and diesel power.
However, only one of the existing two wind turbines is currently working and has been operating intermittently over the past 18 months. The scheme also has no storage ability or capacity for new customers.
As well as new turbines, a solar array and battery storage, the scheme will extend a high voltage network to the north of the island to enable grid connections to the Scottish Water treatment works, Fair Isle Bird Observatory, the airstrip and the North Haven harbour
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Great Glen Consulting was appointed as the project manager to help take forward and develop the project on Fair Isle, while the technical design and engineering will be carried out by Arcus.
As well as securing over £1m of project funding through the Low Carbon Infrastructure Transition Programme (LCITP), The Fair Isle electricity scheme has secured full match funding from a number of partners including Big Lottery, Shetland Islands Council, National Trust for Scotland, Scottish Water, Fair Isle Electricity Company and Fair Isle Bird Observatory.
Fiona Stirling, development manager at HIE's Shetland area team, said: "This is a key project in the development plan for Fair Isle and we are delighted to support it. Improving the island's local energy system supply is one of the highest priorities identified in the recent community development plan.
"It's a key factor in attracting new people to the island as well as helping businesses to develop. The new energy system will also be cleaner and greener and will reduce reliance on expensive diesel, hence making living costs more sustainable."
Fair Isle Electricity Company director, Robert Mitchell, said: "The directors of the community owned company, as well as the whole community itself, are delighted with the support that the small rural community received from all the funding bodies involved. This ambitious project is the first step in ensuring that the community of Fair Isle continues to thrive."
(LM/MH)
