The HIE funding is being used to replace and upgrade high voltage transformers and other associated equipment to enable a major upgrade of the renewable energy supply on the Isle of Muck.
All the community assets on the island are owned by Isle of Muck Community Enterprise Limited.
With no national grid connection, the group's trading subsidiary, Isle of Muck Power Ltd, supplies electricity through a mixture of wind turbines and solar panels with battery storage and back-up diesel generator.
The community enterprise is currently leading a £1m upgrade of its renewable energy system that will increase capacity, minimise the run time of the diesel generator, and significantly reduce the carbon footprint of the company and the island.
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Ian Philp, head of strengthening communities with HIE's Skye, Lochaber and Wester Ross team, said: "This is a welcome and ambitious project by the Isle of Muck community that will significantly improve the power supply for businesses and residents on the island, while helping the region's transition to a net zero economy.
"I am very pleased we have been able to provide support to replace and upgrade the high voltage transformers and look forward to continuing to work with the community enterprise as the project progresses."
The project also includes the replacement of aging lead and acid battery storage with new more efficient lithium-ion batteries.
Consultants have already been engaged to assess the existing grid cabling, transformers and infrastructure components, and the scheme has been modelled to indicate how renewable generation can be increased to decarbonise heating on the island.
Colin MacEwen of Isle of Muck Community Enterprise and director of Isle of Muck Power, said: "The development of Muck's power scheme has been nothing short of life changing for the community on the island. Only ten years ago the power went off at 11pm and not back on until 8 in the morning, and it was all from diesel generators.
"We now have 24-hour power and more than 80% is generated from clean renewables. With this support from HIE, we are now in a position to start the same process with the island's other energy needs, and move towards heating homes using renewable electricity generated on the island."
