1. Leader+ Observatory Seminar ‘The Legacy of Leader+ at local level: Building the future of rural areas’ 24-26 April 2007 Cap Corse, Nebbiù è Custera, Corse, FRANCE Mini-plenary C - Case Study: LEADER+ FINANCIAL SUSTAINABILITY, The Lessons Learned Alec Miller, Northern Isles LEADER+ Partnership, UK European Commission

2. LEADER+ in the Northern Isles  Northern Isles comprise the Orkney & Shetland Island Groups, the most Northerly part of Scotland. The islands are nearer to Oslo, the Capital of Norway than we are to Edinburgh, the capital of Scotland!  The area is peripheral with a total population of only 45,000 spread over about 30 small islands  The LEADER+ theme is: New Technologies & Know How  Target groups are: Young People, Women, Micro Businesses (including Social Enterprises)  This presentation will provide the background to two of the projects funded by our LAG & will conclude by identifying the key factors that have resulted in these projects achieving a route to long term financial sustainability

3. Background to Case Study (1) The Assessment Process  In 2003 LEADER+ part funded the development of a Community Portal in the Orkney Islands with the aim of encouraging voluntary organisations to make effective use of the web for promotion, information and training.  The initial proposal identified that the project would require to establish commercial streams of income if it was going to survive after the end of 3 years of support from LEADER+ and other agencies.  Using their knowledge of the sector, the LAG members considered that there was strong potential for the project to meet its targets and the initial funding was agreed on the basis that a detailed business plan, demonstrating long term sustainability, would be developed in year 2 based on the practical outcomes achieved in the first 18 months of operation.  In year 2 the business plan was prepared as agreed & based on their trading successes & failures, the Community Portal management committee identified future sources of income that would enable the project to continue after the end of LEADER+ funding  The LAG assessed the Business Plan as having good potential and encouraged the group to proceed with their future development plans

4. Background to Case Study (2) The Assessment Process  Based on the remote Shetland Island of Unst, the innovative PURE Project, a community enterprise, has used the skills of young local engineering graduates to develop the technology to use wind energy to create hydrogen fuel cells that can be used to fuel electric vehicles or provide domestic energy.  LEADER+ has supported the fledgling project during the development phase with funding towards pilot projects.  A key factor in supporting this project was the fact that the project promoters had a strong track record of delivering successful projects and while this project was outside their previous experience, they had recruited a core of young engineers who were committed to the future of their Island and were willing to demonstrate this commitment by working on the project for minimum wages during the development stages.  The project has now developed to the stage that it has produced a viable business plan, which has been accepted by funders. This plan will result in the creation of a Hydrogen Energy Centre on the Island. This centre is projected to have a turnover of 700,000 euros within 3 years, selling its expertise to local authorities, universities and a range of isolated communities pursuing the principle of “local energy production for local consumption”.

5. DIAGRAM of PURE SYSTEM

6. The PURE Energy System

7. Key factors in creating economic viability for projects -  After 3 years of Leader+ funding both projects have reached a position where they are able to identify services that can provide them with future economic viability  CASE STUDY (1):- Fees paid by voluntary groups for hosting web sites; sale of advertising space on the portal; Fees from public agencies for hosting public consultations and surveys. Future ideas are a web design service & the development of a similar style portal targeted at the small business sector  PROJECT (2):- Sale of patented Hydrogen production units; Provision of training courses; Research and demonstration programmes; New product development

8. Do the projects drive other economic activity ?  PROJECT (1) has resulted in the voluntary groups involved in the project having to take a commercial view of income generation in order to enable the project to survive. It is also interesting that the voluntary sector are looking at using the skills developed within this project to provide a similar service to local small businesses.  PROJECT (2) which was established by a community business has developed skilled high value jobs in a remote community. The separate company that has now been established to operate the expanding business will pay a dividend to the original community business which will use the money to fund further community regeneration projects.

9. How to ensure economic viability ?  During the application/assessment process, our LAG does request projects to consider their exit Strategy on completion of LEADER funding. If the project has potential for economic viability, the LAG will use its wide network of contacts & skills to assist the project to develop its business plan.  In the example of CASE STUDY (1) LEADER funding was agreed for 3 years on an annually reducing basis, thus ensuring that the project had to become commercial in order to survive  In the case of CASE STUDY (2), over several years, the LAG was supportive of pilot projects which helped the project to generate some additional income sources during the research and development period, and LEADER also part funded the specialised final business plan  An important tool in ensuring viability, is for the LAG to maintain close contact with the projects, offering further support, not necessarily financial, if required. Perhaps, the delivery of this additional support is less difficult for a LAG based in an area with a small population and strong networks.  Finally, while we must be realistic and accept that not all LEADER projects will go on to be economically viable, LAGs must have systems in place to ensure that good projects are clearly identified and adequately supported.