The project will draw water from the Allt Chaorach
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A new hydro station to power more than 1,700 homes is to be built near Crianlarich, Perthshire.
The station, which will be operated by Scottish and Southern Energy, will have a capacity of 2.5 Megawatts and will be powered by the Allt Coire Chaorach.
A licence was agreed by the Scottish Environment Protection Agency (Sepa).
The decision follows discussions with Scottish Natural Heritage, the Fisheries Committee and the Tay District Salmon Fishery Board.
Since April 2006, any abstraction from the water environment must be sanctioned by Sepa.
Renewable energy
The licence has been issued on the condition that mitigation measures be incorporated into the scheme to ensure the protection of the ecology of the Allt Chaorach.
The Chaorach is a tributary of the River Dochart, which is part of the Tay Special Area of Conservation (SAC).
Sepa said an assessment was carried out to ensure the project did not have an adverse impact on the river's salmon populations.
Colin Bayes, director of environmental protection and improvement said: "The Scottish Government has set a target to meet 50% of electricity demand from renewables by 2020, and an interim target of 31%.
"This scheme, along with the other 25 that Sepa has licensed since April 2006, has created a network capable of providing clean, renewable energy to around 91,000 homes in Scotland."
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