Albion Ventures has made its first hydro investment by backing Welsh-based developer Dragon Hydro.

Hydro energy engineering firm Dragon Hydro has secured £1.3 million of investment from VCT investor Albion Ventures.

The deal is the seventh case of a renewable energy investment by Albion, and Dragon Hydro now joins Infinite Renewables and Engensa in the environmental section of its portfolio.

The funding will be used to develop a single 300kW hydropower scheme on the Afon Cadair River in the county of Gwynedd in Wales.

According to a statement, the Welsh site will benefit from the Feed-in-Tariff government regime and will begin to generate electricity in the third quarter of 2013 with a goal of providing energy to 300 households.

Michael Kaplan, partner at Albion Ventures, says that the investment firm is looking to diversify its holdings across a range of renewable energy technologies.

He adds, ‘[Dragon Hydro] demonstrates a very high standard of engineering excellence and commitment, having spent a considerable effort on planning and obtaining all required consents.

‘Hydro power is the oldest renewable technology and we are very pleased that the government continues to support small-scale hydro through Feed-in-Tariffs.’

Albion Ventures, formerly Close Brothers Group before a 2009 management acquisition, currently has £290 million under management and typically invests between £1 million and £10 million.