Up to 120 homes could be powered by a mini hydro-electric scheme that's been proposed by locals for Warburton, in the upper reaches of the Yarra Valley.
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The hydro project, which would involve using water from the fast-flowing Ythan Creek as it flows through the local golf course, would produce year-round power to be fed into the electricity grid.
The proposed scheme would also restore some of the picturesque town's early 20th century heritage, by reviving hydro power at the site of an old hydro scheme that operated at the property from 1919 onwards.
The historic hydro plant powered the old Parbury Timber Mill during the daytime, while at night it powered local street lights and part of the town for years, before Warburton was connected to the electricity grid.
The modern hydro project, expected to cost close to $1 million, is the brainchild of Warburton residents Luke Whiteside and Nick Killey.
Mr Whiteside got the inspiration to revive hydro while playing golf on the steep and picturesque course a few years ago.
"This really does replace coal; this is baseload power, it runs 24 hours a day," he said.
"It's not dependent upon wind, it's not dependent upon sunlight. It is really a coal replacement and that for us I think has always been a real key.
"This is a remarkable creek that has an incredibly consistent flow. The creek has never stopped flowing in any recorded history."
Under the "mini hydro scheme" some water would be taken out of the creek at the top of the golf course.
It would then flow downhill for about 800 metres in an underground pipe below the fairways, to a "powerhouse". The powerhouse, near the 2nd tee, would house a turbine and a generator.
As it travelled down the steep slope, the water would descend a vertical drop of about 69 metres.
"Every drop of water that comes out of the creek goes back into the creek after generating that power," Mr Whiteside said.
Study of daily stream-flows in the creek indicated there was more than enough water to support environmental flows in tandem with the hydro scheme, he said.
The project's backers recently applied to the Yarra Ranges council for a planning permit, and have also applied for $450,000 in funding from the state government's New Energy Jobs Fund.
If the project gets the green light the remaining funds are expected to come from Warburton's Bendigo Community Bank.
The Warburton hydro proposal comes at a time when energy security is a major political issue, given the recent closure of the coal-fired Hazelwood power station in the Latrobe Valley.
Peter Kimberley, chairman of the local Bendigo Community Bank and a member of the group behind the project, said the project was expected to cost about $1 million.
Melbourne Water had indicated "in-principle approval" for giving the project a non-consumptive water licence, he said.
"As we stepped into this renewable energy space, we've found that hydro is exciting. Most people are doing solar, some people are doing wind, but there aren't too many people doing hydro," he said.
"This is no small enterprise, it is significant. And it has the potential to be replicated by others," he said.
Ken Barratt, secretary of the Warburton Golf and Sporting Club, said the club was pleased to be involved with the project. "We're excited and we certainly do hope it goes ahead," he said.
Yarra Ranges councillor Jim Child said the group behind the hydro proposal had "shown great initiative in bringing this project to Council, which has the potential to create a number of environmental, financial and employment benefits to the local economy of Warburton. An application for the project is currently being assessed by our planning department".
