RWE said its Maldie hydroelectric plant has an installed capacity of four megawatts, which can generate enough energy to meet the needs of 3,000 households.
RWE said Thursday hydroelectric power was a key part of its renewable energy portfolio because of its ability to generate electricity around the clock, unlike current solar power technology.
Scottish Energy Minister Fergus Ewing said four renewable energy projects, including the first tidal energy array in the world, received close to $6 million in financial support from Scottish Enterprise, the country's investment agency.
"This latest round of Scottish Enterprise funding underlines the Scottish Government's commitment to Scotland's growing renewables sector," he said in a Wednesday statement.
Scotland says it lays claim to about 25 percent of the wind and tidal energy potential and 10 percent of wave energy potential in all of Europe.
The Scottish government aims to generate the equivalent of 100 percent of its annual electricity consumption through community- and locally-owned renewable energy resources by 2020.