For entrepreneur Lauren Dickerson, water mills are an ancient form of renewable energy that can be brought into the 21st century.

“As early as the year 1050 AD, there were an estimated 6,000 water mills in the UK. These water mills remained fundamentally important to the UK economy through [to] the end of the 19th century when they were overtaken by coal power as the dominant [energy] source,” she says.

Through their company Lunagen, Dickerson and her co-founders have created a system to generate electricity from slow moving water. It is an attempt to capture energy from rivers and streams where other technologies are not viable – which they say will reimagine water mills for the modern era.

The Lunagen system works by placing turbines in the river, which are powered by the flow of water and generate power which is then converted into electricity. The end result can be used to power a home or it can be fed back into the power grid.

A typical system using hydropower – the energy contained in flowing water - involves dams, where the force of released water spins the blades of a turbine. Where Lunagen say there is a gap in the market is in using smaller-scale, slow flowing waters where building dam-like infrastructure is impossible.

“There just is not the force of energy … to power that turbine to generate enough electricity to pay back the whole cost. By not using a dam, by using the whole resource of the flow that is coming through [the river], we are able to dramatically reduce the cost of … the project,” said Will Penfold, another of the four cofounders of the company.

The turbines are still in development but they will be made from fibreglass and will be fitted into modular units which will then be placed into the water. The modules will be placed across the entire span of where the water is flowing, meaning that all of the flowing water goes through the turbines. On top of each turbine is a generator where the energy is converted to electricity. It will then be stored in a battery or fed back into the grid, said Penfold.

“They move as the water goes through and they spin. They generate the electricity and it moves onto a battery or connects to the grid or a house,” he says.

“You could have one or two turbines in the river and it would generate electricity. But not much. If you create this blockage across the river you can get 10 times as much out of each type of turbine because the water cannot flow around it. It has to go through it.”

It is envisaged that the modules which hold the turbines will come in standard sizes, so they can be fitted across the river depending on how many are needed. “Depending on how wide and deep your river is, you can daisy chain these modules together,” says Dickerson.

This system will enable people to generate energy from streams on the grounds of their houses, she says. Using the example of grounds where there is a stream two metres wide and a metre deep, she said it would be impractical to build a dam as the grounds could be flooded - as well as it being costly to install. “These turbines are going to be able to be dropped into the flow with very minimal civil engineering work,” she said.

The turbines will be aimed at the lower end of the energy generation market, from small streams which may generate enough energy to supply a house to small community projects where the flow of water will supply four or five homes. The company’s projections are that the installed system will cost one third of what a small hydroelectric system costs. “We [believe] that a good project would have a 50% capacity factor meaning that it is generating the maximum amount of electricity about 50% of the time,” says Dickerson.

According to Dickerson, the average cost of a conventional system which generates power from flowing water is between £5,000 and £10,000 a kilowatt [kW] of capacity, which includes the cost of the turbines and the infrastructure. A small community energy project would be about 10kW in size while a home with a stream running through it would use about 2kW. The Lunagen will system will cost £3,500 per kW installed, she says.

Following tests in water tanks, Lunagen is building prototypes to put into a live water flow. Although it is their ambition to be selling the units by the middle of the year, the company could face hurdles.

Wildlife could be one problem. Conscious of one recurring criticism of dam projects, Lunagen claims that fish will not be harmed by the turbines. Hydroelectric dams have been criticised for their effect on fish populations, in some instances blocking movement and affecting migratory patterns. Lunagen claims that the system allows fish to swim through the turbines although further tests in a live environment are required. Dickerson said that they may also have to combat perceptions that the turbines represent a flooding risk. A permit from the Environment Agency will be needed to put the system in place, says Penfold, which could take three or four months to secure.

The smaller market – homes and small schemes – which Lunagen is targeting is not being serviced by other products, says Penfold, and will not require as much money to begin as other bigger projects on rivers such as the Thames. The company’s ambitions are to scale up and then start generating energy from larger rivers and irrigation canals, in countries like India, Pakistan, Canada and Australia.

“In the UK the agricultural economy was largely built up on the back of mills that were profligate around the UK. Our research shows over 10,000 mills at one time in the last several hundred years existed in this country so this actually really is a little bit of a part of our heritage. It just takes a little bit of a different form and design but we are going back to our roots,” says Dickerson.

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• This article was amended on 26 January 2016 because an earlier version referred to kilowatt-hour [kWh]. This has been corrected to kilowatt [kW].