PLANS for Scotland's first "people power" wind turbine in an urban area have been blocked by Scottish Water because of an insurance hitch, undermining ministers' attempts to boost locally-owned renewable energy developments.

The voluntary groups proposing to build a wind turbine at Seafield sewage works in Leith, Edinburgh, are furious that they have been thwarted by the Government-owned company, despite having received backing from the Scottish Government and from the private sector.

They are now demanding ministers step in and order Scottish Water to find a way of enabling it to be built.

"We are bitterly disappointed to have got this far only for the project to be stalled on what looks like a technicality," said Charlotte Encombe, chairwoman of the Greener Leith group.

"We are exploring every available option to resolve this impasse, and will not give up on the project yet. We owe it to the thousands of supporters who voted for us, the hundreds of people who will benefit and our funders to try to find a way to break the deadlock."

Greener Leith, along with the neighbouring group, Portobello Transition Town, proposed building a wind turbine to be owned and run for the benefit of local people three years ago. Experts identified Seafield sewage works as the best site, and funding is in place for a planning application.

The project won funding from British Gas's Energyshare last year and is also supported by the Scottish Government, as it aims to triple the amount of electricity generated by locally-owned renewables by 2020.

But negotiations have broken down because Scottish Water, as landowner, has refused to accept liability in case of an accident.

The Scottish Government said it was investigating the options available to the community, and would respond in due course.