The hydro scheme – to produce electricity for 600 homes – destroyed a colony of protected freshwater pearl mussels and devastated a river.
In the space of a few months, the contractors at English company Shawater Ltd caused the equivalent of "hundreds of years" of pollution and killed hundreds of rare mussels.
The work to the River Lyon was so disastrous that the basic repair bill ran to almost £1 million.
Shawater, which designed the small hydro-scheme around 12 miles from Aberfeldy, Perthshire, has been fined £4000. The directors of two other companies involved in the scheme had their sentences deferred.
Sheriff Michael Fletcher said: "The inadequate protection of the river was not a one-off or an isolated incident, but a series of deficiencies over a lengthy period. This was a project taking place on a river system where it was known very delicate wildlife could be affected."
Shawater had overseen the scheme, but Perth Sheriff Court was told the firm – run by engineer Dr Thomas Shaw – had been making a loss and would be dissolved.
Shawater last week admitted causing damage to pearl mussels in the building of a hydro scheme in Glen Lyon.
Alan Smith, 48, a director of A&C Construction, and Charles Kippen, 52, from Stanley, Perthshire, a director of Chic Kippen & Son, admitted similar charges.