Directors have pulled the plug on a scheme for a £1.25m hydro-electric plant on the River Thames in Abingdon.

The project – which got planning permission in October 2013 – would have seen two Archimedes screws installed at Abingdon Weir, which would generate up to 100kW of electricity, enough for 120 homes.

Last month investors were warned they could risk losing money if power was not generated by September next year.

Now the project, which was backed by a share issue raising about £870,000, has been abandoned.

Abingdon Hydro secretary Richard Riggs said directors took the decision to stop the scheme after receiving quotes from a number of contractors on Friday.

He said: "About 420 people and organisations raised about £870,000 through the share issue - lots of people will be disappointed by this news.

"It's a seller's market for construction companies - there are other jobs they can do at the moment so they can quote a high price."

Retired engineer Mr Riggs added that after costs had been covered, including paying for designs, consultancy fees and legal fees, "what remained would be returned to investors".

In an official statement the directors said: "The finances and the clock were against us.

"We had deadlines to meet, and the sheer complexity of the regulations was slowing progress.

"Then over the last few months the incentives that were designed to encourage groups like ours have been cut drastically.

"As invitations to tender had already been issued, we waited for the returns before making a final decision.

"But construction is a seller's market at present, so the cost, and the risk of delay, turned out to be too high to justify."

Directors of the scheme had warned they were “up against the clock” as fresh plans for a larger generator house had to be submitted following the initial design stage.

If it was not generating by September 2016, the scheme will lose its feed-in-tariff – a Government initiative which offers cost compensation for renewable energy schemes.

The project has attracted some opposition, and a group called Protect Abingdon Weir was formed to oppose it.

When plans for larger turbine screws were announced, spokesman Mike Gould described the project as "badly thought through".