Plans for a multi-million-pound research and innovation campus in Stromness (Orkney) are set to go ahead after the two groups behind the venture signed a funding agreement.

The 3.75-acre campus will support the growth of existing research and innovation activity, plus the expansion of companies in Orkney’s marine renewable-energy and low-carbon sectors.

Highlands and Islands Enterprise (HIE) and Orkney Islands Council have entered into a partnership agreement and announced the details of their support on 9 January.

HIE will provide up to £5.15 million for the project; this includes £1.48 million from the European Regional Development Fund. Orkney Islands Council will provide £1.5 million.

The council will also transfer the ownership of the Old Academy research group and the former Stromness primary school to the new partnership; two adjoining buildings will be refurbished and extended to create the campus.

The aim is to attract academic institutions and businesses with “an interest in carrying out a wide range of research projects in an island setting. This could include research linked to Orkney’s energy resources, transport needs, culture and economy”.

Graeme Harrison, HIE area manager in Orkney, said: “This is a huge investment in Orkney’s future business and academic infra-structure, the impact of which will be felt across Orkney.

“It will support the growth of existing businesses and the creation of new enterprises. Crucially, it will provide more opportunities to attract and retain young people looking to live, work and study in the islands.

“We are delighted to offer support and look forward to a long-term partnership with Orkney Islands Council in bringing this important development to fruition.”

The next stage of the project is a planning application. It is intended that site work to create the Orkney Research and Innovation Campus will begin before the end of 2017.