Charities in the Western Isles face losing out on a “devastating” £500,000 a year as a result of the undersea cable fault.
Community wind farms which normally generate cash for local projects by selling power to the national grid are unable to export their energy.
Grid stability problems mean Lewis and Harris are relying on a back-up system for the foreseeable future.
The first charity victim emerged this week when Stornoway-based Western Isles Foyer folded after losing its £50,000 grant, with the loss of five jobs.
There are fears that many more could follow, after the failure of the subsea power cable.
Point and Sandwick Community Trust, which operates a wind farm at Beinn Ghrideag, has been unable to produce output since the cable went down on October 16.
The trust has been told it won’t be able to continue earning income for 12 months which means it can no longer hand out funding to the local organisations it supports.
Angus MacNeil, MP for the Western Isles, has called for compensation for the trust and the charities impacted.
Donald MacSween, trust general manager, said: “There are six major recipients which get in the region of £250,000 annually. There is also quite a list of other smaller charities which received various figures amounting to another £250,000.
“This will have an immediate and devastating effect on many charities we have supported over the last five years.
“We are working as hard as we can to resolve all issues as quickly as we can. Even at that, it will be likely that it will be at least 18 months before we can start reinstating our system and funding grants again.”
Calum Macdonald, former Western Isles MP and community wind farm developer, said: “Local charities can expect to take a big hit. It’s a disaster and will have a big impact on them as the windfarms will not earn a penny.”
Western Isles Foyer provides accommodation, drop-in and training services to the young, with five staff. It will officially close on December 2.
Matt Bruce, chairman, said: “Given the changed financial situation facing the Foyer, its committee directors made the very tough decision that the organisation was no longer viable to continue trading and would therefore need to cease trading resulting in all of Foyer’s staff team having to be made redundant.
“This decision has been made with huge regret and in the knowledge that other island bodies do not have sufficient funds available to cover this shortfall at such short notice, especially given the current global Covid-19 pandemic.”
Mr MacNeil MP said: “I fear more charities could follow Foyers. It could be make or break for charities to lose this level of funding.
“Is there a possibility of compensation, firstly to Point and Sandwick and secondly to the charities? An asset has gone.”
The 20-mile subsea power cable between Skye and Harris failed on October 16 resulting in a power cut on the whole of Harris and Lewis.
For the foreseeable future power to the two islands is being supplied by diesel-fired turbines at Battery Point power station, Stornoway.
Grid operator SSE said it has communicated with all generators impacted and was treating it with the highest priority.
A spokeswoman said: “A range of technical options for cable replacement are currently being analysed.’’