When I decided to settle permanently in Machynlleth in 1988, the town boasted its own Post Office, florist and sweet shop complete with a vast array of glass jars filled with boiled sweets, Everton mints and cinder toffee. It also had two grocery shops, a greengrocer, two newsagents and no chain stores. Slowly but surely, with the coming of large corporate retailers, life has become increasingly hard for the town's independent traders. A franchise chain bought out both of the independent grocery stores, then swallowed up the Post Office. Larger chain retailers can afford to carry a wide selection of sweets and chocolates, so shortly afterwards the sweet shop closed. The chain retailer then expanded into cut flowers and the florist soon closed.

The coming of a second, even larger, supermarket chain has now seen off one of the newsagents, the other is up for sale and the greengrocer has closed. Both chain stores have recently diversified into pet foods, which is worrying the local independent pet shop, which also provides advice and support. The larger supermarket has just started offering televisions and DVD players, threatening the viability of the town's independent audio-visual supplier - who not only offers a wider range of products backed by professional advice, but also provides a repair service. In general, it seems the chain retailers can use economies of scale to knock a few pounds off initial purchase prices, but the level of product information, advice and after sales service cannot begin to compete with that offered by independent specialists. Machynlleth could be desolateáhalf its stores could be either boarded up or be charity shops, but happily this is not the case. There is still a thriving independent economy in the town - although the supply of 'essentials' such as bread and milk is dominated by the chain retailers. Machynlleth's traders have diversified into a number of specialist niches, which are currently unattractive to the larger chain stores. Machynlleth has two art galleries, a Museum of Modern Art, a jeweller, an Aga shop, three independent bookshops, two antique shops, a catering equipment supplier, three craft shops, a doll's house shop, a music shop, two fabric specialists, numerous cafés including an internet café, and a mountain bike specialist.

This is not to say that there are no independent traders supplying food and other essentials. One of the cornerstones of the struggle for independent survival has been Will Lloyd Williams. He has fought tooth and nail to keep his abattoir and butcher's shop open. His dedication and commitment was finally recognised during the recent foot and mouth epidemic, when he was the only meat processor in the area to remain open.

Mr Lloyd Williams is not just holding his own, he is expanding both his abattoir and shop premises. Simultaneously, another butcher is re-opening a shop that closed last year. The independent Arvonia bakery is also still with us, despite the supermarket's in-store bakery. Machynlleth's thriving Wednesday market has a local independent organic vegetable grower, a local herb specialist and two independent fishmongers. The most recent twist in this story of niche marketing is that the chain supermarket has begun to offer non-GM cheese, a selection of fair trade produce and a range of organic produce!

Machynlleth has proved it is possible for local independent traders to fight back. When one of the chain retailers began a video rental service, the town's two video shops were worried, especially as the chain retailer was able to undercut the local shops by 50p a video - using it as a loss leader to get people into the store. However, posters quickly went up around the town encouraging support: if the local shop closed the only choice available would be from a narrow mainstream selection. Thankfully, people must have taken this to heart as both our independent video shops are still trading almost two years later. The agricultural merchant, ironmonger, bedding and shoe shops are also still holding their own, supported by local customers.

Perhaps the key lesson Machynlleth's independent traders have learned is that they must promote the benefits of keeping money circulating in the local economy. It is also important to be innovative, to diversify and to exploit specialist markets.

One of Machynlleth's strengths is the environmental goods and services sector. During its 30 years CAT has seen the creation of a number of spin-off companies. Some were created directly by CAT and some by enterprising ex-CAT staff setting up businesses in the local area.

In 1982 CAT set up Dulas Engineering to carry out design and installation of renewable energy systems. Dulas Ltd is now a leading renewable energy company with 20 years' international experience in the industry. The company is based around a highly qualified and experienced multi-disciplinary team encompassing all aspects of renewable energy. Employing around 20 people, Dulas Ltd provides power based solutions on a wide range of renewable energy options, for anything from commercial operations in the UK to communities or hospitals in remote corners of the planet.

Another CAT offshoot is Aber Instruments. The company was established in June 1988 following several years of initial development work on using Radio-Frequency Impedence methods for biomass monitoring (carried out in conjunction with the University of Wales Aberystwyth). To date, Aber Instruments has supplied over 200 systems worldwide for the on-line measurement of viable biomass. The company is situated on the Science Park in nearby Aberystwyth and currently employs 21 staff.

Employing 5 people, Elemental Earth strives to create opportunities for people to improve their understanding of the Earth. Their aim is to encourage people to lead lives that are more ecologically friendly and meaningful and projects include woodland gardens in four local schools, out of school hours learning, spectacular community celebrations and provision of courses and training.

Another local business, EcoGen Projects Ltd, supports local land owners and community groups wishing to develop renewable forms of energy generation. EcoGen helps identify potential renewable energy sites, with Power Purchase Agreements and any necessary permissions. This approach negates the need for an external developer and ensures that local benefits from any development are maximised. EcoGen has played a major role in the implementation of some of the UK's first windfarms, as well as having undertaken resource studies in other aspects of renewable energy and energy conservation.

The concentration of expertise in the Machynlleth area led to the formation, in 1997, of the Dyfi EcoValley Partnership, which has the specific aim of creating and supporting local enterprise embracing sustainability. The members of the partnership believe that strengthening the local economy and meeting social needs goes hand in hand with communities appreciating the value of their cultural and environmental assets. Through this partnership several organisations in Mid-Wales have come together to enable the local community to generate their own energy and income from small-scale renewable energy schemes. Grant support was provided by the European Commission via their European Regional Development Fund.

The Partnership (now renamed Ecodyfi) has evolved into an independent body controlled by local people and supported by the Welsh Development Agency. Its remit is sustainable community regeneration for the Dyfi valley - an ambitious agenda! Projects include tourism, waste reduction, a skate-park, feasibility work for 'starter' workshops and a Centre of Excellence for the timber industry.

Environmental goods and services are by no means the only successful niche market in Machynlleth. There are many others: from mountain bikes to modern art, from trees to tipis. These businesses show what can be achieved by innovative local independent entrepreneurs, creating both income and employment in their area - localisation in action!

Ecodyfi Renewable Energy Schemes

Water power
• Maesglas (Mallwyd) - a farm diversification by a 120kW hydro-electric scheme selling its output to the grid

Windpower
• Dulas Valley Community Wind Partnership (Pantperthog) - 75kW turbine is owned collectively by a number of local people who have formed a company called Bro Dyfi Community Renewables, selling power to CAT
• Off-grid domestic system (Ynyslas) - 340W of wind and solar electricity

Solar electric power
• Schools (Machynlleth & Borth) - 690W educational solar array with internet links to systems in other schools
• Dulas Ltd (Machynlleth) - a grid-connected 1.4kWp solar system, providing approximately 10 per cent of their annual electricity
• Domestic solar electric (Llanwrin) - just under 1kWp system grid-connected, so that electricity not used in the house can be used elsewhere locally
• Domestic solar electric (Machynlleth) - 960Wp solar array output in winter will power a ground source heat pump (to heat the house). Back-up heating is from a wood stove
• Domestic solar electric (Eglwysfach) - a domestic solar electric system with an output of 2kWp plus a space heater fuelled by wood pellets (from woodworking industries) and solar water heating
• Social housing (Machynlleth) - 18.4 kWp solar electric array on 10 flats and a semi-detached unit
• Dyfi Eco Park (Machynlleth) - 13.4 kWp solar electric arrays on 'green' light industrial estate

Solar Water heating
• Dyfi Solar Club - enables householders to obtain solar water heating systems at bulk discount prices. Also provides training in system choice, design and installation. Ten systems have been completed so far and a further 14 local people have been trained
• Quarry Café (Machynlleth) - eight square metres of roof-integrated solar water heating for café and flat

Biofuels
• Pottery (Pennant) - heating the house and pottery with woody wastes from factories and farms, incorporating a small 'heat main'
• Domestic stove (Pantperthog) - log-burning stove with back boiler, displacing LPG. Combined with solar water heating and gas via a multiple-input wet heating system
• Domestic stove (Ynyslas) - log-burning stove with back boiler, replacing LPG Combined with solar water heating
• The Wynnstay Hotel (Machynlleth) - first of several wood burners installed

Paul Allen, Peter Harper (CAT) and Andy Rowland (Ecodyfi) will be speaking at the conference 'No place like home - Localisation in Action' at the Findhorn Foundation, Scotland on April 19-25th, 2003. For details contact 01309 691933 or www.findhorn.org/home