Laxey Power Station was built in 1894 for the extension of the tramway from Groudle to Laxey, on the south bank of the Glen Roy Stream and Laxey Rivers. It was fitted with two Galloway Boilers with Mather and Platt engines and dynamos, similar to the set installed at Derby Castle in the same year. In 1898, for the extension of the line to Ballure, an additional Robb Armstrong compound engine and Galloway Boiler was installed at the Power Station, together with a replacement seven panel switchboard.
For 1899, the decision was taken to install a water powered generating station as a source of cheap off-season power for the railway, allowing the steam power stations at Derby Castle, Laxey and Ballaglass to be shut down during the winter months. The equipment was constructed in a turbine house 1,100ft downstream of the Power Station, with two Victor 70hp turbines driving a E.C.C dynamo and booster. The regulators could then be remotely opened and closed from the Power Station by use of two Lundell 1/4 power motors. A concrete weir was also constructed to the rear of the building, with water passing through two settling tanks and pipework to reach the turbines, a tail race raking the remaining water to the turbine house and finally the harbour.
In Spring/Summer 1903 the generating side was rebuilt, with two 165psi Climax vertical water-tube boilers by B Rowland and Co of Reddish installed alongside the Galloway boilers, and two Bellis and Morcom 400hp engines, which drove two Societe l’Electricite et l’Hydraulique 300kw alternators. The engines/alternators replaced the two Mather and Platt engines and dynamos installed in 1894, which were offered for sale. New switchgear was placed into a newly constructed extension, controlled by a nine-panel elevated switchboard, built above the original, and a Mirrlees and Watson surface condensing plant and two weir feed pumps were also installed. Finally, a rotary converter from Derby Castle Engine House was moved here – and the new plant was first run in July 1903. Following a decade of successful operation, thoughts were placed into the upgrade of the equipment in 1914 – A second-hand 1000hp/750KW Parsons Turbo-alternator was purchased in October to replace the two Bellis and Morcom engines, but due to the outbreak of WW1 it was stored in Laxey Goods Shed pending decision.
With the end of WW1, an attempt was made of selling the Parsons Turbo-alternator in 1919, but after deliberation it was decided to install it in the Laxey Power Station in Winter 1919/20 and carry out the modernisation plan; placing it on a overhead gantry between the old engine room and a boiler house of new construction, with a overhead crane following. This also required a British Electric Transformer Co. step-up transformer of 7000V, due to it being low voltage. Following in 1921 was the next expansion, with a new eastward extension and boiler house. Following removal of the 2 original 1894 and 1 1898 Galloway boilers, the new building was fitted with two Stirling Ross 120psi water-tube boilers, replacing the Climax boilers which became dis-used. An 9 1/2hp air pump motor by the Mechanical and Electrical Engineering Co, and a 50hp pump motor from Brook were installed alongside the condenser. A new bridge was constructed across the Laxey river from the new boiler house, and a new 135ft chimney replaced the original.
In 1923/24, motor-driven Hodgkinson mechanical stokers were introduced to assist with coal consumption. A small 18inch gauge tramway was built in Autumn 1924 for the delivery of coal from the yards across the river to the boiler house, the dumping of boiler ash in another yard across the river in Autumn 1924, along with a replacement bridge (A third rail was curiously added later, perhaps with a view to expansion of gauge). In 1924/25 the original low-tension switchboard was moved to a new platform at right angles to the 1898 example at the same height, and superheaters were fitted to the Stirling Ross boilers, to allow them to operate at 160psi.
The night of September 17th 1930 saw a heavy rainstorm and flash flooding cause destruction to many parts of Laxey, due in part to a severe accumulation of debris behind the weir of the Laxey Power Station hydroelectric plant. This also flooded the water turbine and the steam workings in part, requiring repairs to be undertaken across October and November. In April 1932 an inspection of the chimney found severe interior corrosion – as a result, the height was reduced, and a induced draught fan was built in a shed alongside. In Winter 1934, following an agreement to draw off the public supply, hydro-electric and steam power was to be wound up at Laxey. The steam turbines were already turned off in September 1934, with the two Bellis and Morcom sets and Water Turbine turned off in April 1935.
The equipment was disposed of in the late 1930s, and the buildings were sold in to private use in 1944, surviving today in industrial use.