WATCHING the Viking wind turbines go up in the Central Mainland these last few months, people are reminded that Shetland is again hosting a large energy project, yet the direct financial return for the local community – in comparison to the expected profits for the developer – is rather limited.
Local consultancy and project development company Voar, which has recently moved into a new office in Lerwick has spent three years studying Shetland’s potential for ‘Power to X’ projects.
The company said that large scale development of this type of industry was imminent in Shetland.
Speaking ahead of the All-Energy exhibition in Glasgow, managing director Daniel Gear said Shetland was at a crucial moment in its history and warned that there was just a short window of time to secure a community stake.
“We’re not talking about more wind,” he said, “we’re talking about a facility at least as big as the gas plant, where the electricity produced by Shetland’s wind resources is converted into globally traded commodities like hydrogen and ammonia.
“We have a chance to harness some of that for the community, but if we’re not careful, the profits made from Shetland’s natural capital will go straight out the sooth mooth.”
Newly recruited developments director Tom Wills added: “Shetland has some of the best wind resource in Europe but we’re a long way from the population centres where most power is consumed.
“Even with the new interconnector, we’re still at the tail end of the electricity grid.
“Fundamentally this is why there’s such interest in using electricity to produce hydrogen and ammonia: it makes that renewable energy transportable.
“Shetland is also particularly attractive because of our exceptional deep water port facilities and skilled workforce.
“This is an industry that will almost certainly come here anyway – and at the moment the base case is that a big multinational will put in all the capital and extract the profits.”
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Wills said Shetland shouldn’t give up on the principle of direct local ownership of projects harnessing the isles’ natural capital.
He said: “Orkney and the Western Isles are pressing ahead with community-owned energy schemes, and this is a standard approach in many European countries.
“We have unrivalled energy sector experience which we now need to use to our advantage. There are many different models to achieve some community ownership and we need to satisfy ourselves that we’ve explored all possible options.
Gear added: “Shetland has assets including development sites and infrastructure as well as sources of public and private capital that could be used to secure a meaningful stake in this new industry.
“The up-front sums required to secure a stake at the early development stages are relatively small compared to the much larger amounts needed for construction, which are typically raised through project financing.
“The best way to secure a stake for Shetland could be to create an independent energy trust that can pool local assets and funds, and then work with a project developer to secure a share of the profits for the community.
“Voar has done some work on how the mechanics of this could function and we are convinced that partial community ownership is achievable.
“To be clear, Voar is just one potential project developer – but as folk who are living and raising families here in Shetland, we feel an obligation to help ensure that whoever develops this industry, the community has a meaningful stake.”
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