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Energy / SIC programme explores options for pursuing ‘Shetland tariff’ and affordable energy

COUNCILLORS have approved a report which is said to be the first stage in the process of identifying the best value options for delivering a ‘Shetland tariff’ and more affordable energy for islanders.

The full Shetland Islands Council met on Wednesday to approve a strategic outline programme called ‘Energising Sheland – Affordable Energy and a Shetland Tariff’.

It contains a number of possible options of ways to achieve this, from market reform to community benefit from energy generation.

The plan also features ambitious options like a private electricity network for Shetland – but the meeting was told this has effectively been ruled out already.

Council officers now have the authority to investigate options, approaches and opportunities identified in the programme and engage with energy developers, governments and regulators.

Infrastructure director John Smith said there will need to be “sustained campaigning” on the topic of securing more affordable energy for Shetland households, and that the issue requires significant partnership working.

Shetland has long suffered from high levels of fuel poverty, and the report says that the SIC is “currently estimating a fuel poverty figure of 66 per cent, and an extreme fuel poverty figure of 33 per cent of households in Shetland” as a result of the rises in bills.

This is a sharp increase from confirmed 2019 figures of 30.9 per cent and 21.7 per cent.

With Shetland set to become a net exporter of energy next year through the Viking wind farm, and with offshore wind and other new energy opportunities on the horizon, the case for cheaper electricity for islanders continues to be made.

The strategic outline plan highlights that Shetland has a lack of choice for energy – most significantly no mains gas – as well as a colder climate and poor housing stock.

Analysis conducted by the council estimates that the surge in energy costs caused by the steep rises in gas and oil prices through 2022 now means overall energy costs for the islands are around £135 million per year – 50 per cent more than the estimated cost in 2020.

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Smith told Wednesday’s meeting that the transition to net zero represented an opportunity for the case to be made for more affordable energy.

Whilst a number of possible options are presented in the plan, there is not a preferred way forward at this stage.

This is “due to the complexity of the problem, and the range of potential options that could have different effects on the cost of electricity in Shetland”.

However, two possible main routes could be variation in UK electricity pricing regulation where lower energy prices should be available in intensive generation/high energy cost areas like Shetland, and securing ‘energy benefits’ from developers.

At Wednesday’s meeting Smith highlighted that supplier Octopus Energy has a scheme where people living near renewable generation projects like wind farms can enjoy cheaper electricity when their local turbines are spinning.

There are currently four wind farms in England and Wales – both onshore and offshore – eligible for this scheme.

They apply to households in certain postcodes, giving 50 per cent of electricity when power generation is at a designated level.

Smith said the Octopus scheme was of interest as it showed that suppliers are aware of the issue.

SIC depute leader Gary Robinson also said he felt the matter of smart meter reliability in Shetland was a “key issue”.

Concern was raised by councillors about the time the programme might take, as well as the workload, with Smith saying the SIC will have to be “pragmatic and measured”.

Development committee chairman Dennis Leask added that the plan puts a spotlight on community wealth building in Shetland.

Meanwhile Shetland’s sole Green councillor Alex Armitage failed to win enough support at Wednesday’s meeting to pass a motion on future electricity use.

His motion said the “development of a green hydrogen/green fuels industry should be a top priority in Shetland’s industrial strategy within the next decade” – with renewable electricity used in the generation process.

Shetland South councillor Alex Armitage.

It added: “Shetland Islands Council notes that the use of electricity generated in Shetland to produce hydrogen and hydrogen derivative fuels could save more carbon than using that same power to electrify extraction of oil and gas.

“Shetland Islands Council also notes that using electricity from Shetland to power a green hydrogen plant would bring greater employment and wider benefits to Shetland’s local economy than using that same power to electrify Rosebank, Cambo, or other new oil and gas fields.

“Shetland Islands Council considers that the electrification of new oil and gas fields risks stifling the development of key future industries and sources of economic security for Shetland, by restricting the amount of clean electricity that is available for local use.”

But depute leader Gary Robinson argued that hydrogen would have a limited role to play in the energy transition.

He also said he was not sure if the motion would add much to the work already being undertaken by council officers.

When it came to a vote Robinson won by 11 to four.

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