Transport / Government’s £10m inter-island connectivity grant to be funded through ScotWind revenue
A SCOTTISH Government grant worth £10 million which is destined to go towards a new ferry for Shetland Islands Council (SIC) is being funded from revenue related to offshore wind development.
The relief ferry – which is estimated to cost nearly £11.8 million – would provide extra resilience to the SIC’s ferry fleet, with an initial business case going in front of meetings this month.
However it has been revealed that a rare £10 million capital grant pledged to the SIC by the Scottish Government for inter-island connectivity, which would go towards the ferry and has been warmly welcomed, is set to be paid for by revenue from the ScotWind offshore wind leasing process.
This process has seen seabed rights given to two large proposed offshore wind farms to the east of Shetland, which have drawn concern from some quarters including the fishing industry.
There are also a number of other proposed farms in the seas around Scotland which came through the ScotWind process, which was overseen by the Crown Estate and has boosted the Scottish Government’s public coffers by hundreds of millions.
In a statement to Shetland News, Scottish finance secretary Shona Robison said the government “recognised the unique challenges faced by island communities and the importance of targeted support to improve connectivity for people in Shetland”.
Councillors happy to support initial business case for £11.7m relief ferry
Robison confirmed in response to a recent parliamentary question that a total of £756 million was generated from the initial ScotWind leasing round.
She said £96 million of this funding has been spent to date – all in 2022/23 to support the government’s general fiscal position.
Robison then said £364 million of ScotWind revenues have been profiled into 2025/26.
This includes £10 million allocated to both the SIC and Orkney Islands Council for inter-island connectivity.
Robison said final decisions on formally drawing down the funding will be made at the end of the financial year.
SIC leader Emma Macdonald said it is the council’s view that for “host communities who will be significantly impacted by the onshore infrastructure there should be benefit that can be used for investing in infrastructure”.
Speaking during a visit to Shetland last month, Scottish first minister John Swinney said the government was working closely with Scotland’s three island authorities on how they can “benefit from the resources that are going to come from ScotWind and how that can contribute towards a sustainable future for the islands”.
Meanwhile around £185 million of ScotWind revenue is designated to support offshore wind capital investment, nature restoration and energy and transition funds.
A total of £78.5 million has been earmarked for supporting capital investment for sustainable and active travel programmes and low carbon programmes in 2025/26.
Meanwhile nearly £31 million is set to go towards the agriculture and food and drink industries, particularly on energy efficiency and improved resilience, as well as peatland restoration and woodlands creation.
The SIC’s environment and transport committee chair Moraig Lyall said ScotWind money going towards a ferry for Shetland may not sit too well for some, and added that Shetland could also potentially receive allocations from this same source for peatland restoration and active travel projects too in the future.
“But most appalling is that an unspecified amount is going straight back to support offshore wind capital investment,” she said.
An initial outline business case on the new relief ferry got its first airing in front of councillors on Monday, with estimates that the new vessel could be delivered in 2027.
Commenting on the initial £10 million coming to Shetland, Robison said: “We recognised the unique challenges faced by island communities and the importance of targeted support to improve connectivity for people in Shetland.
“This funding helps the local community to develop solutions to these challenges whilst delivering on the ambitions of the National Islands Plan.
“The Scottish Government is focused on delivering policies and investments that support our islands’ ambitions, empowering communities to thrive and creating the conditions for sustainable economic and social development.
“Prosperous island communities are central to our vision of Scotland as a successful country in which to live, work and study.”
Robison said the remaining £296 million of ScotWind revenue has not yet been allocated with decisions on their deployment to be taken at individual budgets, “in line with Scottish Government priorities”.
However speaking this week, Northern Isles MP Alistair Carmichael accused Crown Estate Scotland of “squandering” tens of millions of pounds in possible ScotWind revenue through a cap of £100,000 per square kilometre.
The Arven and Stoura offshore wind farms, planned to the east of Shetland, came through the ScotWind leasing process.
The former could have a generating capacity of 2.3GW, with the latter smaller at 500MW.
Both projects are in their very early stages, with Stoura for example holding another round of public consultation last week.
The plan is for cabling to run to the Shetland mainland, where there would onshore infrastructure, with a proposed second HVDC subsea then allowing power to the exported south.
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