Executive Summary
At a time of rapid global energy transition, Shetland needs to be clear on its ambitions for clean, secure and affordable energy. We need to transform the ways energy is generated, transported and used here, and to consider how we engage with energy project development. With our clean energy resource and established skills base, energy transition offers a huge opportunity to deliver benefits to Shetland’s people, workers, communities and the wider economy.
Our vision is that by 2045:
- We will have full access to clean, affordable and secure energy produced in Shetland.
- Energy Developers will have fully engaged with our Energy Development Principles across all four themes through project development, delivery and decommissioning.
- Shetland continues to have a skilled workforce and strong supply chain, building on the foundations which are currently in place.
Shetland has a long and successful history in the energy business, achieved through commitment to a number of key principles, which recognised all parties’ legitimate interests and concerns. In order to deliver the vision we need to emphasise cooperation and collaboration, build on the successes of the past and understand why unsuccessful ventures did not work.
The draft Energy Strategy sets out the components of energy transition for Shetland, considering the current position and looking to the future for each, with associated actions. These components highlight a range of interlinkages and dependencies.
Energy transition will impact all aspects of life in Shetland. While there are many routes to net zero, we need a route which will deliver secure affordable energy, create and retain local wealth to enable Shetland to remain a viable place to live and work. In order to do this we will need to grow capacity within our community, including the skills, accommodation and enabling infrastructure.
The development of the energy strategy has faced the challenge of changing national priorities in relation to energy transition. Changing priorities in energy transition will continue to be a challenge, particularly the balance between reaching net zero and energy security. However, within the wider lenses of seeking affordable energy and the development of our own Energy Development Principles, we can press forward to achieve a just energy transition for Shetland.
The four long term outcomes of the Shetland Energy Strategy are to:
- Reduce emissions
- Secure affordable energy
- Create & retain local wealth
- Skills and capacity development
Reducing emissions
We need to take action to transform the way we generate and use energy along with considering how energy is stored and transported.
The renewable energy generation potential in and around Shetland far exceeds our local demand and, as we are remote from the energy markets, alternative business models need to be developed. These models will require taking a whole system approach to energy infrastructure, to reduce the risk of duplicated or sub-optimal infrastructure and minimise the impact on the local environment.
Targets
The UK and Scottish Governments have set ambitious targets for energy generation and have also set targets for the use of energy such as the path to zero emission vehicles and for the decarbonisation of oil and gas. Shetland’s role in contributing towards these targets is unclear but we must ensure that any proposals are holistic, taking the whole energy system into consideration. We will encourage developers to use our established industrial sites and support cooperation and collaboration between developers.
Secure and affordable energy
In addition to the decarbonisation of energy, we must also ensure that energy is secure and affordable. The cost of living here is already 20%-65% higher than Mainland UK, with our high use and cost of energy a main factor in the difference.
The three factors driving affordable energy are:
Energy Consumption
Domestic Household energy consumption in Shetland is nearly 150% higher than a typical domestic property in the UK. This is due to our climate (greater wind chill, lower average temperatures and darker winters), our housing density and the very mixed quality of Shetland housing. In addition to this we have high levels of car ownership and a reliance on ferries and planes for lifeline travel.
The cost of energy
The main factor leading to high energy prices in Shetland is the high use of electricity because, like most rural areas, there is no access to the UK gas grid and the price of electricity is around three times the price of gas.
Another factor is the vast majority of energy (petrol, diesel and kerosene) used in Shetland needs to be imported at additional cost.
Household incomes
The Shetland Partnership report that according to CACI paycheck data (2021), 47% of household in Shetland do not earn enough to live well, based on the minimum income standard for remote and rural areas.
Targets
The Scottish Government have set a statutory target for no more than 5% of households being in fuel poverty by 2040. This is particularly ambitious for Shetland as the most recent official figures from 2019 suggest 30.9% of households in Shetland were in fuel poverty and this figure predates the significant price increases we have seen in recent years. We will ensure a coordinated approach to secure and affordable energy.
Creating and Retaining local wealth
To secure a just transition on the route to net zero that benefits everyone we must support our existing industries to decarbonise and remain competitive. We are taking a “Team Shetland” approach to new energy developments based on the set of energy development principles approved by the Council in December 2022. These principles are now being developed into guidelines which can be used in discussions with developers and the four themes are:
Environmental Protection
- Climate Change impact and mitigation
- Impacts and protection of wildlife and bio-diversity on and around Shetland
- Protection of the Shetland landscape and seascape and containment of impacts on it
Local Supply Chain Integration
- Jobs in Shetland
- Contracts and opportunities for Shetland businesses
- Commercial Infrastructure
- Skills and Training for current, and new, Shetland residents
Sectoral Co-Existence
- Competition for mutually important locations
- Impacts on the sustainability of our key natural resources
- Any other beneficial or detrimental interactions between sectors
Benefits to the Shetland Community
- Fair Share of value from all developments, offshore and onshore
- Financial Benefits to the community
- Product Benefits; e.g. affordable energy for Shetland households
- Public Goods Benefits
Targets
The UK and Scottish Governments have set out their plans for economic transformation in relation to their net zero targets. We need to build on our strengths and, along with supporting our existing industries to decarbonise and remain competitive, we must also look at opportunities for maintaining future prosperity. Our main mechanism for this will be using and improving our Energy Development Principles to engage with energy developers within the broad context of our community’s needs.
In addition, we require a coordinated approach to support all of our local industries to reduce their emissions and adapt to the opportunities and challenges associated with energy transition. This will require a mixture of approaches depending on the industry and challenge faced.
Skills and capacity development to sustain jobs
In addition to supporting industry, key to ensuring a just transition for Shetland is ensuring no one is left behind. Energy Transition will impact everyone and as we all start from a different situation there can be no single set of actions which must be followed.
One key lesson from the past is that areas which have seen abrupt unmanaged transitions tend to take decades to recover and the impacts are far reaching. As we know we are entering a period of huge transition, so it is therefore vital that our people are supported to engage and empowered to take action.
Regarding lifestyle and behaviour change, we learn our behaviours from the circumstances in which we live. These behaviours become engrained and we form habits that we must work to break or shift. This can only be done if there is a willingness to change which can be encouraged from awareness raising and providing alternative options. An example of this is learning to turn off lights and power outlets when not in use.
Advancing technology is a component of changing energy use. However, there must be a willingness to use these products, as consumer expectation will be a key driver to change. This can only happen if people know what to look and ask for.
The current workforce in Shetland is around 14,200 people, with around 1,000 people working either directly or indirectly in the energy sector. Current projections suggest this could increase to around 2,000 at the transition development peak before reducing to 1,500. Further work needs to be undertaken to understand the pipeline of upcoming projects to ensure we have the skills and capacity to handle a change in employment of this magnitude. Shetland will need to create its own roadmap for the transition of jobs to align with our unique set of circumstances.
Energy transition is a massive challenge and Shetland does not have the resources or the time to duplicate efforts being made in other places. To learn from others we must collaborate. One key project for collaboration across the three island local authorities is the Island Centre for Net Zero, described later, which seeks to accelerate decarbonisation and is part of the Islands Growth Deal.
Target
The Scottish Government has recognised the importance of achieving a Just Transition to Net Zero through the development of their Energy Strategy and Just Transition Plan. As energy transition for Shetland will be significantly different to other communities across Scotland we need to prepare our own Just Transition route map.
Working with others
Many of the key decision - making powers in energy sit with the UK or Scottish Governments or relate to business planning by large energy companies. It is therefore important that we take a “Team Shetland” approach, recognising the legitimate interests and concerns of all parties. The Communications section highlights the 5 main groups of stakeholders that need to be engaged in the course of energy transition. Specific communications plans will be developed for individual projects because how we engage with these stakeholders and “our asks” will be project specific, but must always link with our four long term outcomes.
Delivering on the four long term outcomes
Reduce emissions – work on this has been initiated through the Shetland Net Zero Route Map which provides an overview of the magnitude of the challenge ahead and the level of action required to meet the target of net zero by 2045.
Further action to:
- Support and encourage a diverse energy ecosystem for Shetland, which incorporates the whole energy system. Including: generation and use along with the associated and enabling infrastructure. Using the Energy Development Principles as the basis for negotiation to ensure a Shetland approach, which recognises our legitimate interests and concerns.
- Explore the opportunities and capacity for renewable energy generation across different technologies in Shetland, including community based projects.
- Communicate the need for action across a range of fronts including: behaviour change, customer expectation and empowerment to maximise carbon saving opportunities.
Secure affordable energy – work on this has been initiated through the Energising Shetland campaign. However the route to affordable energy is complex with various technical and regulatory challenges.
Further action to:
- Further develop and deliver the agreed Council Programme on affordable energy.
- Understand the barriers to smart meter deployment and find a Shetland based solution.
- Engage further with the UK Governments ongoing consultation on REMA (Review of electricity market arrangements).
Create & retain local wealth – Work has been initiated on the Energy Development Principles, which were approved by Council in December 2022. These are now being developed into guidelines with strategic oversight provided by the 4Shetland Forum.
Further action to:
- Use the Energy Development Principles as the basis for discussion on Local supply chain integration, Sectoral co-existence and benefits to the Shetland community.
- Support the decarbonisation of industry to ensure that our existing industries remain competitive.
- Use the proposed governance structures and action planning toolbox, as a mechanism to speed up the process of identifying consortia for funding bids.
Skills and capacity development – The Shetland Green Skills group led by UHI Shetland has already been established, with a wide terms of reference to support the skills pipeline for green skills development in Shetland. Further work is required to ensure alignment on capacity development.
Further action to:
- Further understand and refine the pipeline of upcoming projects, as we will require our own roadmap for the transition of jobs in Shetland.
- Support engagement in energy throughout the community, including outreach projects and contextual learning.
- Learn from others and collaborate, we don’t have the resource or capacity to do everything ourselves.
- Be empowered by the community and ensure we develop a Shetland approach to our energy transition challenges and opportunities, which recognise our legitimate interests and concerns.
Wider actions
To be undertaken as part of the consultation process:
- The development of an action planning toolkit to support organisations to develop their own Energy Strategy and Action Plan in alignment with the Shetland Energy Strategy.
- Development of a clear governance structure for energy transition in Shetland, with clear alignment to the Shetland Partnership’s 5 work packages.