Climate Change Programme Consultations

Section 5 - Place: Whole Energy System

Contents

 

Introduction

Our current energy infrastructure networks have evolved through time to reflect a pattern of centralised generation and distributed use.  Section 4 looked at energy generation. How that energy will be used and the infrastructure required is of equal importance.  This section examines the need to ensure a future energy system which is clean, secure and affordable, the infrastructure required, and the right policy and regulatory frameworks which are a necessary part of a whole energy system.

Technological innovations in energy are a continuing and rapid process.  There are no certainties around the ‘best’ way forward. However, the International Energy Agency (IEA) report advocates “The path to net zero emissions is narrow: staying on it requires immediate and massive deployment of all available clean and efficient energy technologies”.  Following that advice will inevitably require places to take risks on technologies by making decisions now to optimize our future energy arrangements.

 

Decisions on the use of energy and infrastructure

The energy generation potential for Shetland far exceeds our domestic energy requirements. 

Energy Generation:

  • The 443MW Viking Wind Farm is under construction due for completion in 2024.
  • 246MW of consented onshore wind across three further sites.
  • Energy Recovery Plant.
  • Options signed for the NE1 offshore wind sites with a total of 2.8GW of capacity to be installed.
  • Tidal power
  • Oil and Gas

Demand for energy:

  • Domestic and business demand on the distribution network is around 44MW in winter, reducing to a minimum of around 12MW in summer.
  • Electricity only represents a proportion of the energy consumed in Shetland.
  • Electrification of the SVT and SGP 40MW
  • Export potential 600MW via the interconnector cable due for completion in 2024.
  • BP, Equinor and Ithica Energy have announced plans to explore electrification options to the west of Shetland.  This will require around 220MW of power. 
  • Various companies have expressed an interest in the production of green hydrogen at various scales

Current situation and the future

We know the current situation is unsustainable, that change is required and a coordinated approach needs to be taken.  Targets have been set, these are summarised throughout the strategy document in their relevant sections.  How we got here and placing blame is of minor importance, now we must make a plan on how to achieve these targets. 

A large number of decisions have to be made on the generation and use of energy, along with the associated infrastructure required.  A geographic approach would allow us to understand how Shetland can best contribute to targets and ensure a strategic approach to decisions on large scale infrastructure projects.

 

Energy Systems

Components of the Electricity Network

The electricity network has a significant role in the transition to net zero, either supplying renewable electricity directly to power homes, vehicles and other applications, or being used to supply clean fuel production plants.  Improvements and reinforcement of the network must occur as efficiently as possible to maximise the capabilities of the network and reduce upgrade costs.  The Great Britain (GB) electricity network is split between the high voltage transmission network and low voltage distribution network.

Governance, Policy and Frameworks

In Scotland, certain applications in relation to energy infrastructure are made to the Scottish Ministers for determination.  These cases are administered by the Energy Consents Unit. In terms of the electricity network these include:

  • Applications for the installation of certain overhead electric lines and associated infrastructure;
  • Applications for necessary wayleaves to confer rights over land to install electric lines;
  • Compulsory purchase orders promoted under the Electricity Act 1989; 

Ofgem as the independent energy regular for Great Britain are responsible for approving investments by the Transmission and Distribution Network Operators.  Price controls balance the relationship between investment in the network, company returns and the amount that they can charge for operating the networks.

The Council’s Planning Department have a role as a consultee on all applications and are the decision making authority for certain overhead lines and associated infrastructure not covered by the Energy Consents Unit. 

 

Transmission Network  

How it works

The transmission network transports electricity long distances at high voltages which is 132kV and above in Scotland.  This network is responsible for transporting electricity from large generation sources, such as power stations and large wind farms, towards areas of demand, where it supplies the distribution network.  Historically, the electricity network was designed with centralised generation and a predictable output, but this is changing, with smaller renewable sources spread out across the country.

National Grid Electricity System Operator (ESO) are responsible for the secure and stable operation of the GB transmission system, while there are four Transmission System Operators (TSO) who are responsible for developing, operating and maintaining the transmission system within their region.  The TSO for the North of Scotland is SSEN Transmission.

Current Situation

There has never been a transmission network in Shetland.  It has been an islanded grid, separate from the GB network, but this is due to change in the coming years. 

A 600MW High Voltage Direct Current (HVDC) interconnector cable is currently being installed, which will connect Shetland to the GB electricity network for the first time.  This 257km subsea cable will connect a substation and converter station at Kergord to a switching station in Noss Head, Caithness.  This is being built on the same timeline with the Viking Energy Wind Farm.  

Governance, Policy and Frameworks

The Electricity Networks Commissioner recently published a letter to the Secretary of State for Energy Security and Net Zero with a number of recommendations to accelerate the deployment of strategic electricity transmission infrastructure in Great Britain.  This was accompanied by a companion report produced by the Energy Systems Catapult.  These reports provide an analysis of the current process to deliver transmission infrastructure in Great Britain.  From this analysis a number of recommendations were made on how the process could be accelerated.  Including the development of a Strategic Spatial Energy Plan which will forecast supply and demand characteristics along with their location.  This would allow decisions to be made earlier rather than waiting to see which energy sources and demands arise. 

Future

Once we are connected to the GB network via the HVDC interconnector, the distribution and transmission networks on Shetland will need to be connected at a new substation, known as the Grid Supply Point (GSP).  Construction of the GSP began in December 2022 at a site near the Lerwick Power Station and is expected to be completed in 2024 in time for the transmission grid connection.

In addition to Viking Wind Farm, the three other large wind farms currently planned for Shetland will require transmission connections to the Kergord substation.  SSEN Transmission are responsible for providing connections for these wind farms, and are proposing new 132kV lines between the three wind farms, Kergord and the GSP, along with an associated switching station to connect the two wind farms to be constructed in Yell.  

The Council is currently involved in various projects to champion a holistic power solution for Shetland.  This is to avoid unnecessary infrastructure and support the delivery of better integrated projects.  At present there are a number of transmission and distribution projects being planned for Shetland.  The concern is that, without a strategic overview of these projects, the outcome will be sub-optimal and we could end up with a web of networks.  Particular consideration needs to be given to the route for power to electrify offshore oil and gas assets and from offshore wind farms such as NE1 which is currently investigating their options.

 

Distribution Network

How it works

The distribution network transports electricity to homes and businesses at voltages of 33kV and below.  This is supplied by small scale electricity generation connected directly to the distribution network, or from the transmission network via a transformer.

The GB network is separated into 14 different regions, managed by six distribution companies called Distribution Network Operators (DNOs).  Scottish and Southern Electricity Networks (SSEN) own and operate the distribution network in Northern Scotland, including Shetland.

Current Situation

The distribution network in Shetland is composed of approximately 1,650km of overhead lines and underground cables.  The cable voltages are 11kV and 33kV and the system is not currently connected to the main GB electricity network, which means we rely entirely on local sources of generation.  Currently, this is from Lerwick and Sullom Voe Power Stations along with a small proportion of renewable generation, as described in Section 4.

In order to maintain a secure supply, the overall electricity system must match supply and demand to the second.  Supply and demand of electricity in Shetland is balanced locally, making the electricity distribution network highly constrained. 

The islands of Fair Isle and Foula are not connected to the Shetland distribution network, having their own grids supplied by local generation. 

Future 

Once the new 132kV transmission network is in place, this will supply Shetland’s distribution network and the Lerwick Power Station will operate in standby mode.  The two networks will be connected via the Grid Supply Point (GSP).  While local renewable energy generation will supply Shetland’s electricity needs for the vast majority of the time, a standby solution is required during transmission system outages, such as maintenance or a fault.  This system will react quickly to keep the power on while the Lerwick Power Station starts up, as the process could take around 30-60 minutes.  The standby solution will consist of energy storage, stability and voltage support to prevent a blackout.

The distribution network in Shetland will remain largely constrained due to the limited demand within Shetland, particularly during the summer when the demand for heat is less. 

 

Smarter Systems and Digitalisation 

How it works

The way in which electricity is generated and consumed is changing, and these changes are necessary in order to reach net zero.  A smart electricity grid monitors and manages the electricity network through digitalisation and other advanced technologies.  This maximises the efficiency and flexibility of the system, thereby reducing overall infrastructure costs. 

Due to the unpredictable nature due to intermittency of many renewable sources, these smart systems are necessary to ensure renewable energy is used to its maximum potential, as well as ensuring the reliability and stability of the electricity grid.  This requires investment, and grid operators have already begun modernising their infrastructure.

Current Situation

The five year Shetland based Northern Isles New Energy Solutions (NINES) project, led by SSEN Distribution, was completed in 2016. 

This created an Active Network Management (ANM) system in Shetland, which automatically controls and manages energy demand, generation and storage.  At the time, there were restrictions on the electricity infrastructure on Shetland, meaning no further intermittent renewable generators could be connected to the grid.  This project allowed a further 8.5MW of renewable generation to connect to the distribution grid, due to a digitally smart grid optimising demand and generation. 

Demand side management (DSM) was also investigated as part of the project.  DSM is where consumers are encouraged to use electricity at certain times.  Generally when demand is low or renewable generation is high, this in turn reduces curtailment and strain on the system.

Future

As more intermittent renewable generation is added to the grid and we strive for greater efficiency, systems need to become smarter and more connected to enable better, quicker decision making and flexibility. Understanding how electricity demand will change is integral to developing a smart electricity network. 

 

Private Wire Systems 

How it works

A private wire system is a localised electricity grid connected to privately owned generation.  Private wire networks can happen on all scales from domestic small wind turbines connected to heating systems, through to offshore wind turbines connected to an industrial scale electrolyser plant.

Private wire agreements essentially allow an energy generator to sell power to neighbouring premises without transmitting through the public network, thus avoiding the need to pay for additional charges from the grid, however they do need to invest in additional infrastructure.

Current Situation

At present there are minimal private wire arrangements in Shetland. 

Case Study: Fair Isle and Foula

Fair Isle and Foula are the most isolated islands of Shetland and both require either a 2-3 hour inter-island ferry or a flight for access and supplies. Both islands have developed their own energy companies to manage their own needs, and they are responsible for their own electricity networks. For instance, the Fair Isle Electricity Company manage a system that includes three 60kW wind turbines, a solar array with a capacity of around 50kW and battery storage capable of holding 50 hours of power. The Foula Energy Trust manage their system, which includes solar, hydro, and wind power, and Foula is one of seven off-grid electricity systems in Scotland. These islands are not connected to the Shetland Distribution Network and there are also some micro arrangements with off-grid wind turbines feeding domestic and industrial buildings.

Both islands have unique challenges associated to their location, which includes maintenance and servicing of their energy systems. This is exasperated by rough sea conditions and weather that can make the islands inaccessible at times. This is an issue when replacement parts need to be imported or when specialists need to travel to the islands. Both islands have developed a resilient system utilising multiple sources of energy, including diesel backup to ensure security of supply. In Fair Isle’s case, funding for a new ferry is likely to provide more capability to supply the island in the near future.

In the long-term, the realities around Fair Isle and Foula’s place in a future energy system will need to be determined. For instance, if a clean hydrogen fuel is likely to be adopted in future for the ferry routes then refuelling infrastructure will need to be developed at both ends of the ferry sailing to the islands. There are also other challenges associated to the limited grid capabilities at these islands when considering electrification or the use of future fuels.

Future

Private wire networks are likely to be a component of any future energy system in Shetland.  Both for hydrogen production and as a route to market for offshore wind.

Summary of Future Electricity Scenarios

The future electricity demand has a large range of predicted increases based on a range of variables. Ricardo undertook sensitivity testing as part of the NZRM, highlighting that projected changes in electricity use in Shetland were highly sensitive to assumptions about whether industrial, commercial, and agricultural fossil fuel switch to electricity or green hydrogen.

Extra scenarios that were tested and found that grid electricity use would increase by between 6%-73% between 2019 and 2045.

This does not include the additional electricity required to produce green hydrogen or for offshore electrification or the balance between the different fuel choices for marine decarbonisation.

What it does highlight is the need to understand the different decarbonisation routes, timelines and volumes of energy required and how these vary geographically.  Significant electricity network upgrades will be required to both distribution and transmission networks at significant cost and will take a number of years to implement.  At a national scale National Grid ESO produce a range of Future Energy Scenarios based on speed of decarbonisation and level of societal change.  

At a more localised level SSEN Distribution have been working with Regen on the North of Scotland Distribution Future Energy Scenarios (DFES).

The DFES process essentially helps SSEN Distribution to understand:

  • What technologies will connect/disconnect from their network out to 2050
  • How much installed capacity of each technology will connect, under four future societal and technological scenarios
  • When this capacity could come online and begin supplying/consuming electricity
  • And where across SSEN’s licence areas these technologies will likely connect.

SSEN uses the outputs of the DFES modelling to determine the potential impacts on the distribution network, to provide an evidence base to support future network reinforcement and investment, and to identify opportunities for the use of non-network solutions such as storage and flexibility services. For key low carbon technologies, a more detailed, granular, analysis is completed as part of the DFES assessment, producing ‘below street level’ future scenario projections on the low voltage network, for electric vehicles (EVs), EV chargers, heat pumps, rooftop solar and domestic battery storage.

The DFES is updated annually and is underpinned by input from local stakeholders.  As this information is then used by SSEN to help plan their future projects it is important that we engage.  The most recent report was published in April 2023 and contains information specific to Shetland. The level of demand for electricity in the future will help shape what smart systems are required and where they are needed for the electricity grid to reach net zero.

Understanding the future energy scenarios and the different variables will be key to ensuring that we have a clean, secure grid that provides affordable electricity to local consumers.

Shetland’s electricity grid is changing:

  • From 2024 we shall no longer be an island grid.  However, the distribution grid will remain highly constrained. 
  • Upgrades will be required to the distribution network to cope with the uptake of electric vehicles and vessels and the transition to electric heating.   
  • Smart grids, active network management, grid stabilisation and energy storage will become more common to maximise grid efficiency and allow greater flexibility. 
  • Potential for additional interconnectors, particularly associated with offshore wind to connect with the energy market.  
  • Electricity market reform to allow a closer connection between the energy generation, distribution and the customer to encourage use at times of low demand and discourage at times of low generation or high demand. 

 

Power 2 X

The term covers a wide range of pathways and technologies and is widely used to summarise the conversion of power into a range of other sectors.  The X in the terminology can refer to hydrogen, ammonia, methanol, mobility etc.  As there will be times when renewable generation exceeds demand, converting the electricity into ‘X’ will reduce curtailment and increase overall system efficiency.

Power 2 X is of particular interest as we have an enormous renewable energy generation potential but as our electricity demand is limited, it is necessary to consider what forms of energy will be required in Shetland.  Particularly for our more difficult to decarbonise sectors such as marine and aviation, where synthetic fuels may be a suitable substitute.  It is also necessary to look at the wider energy markets to understand the global trends.

 

Energy Storage

How it works

The majority of renewable energy generation is intermittent, and this variability means that matching supply and demand across the network won’t be possible with renewable energy alone. Currently, fossil fuel generation plants are used in the electricity network to ensure there is electricity available to match demand at all times.  In order to reach a net zero electricity network, a variety of storage technology will be required to ensure that renewable generated electricity is available to customers at all times, and the network retains stability.  This storage allows consumption to be separated in time from generation.  Storage will also enable a more efficient overall system, reducing the amount of renewable energy generation which required to be curtailed, by storing it at times of low demand for later use. 

Current Situation

There is over 4GW of energy storage currently connected to the UK grid, mainly consisting of pumped hydro or battery storage.  The various storage options can be categorised into five technology types based on the storage medium:

  • electrical (eg supercapacitor)
  • mechanical (eg compressed air/pumped hydro)
  • low carbon fuel (eg hydrogen)
  • electrochemical (eg Lithium Ion battery)
  • thermal (eg sand battery)

Multiple types of storage technology are required, as they all uniquely cater for different types of energy storage.  Another important factor for providing storage for grid back up is time taken to initiate.  Stored energy that can be accessed instantaneously is more desirable for grid stability and security.

Lerwick Power Station currently has an 8MW Lithium Ion battery, which was installed in 2021, replacing a 1MW lead acid battery.  The original battery was installed as part of the NINES project.

Future

An application for a battery energy storage system (BESS) with up to 100MW generation capacity has recently been submitted to the Energy Consents Unit at the Scottish Government.  The BESS is planned in association with the Lerwick GSP to ensure grid back up in the event of an outage with the interconnector. This is to provide a standby solution to keep the power on in Shetland until the Lerwick Power Station is powered up, expected to take up to an hour.  Zenobe who are applying to undertake the work have approximately 435MW of batteries operating or in construction across the National Grid.

There is a pipeline of projects of over 20GW of planned storage in the UK, highlighting the huge growth in this area.  Battery storage will form the majority of this, but as the requirement to store energy becomes more prevalent, other technologies will become more common, such as hydrogen storage, forming a holistic grid storage system consisting of various technology types and capacities.

We will statements for the electricity network

  • We will support and encourage the development of a holistic whole energy system for Shetland which makes full use of existing and planned infrastructure.
  • We will engage with the development and refinement of future energy scenarios for Shetland

 

Hydrogen and the Hydrogen Economy

Site Location for H2 Production

Selecting the most suitable site for hydrogen production is a balance between small projects located close to demand, as is the case for most green hydrogen projects at present, or larger sites associated with larger electricity connections and export routes.

Scottish Enterprise undertook a desk-based study to consider the technology and site cost reduction opportunities to highlight the features of a 1GW hydrogen production site based on current available technology.  The findings are summarised here with a comparator for Shetland.

Renewable Electricity Resource

Detail:

  • Electricity is the largest cost contributor, an ideal site will have a source of low carbon, low cost electricity at scale to meet production.
  • 1GW electrolyser will require up to 24,000MWh per day

Advantages in Shetland:

  • Excellent renewable energy resource from onshore wind, offshore wind and tidal

Water

Detail:

  • Requires purified water from either fresh or processed seawater. 1GW electrolyser will require 3,840 t/day of purified water. Using seawater the consumption is around an additional 50% or around 5,760 t/day

Advantages in Shetland:

  • Island location limiting fresh water availability. 
  • Sea water available but consideration required for sea water extraction and safe brine disposal.
  • Investigate opportunities for value added products from the brine

Site Size and Availability

Detail:

  • The footprint required for 1GW green hydrogen must be greater than 15ha.  This includes electrolyser and desalination.
  • In addition, sites need to be specifically zoned for industrial use and classified within the COMAH Upper Tier
  • Market for oxygen 1GW scale H2 production will produce 3,225t/day O2 roughly 8x the weight of hydrogen produced

Advantages in Shetland:

  • Site availability – various sites available including brown field sites at Sullom Voe Terminal and the former Scatsta Airport. 
  • Opportunities for the use of surplus heat.
  • Demand for O2 from the aquaculture and space industries

Local Activity

Detail:

  • Skilled local workforce (gas processing / power plant type skills.
  • Local demand to negate the cost of export

Advantages in Shetland:

  • Skilled workforce through existing oil and gas, marine engineering along with electricity generation and management
  • Currently no demand but this is set to change as H2 becomes available

H2 Export

Detail:

  • Access to natural gas pipeline network
  • 1GW hydrogen electrolyser can potentially produce around 92,000Te/year

Advantages in Shetland:

Note – all of the figures on water and electricity required along with the amount of hydrogen and oxygen produced will depend on the efficiency of the electrolyser, the electricity source and the percentage of time the system is in operation.

The Scottish Government suggest a 1GW electrolyser will produce around 92,000 tonnes of hydrogen per annum.  However, this will depend on how electrolyser technology is developed along with the types of electrolysers that are used. The most advanced are PEM (Polymer Electrolyte Membrane) and Alkaline Water electrolysers. However, there are other electrolyser technologies being developed, such as Solid Oxide and Supercritical Electrolysers, which could produce hydrogen more efficiently once the technology is developed further to make it scalable. It may be possible to also improve efficiency through the development of desalination technology associated to hydrogen production, however, this technology is already relatively advanced.

The table above highlights the site requirements for hydrogen production but it will also be necessary to match supply and demand.  Consideration should also be given to the whole value chain as space may also be required for the production of ammonia or e-methanol, or the equipment required for exporting hydrogen.  This means that there are a wide range of factors which must come together to enable a hydrogen ecosystem to be initiated and for it to be sustainable.

Storage and Distribution

Experience is lacking in the storage and distribution of green hydrogen. Currently, most hydrogen is grey hydrogen where production is co-located with demand in the oil and gas industry and for producing fertilisers, which represents the current 10-27 TWh of hydrogen produced in the UK.

The challenge is that hydrogen has an extremely low density under ambient conditions. To improve the energy density of hydrogen it needs to be:

  • transported at high pressure or low temperature,
  • converted to another product such as ammonia or methanol, or
  • Alternative methods such as a metal hydride or a Liquid Organic Hydrogen Carrier (LOHC). 

Consideration must also be given to how the hydrogen will be used.  As the most appropriate transport method will link into its end use, the volume and purity required. 

The Council have been and are involved in various studies to explore transportation technologies for hydrogen, including LOHC, ammonia, and methanol and the potential of developing a national hydrogen pipeline connecting Scotland to Europe.

The Cost of Using Hydrogen

As discussed above the current cost of hydrogen production is high, the projects involve high levels of capital investment for the full system and have high operating costs which link directly to the cost of electricity. 

To allow a viable green hydrogen industry to emerge the cost of equipment for both the production and use along with the base clean energy required will need to be competitive and the cost of using hydrocarbons will need to reflect its true environmental impact.  Section 9 on affordable energy provides a summary of how the cost of generating energy from renewables has declined over the past 10 years.  This cost reduction is in part due to major international energy companies and climate change focused governments investing a great deal of time and money. 

Policy change is needed to support the emerging hydrogen economy. For instance, tax breaks could enable the hydrogen economy to develop at the speed required to meet the wide range of targets being set.  The allocation of government subsidy is subject to the value for money debate, and will likely require competitive auctions, so it is imperative for green projects in Shetland to be cost competitive with alternative low carbon hydrogen production.  Any subsidies will only be made available to projects that can prove they meet stringent carbon reduction thresholds.

Vehicle manufacturers, boat builders, industrialists and heating engineers have been working on the technologies to use hydrogen in a variety of new ways to replace fossil fuels.  All this effort means there is a very real prospect of a worldwide hydrogen economy emerging in the coming decades. Hydrogen production costs can be reduced by producing the fuel in very large volumes in places where there is a vast resource of clean energy which has no other route to market. Solar energy in the Earth’s sunniest places is one option, another is in the planet’s windiest places – hence the growing interest from energy producers to site hydrogen production in Shetland.

Another cost which is being investigated is the cost of transporting hydrogen to market.  The hydrogen backbone link by the Net Zero Technology Centre estimates that an export gas pipeline to Europe would potentially cost ca£2.7 billion, and the resulting transport cost would be 32p/kg.  The link could provide around 10% of the projected EU demand.  

Efficient use of hydrogen and considering the whole system will be key to the use of hydrogen being affordable. 

Hydrogen for Export

The production and use of green hydrogen is of international interest due to the need to replace the use of fossil fuels and significantly reduce emissions in line with climate change targets.

Countries around the world have ambitions to either become a net-exporter or net-importer of hydrogen depending on their natural resources and their plans to encourage the use of hydrogen. Currently, many European countries are being driven to accelerate the importing of hydrogen as part of their decarbonisation plans and to increase their energy security. Scotland, the UK, and other North Sea regions plan to compete with other net-exporters (like Chilean, Moroccan, Australian, and Saudi Arabian hydrogen from solar energy) to satisfy this growing demand.  In addition, as there are a number of variables to the storage, transportation and use of hydrogen it will therefore be necessary to ensure that systems are standardised and compatible.

By products and co-benefits

In order to maximise the return on investment and maximise efficiency, it will be necessary to consider the whole system and seek to use by-products such as surplus heat and oxygen along with making full use of the brine from the desalination of sea water prior to safe disposal. 

As highlighted at the start of the section there are a number of factors required for the selection of a suitable site. Some of these are described below.

Oxygen

For each tonne of hydrogen produced, there will be 8 tonnes of oxygen.

There are number of local applications for oxygen. The aquaculture industry in Shetland currently uses significant quantities of oxygen for its operations.  By working with local hydrogen producers, they may be able to reduce costs by having a close by source.  The future growth from the Shetland Space Innovation Campus could be another use for this by-product. 

Water and desalination

Purified water is a key limiting factor for hydrogen production.  Due to the volumes of water required sea water is the most likely option for a water source.  There are various options and processes under consideration and these must be considered as part of the whole system.  As there are opportunities and challenges which require further investigation, with various studies already undertaken.  Including a recent report by Ramboll for SGN to undertake a technical assessment and feasibility study into water requirements for hydrogen production.

Surplus Heat

A study undertaken by Ramboll highlighted that the system efficiency of electrolyser plants can increase by 14%-32% by recovering waste heat. The surplus heat from electrolysis and compressors can be used in district heating systems and is currently being examined in Denmark. 

Hydrogen Vision

2023-2027

Production

  • Small scale electrolytic production from onshore wind and tidal

Networks

  • Local production with storage and distribution to match scale

Use

  • HGV and Equipment, Marine, and Space

Key Actions & Milestones

  • All onshore wind farms operational, Pipeline trials for the export H2 and Import CO2, Port & jetty development in progress, Contracts in place for H2 & EFuel offtakers, Local green H2 market

2027-2030

Production

  • Onset industrial scale green hydrogen production powered by floating offshore wind

Networks

  • Production & storage scaled up

Use

  • Transport, Equipment, Marine, space and industrial

Key Actions & Milestones

  • Scotwind, Sullom Voe H2 production & CCUS initiated, Shetland ports support offshore wind.

2030-2035

Production

  • Increase onset industrial scale green hydrogen production powered by floating offshore wind

Networks

  • Production and storage scaled up

Use

  • International export in addition to local use

Key Actions & Milestones

  • Scotwind production initiated, additional offshore wind areas licenced, pipeline import & export at scale, tanker export.

 

We will statement for the hydrogen economy

  • We will continue our participation in research to determine the economics and impacts of the hydrogen economy in Shetland.
  • We will develop a clearer roadmap on the current and future demand for hydrogen locally, and elsewhere, to accompany the pipeline of planned projects for hydrogen production.
  • We will progress the hydrogen economy in Shetland when production and demand are aligned.

 

Carbon Capture, Utilisation and Storage

How it works

Carbon Capture, Utilisation and Storage (CCUS) is where CO2, produced from power generation or an industrial process, is captured.  The captured CO2 is then stored, such as in saline aquifers or depleted oil and gas reservoirs, or used, such as in the production of methanol.  This is a method of reducing the amount of CO2 in the atmosphere, and will be required in order to reach net zero to counteract the industries and processes where CO2 will still be released into the atmosphere.  It is a proven process, using technologies that have been used for decades, but will be required to expand rapidly during the transition to net zero.

Governance, Policy and Frameworks

The UK Government’s Department for Energy Security & Net Zero (DESNZ) lead government policy on CCUS.  

The North Sea Transition Authority (NSTA) are the licensing authority that regulates offshore carbon dioxide storage. This includes pipelines and any other infrastructure required in connection with the development and use of such facilities. 

Developers must also obtain the appropriate rights from the Crown Estate Scotland.

The UK Government is committed to deploying two industrial CCUS clusters by the mid-2020s, and a further two by 2030. In November 2021, the HyNet Cluster (NW England and N Wales) and East Coast Cluster (Teesside and Humber) were selected as Track-1 CCUS clusters. The Track-2 clusters were announced in July 2023 as Acorn (NE Scotland) and Viking (Humber).  These projects are expected to be the flagship CCS projects in the UK, receiving government support to progress.

Current

244 million tonnes of CO2 was captured in 2022 across 30 facilities, with a further 164 facilities under construction or in development.  Currently these are based around large point sources, before the CO2 is compressed and transported to its end location. 

Future

The UK has one of the greatest CO2 storage potentials in the world, with a huge geological advantage.  25% of Europe’s storage potential is in the UK Continental Shelf. In September 2023, The NSTA announced the 14 companies that accepted licences during the UK’s first ever carbon storage licensing round.  21 licences were awarded in total across the North Sea. SVT operator EnQuest were awarded 4 licence areas, at the Magnus, Thistle, Eider and Tern fields to the North East of Shetland.  There is an existing gas pipeline that connects SVT to Magnus.  This could enable SVT to become a hub for importing CO2 to export via pipeline to these offshore reservoirs.

We will statements for CCUS

  • We will engage with EnQuest to understand their plans for CCUS and the opportunities which may arise.
  • We will continue research into the development of the carbon economy in relation to trading schemes, carbon pricing, and taxation.

 

District heating

How it works

District heating, also known as a heat network, is a system where heat is generated in a central location and then distributed through a network of pipes to many different buildings.  Each property has a heat exchanger or heat pump to take heat from the system for use within the property for space heating and hot water. 

Governance, policy and framework

The Scottish Government have set ambitious target of increasing the amount of heat supplied in Scotland by heat networks to 8% by 2030, the current level for Scotland is 1.5%.  In Shetland the Lerwick District Heating Scheme supplies 900 domestic properties and 300 non-domestic properties.

The Scottish Government have also introduced the Heat Networks (Scotland) Act 2021, the act relates to the regulation of the supply thermal energy by a heat network.

Local Authority obligations

  • Must carry out a review to consider which areas within its boundaries can be designated heat network zones.  Then must comply with a range of requirements in establishing the heat network zone.
  • Will have to carry out building assessments on any non-domestic building to assess their capability of connecting to a heat network zone.
  • Will be the licencing authority for heat networks within its boundaries.
  • Will be the operator of last resort for heat networks within its boundaries.

Case Study - Shetland Heat Energy & Power (SHE&P)

The history and decisions

In 1991 Shetland Islands Council and the Orkney Islands Council were faced with the problem that their existing incinerators were going to be closed down because they did not meet the impending European Union (EU) legislations.  This was a massive issue because of the increased need to landfill waste.

The Council looked to other countries and technical studies were undertaken to understand the different options available and the quantities of waste required.  From these studies and visits to successful plants, the Council established that waste incineration was a better option than sending each of the different waste streams to landfill.  However, there was insufficient waste available in Shetland for the system to work.  It would be possible to import waste from Orkney and elsewhere off island to meet the required amounts to make a waste-to-heat plant the most efficient option.  Electricity generation from waste was considered but wasn’t cost effective for the size of plant proposed. 

Following a rigorous business analysis of the waste to heat technology, a decision was taken to build an Energy Recovery Plant and use the energy produced for a district heating scheme in Lerwick.

It was also decided that the most appropriate ownership model would be for the district heating scheme to be owned by SHE&P, which is itself owned by the Shetland Charitable Trust. The Council, would have ownership of and responsibility for the Lerwick Energy Recovery Plant.  This is a similar ownership model to district heating schemes in Denmark. To ensure maximum benefits to the customers, the companies which own and operate district heating schemes are not permitted to retain profits. 

Other considerations explored included the extent of SHE&P’s responsibility.  It was decided that SHE&P’s responsibility would end at the valves just inside properties, and that the customer had to use an approved plumber to complete the installation inside their own property.  As the heat meters were supplied by SHE&P, plumbers had to visit SHE&P regularly enabling good information exchanges to develop and problems to be discussed. 

Current Situation

SHE&P are responsible for 40km of pre insulated pipes which stretch across Lerwick, supplying 900 domestic properties, including around 300 social housing, along with 300 non-domestic customers.  These include the hospital, Clickimin Leisure Centre, and Mareel which form the anchor loads for the system.  The last major expansion served the Hjaltland Housing Association (HHA) development at Quoys in 2012, with around 148 properties connected. There is an agreement in place to extend the network and connect to the HHA Staney Hill development bringing in an additional 300 customers in the next 10 years. 

Peak demand on the system is around 11.5MW and over 40GWh of heat is supplied annually to the community.  Figure 9 above shows the scale of district heating within the overall energy mix for Shetland.  

The recent refurbishment of the Council owned incinerator has increased the efficiency from 85% to 90%, meaning that more energy from burning the isles’ domestic waste is converted to heating for homes and offices in Lerwick.

A ground breaking system has recently been installed to recycle surplus heat from the Lerwick Power Station into the district heating scheme.  The system was designed using Danish district heating expertise and delivered under a tight schedule by local contractors.  For the majority of the year, the energy recovery plant provides sufficient heat to meet the town’s heating requirement.  However, in the winter diesel is required to meet the shortfall.  The combination of the additional heat from the Lerwick Power Station and the upgrade to the energy recovery plant, has made a significant reduction to the amount of diesel required to meet peak demand, saving around 600,000 litres of diesel over the course of the year. 

SHE&P have been able to keep their rates stable for several years, with an increase in 2023 to 9.5p/kWh, at a time when other energy prices have risen dramatically.  This offers a huge saving to the community both directly to the households connected to the system and indirectly as large energy users such as the Council and the Shetland Recreational Trust are able to keep their heating costs stable.  Further discussion on energy costs can be found in Section 9 Affordable Energy.

Future

In Denmark there are a number of micro district heating schemes serving 100-200 houses. This suggests that there is potential in Shetland to investigate micro district heating schemes in rural centres. 

Opportunities:

  • Energy Security
  • Flexible, other heat sources can be plugged in when available
  • All revenue generated or saved stays within the local economy
  • Replicable
  • Local service
  • Heat exchanger requires minimal space, low maintenance and rarely malfunctions
  • Reduces the amount of electricity required by a property freeing up headroom. 
  • Thermal storage is a small proportion of the cost of batteries

Challenges:

  • Need an affordable low carbon heat source
  • Need a heat distribution network
  • Need sufficient heat density
  • High capital cost for the infrastructure
  • Heat is currently supplied to the Lerwick District Heating Scheme by the Energy Recovery Plant changes to waste legislation may have an impact


We will statements for district heating

  • We will support the continued operation and development of the Lerwick District Heating Scheme.
  • We will investigate opportunities for additional district heating schemes outside Lerwick.
  • We will promote the success of the Lerwick district heating scheme to other communities seeking to develop similar projects.
  • We will explore alternative sources of low carbon, low cost heat suitable for integration into a district heating scheme.

 

Enabling Infrastructure

Ports and Harbours

Current Situation

Shetland’s ports are a key enabler for many industries on the island, such as fishing, aquaculture, energy and tourism. As Shetland seeks a Just Transition towards a net zero future, and we enter a period of global change in transport and energy, it is clear that ports will retain their huge importance to many existing and emerging activities throughout Shetland.

Shetland has several ports that contribute significantly to major industries on and around the islands, and they each have many unique selling points. While fishing remains the largest industry, Shetland has supported vast activity in the offshore energy sector, centred around its ports. This has led to an incredibly knowledgeable and skilled workforce with valuable experience.

Lerwick Port & Harbour

Lerwick Port Authority operate the port, including quaysides, at Lerwick and Dales Voe, including Greenhead Base which has Peterson as logistics operator. The sheltered, deep-water port is open to shipping in all weathers and operates around the clock.

Lerwick supports a wide range of industries including energy, sailing, fishing, cruise, and ferries. Further information can be found on the Lerwick Port Authority website.

There is 1MW of shore power available at Mairs Pier, with six connections used primarily for the pelagic fishing fleet.  Plans have recently been announced to create a shore power connection for the Northlink Ferries, showing that the Port Authority is already making advancements to transition its port activity.

Dales Voe

Dales Voe includes a decommissioning base for offshore platforms. This has recently undergone a quayside extension along with the installation of a decommissioning pad.

A project to build an Ultra Deep Water Quay to complement existing facilities is progressing. The ambition is for 24m water depths with 25t/m2 deck loading and an additional 65,000m2 laydown. The Ultra Deep Water Quay project has been identified by the Scottish Government as the preferred location for development of an Ultra Deep Water Quay for the UK. This could facilitate large scale offshore wind structures along with enhancing their decommissioning services. The wet storage anchorages could also facilitate floating offshore wind structures.

Port of Sullom Voe

The Port of Sullom Voe (PoSV), operated by the Council, serves the nearby Sullom Voe Terminal. The servicing vessels are based at Sella Ness operate with 24/365 operation. The Port sees an average of 80 oil tanker movements per year. There are four jetties which have primarily been used for crude oil export since the 1970s.

As terminal operations have decreased, the use of the jetties have decreased.  However, there is an opportunity to repurpose some of the jetties for clean fuel export, as well as CO2 import, in line with the creation of a clean energy hub in the area.

Scalloway

The port of Scalloway is operated by the Council and supports the fishing and aquaculture industry, with a new fish market opened in 2020, the building benefits from a high speed fibre connection to Shetland Seafood Auctions providing ready access to the online marketplace for buyers and sellers. Scalloway receives whitefish trawlers, which are likely to require a future fuel. As one of the three largest ports in Shetland, this could become a centre for bunkering, especially for vessels largely based on the west side of Shetland.

The quay length is 373m in total and the depth is around 6.5m to 7m, with bunkering is available for large vessels, along with potable water and shore power.  Laydown space is limited but there are small ship repair yards available. 

Cullivoe

Cullivoe, on the island of Yell, acts as a major fishing and aquaculture port, operated by the Council. The onshore infrastructure for Nova Innovation’s tidal array is based at Cullivoe pier, including cable landings and the world’s first tidal powered EV charger.

North Yell Development Council have recently expanded the Industrial Estate at the pier and opened the new North Yell Marina in May 22.

Small ports and marinas

In addition to the larger ports, Shetland also benefits from a network of small ports and marinas.  These are owned and managed by the Council, community groups and local industry and have a wide range of functions.  These include but are not limited to ferry terminals, inshore fisheries, aquaculture, marine tourism and pleasure.

The Future

Our ports have played a vital role in our economic prosperity throughout history and will continue to be vital for any future energy scenario which plays out. 

We need to understand how our existing industries will develop and change.  For example, during decarbonisation which fuels will vessels transition to and what infrastructure and storage will be required? It is also necessary to consider these natural community hubs in a wider context.  For example, changes to the marine industry may result in changes to road traffic as marine vessels seek to travel shorter distances to save on fuel.  This change could result in a need for further vehicle charging facilities.  Similarly changes to ferry operations and fixed links will change the way people travel. 

For the new industrial opportunities, such as offshore wind and hydrogen production, we need to understand the scale of infrastructure required for the marshalling and assembly of turbines and the number and types of vessels which may be required for the operation and maintenance of offshore wind farms and where these may be based.  The infrastructure required for the import and export of hydrogen and its derivatives, along with CO2 transfer, must be developed in line with these industries emerging within Shetland. To retain Shetland’s status as a main energy hub built on our natural resources, existing energy infrastructure and highly experienced energy skills base, our ports must transition to support these existing and future industries.

 

Airports and aviation

Current situation

HIAL operates Sumburgh Airport, a key transport hub linking Shetland to various cities across the UK through scheduled flights for the general public. It is also used by the oil & gas industry as a hub for the transfer of passengers to offshore installations. 

The Council operates Tingwall Airport which has regular flights to Fair Isle and Foula, the two remote outer islands. The Council owns two aircraft (Britten-Norman Islanders) which are small 8 seater aircraft.

One project currently being undertaken is Sustainable Aviation Test Environment (SATE) led by Highland and Islands Airports Ltd (HIAL).  HIAL have created the UK’s first low carbon aviation test centre embedded at a commercial airport at Kirkwall in Orkney.  In phase 1 they opened a dedicated hangar with office space for technology developers and facilitated a number of demonstration flights. SATE 2 aims to expand on the success.

In 2022, Tingwall Airport was used as a test site for the Windracer autonomous drone.  The drone can carry loads of up to 100kg and could potentially carry mail, medicine or other supplies to remote communities. 

Future

Aviation in and around Shetland is set to change significantly over the next 20 to 30 years.  This is due to a number of reasons including:

  • Changes to sub regional travel patterns
  • Managed decline and decommissioning of the oil and gas industry.
  • Development of new industries including offshore wind,
  • Alternative fuel options, which are likely to be a combination of hydrogen, electric and sustainable aviation fuel. 
  • Alternative aviation options including the greater use of drones and the potential for sea gliders.

It is likely that the aviation industry will be one of the last to reach net zero due to safety requirements and lack of mature technology. This doesn’t take away from the fact that aviation is a heavy polluter, and work needs to begin now to allow it to reach net zero.

Regional flights and airports are likely to be at the forefront of energy transition in aviation.  The aeroplanes are smaller and routes shorter making them easier to decarbonise. Additionally, there are opportunities for alternative options such as autonomous drones to deliver services out to remote areas. 

Shetland will also benefit from the development of the Saxa Vord Space Port in Unst, which is set to be an internationally recognised site.  It has already delivered a step change to the Shetland economy through its construction and is set to open the doors to a range of opportunities in the future.

We will statements enabling infrastructure

  • We will engage with developers and port users to understand the investment required in our ports and harbours and the timescales (to deliver decarbonisation and renewables projects).
  • We will engage with the aviation industry to better understand future developments.