Shetland's energy transition faces test as communities buffeted by cost of living

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On the way north from Lerwick, an arterial road winds through a sparse canvas of grass, heather and rock typical of Shetland’s stunning landscape.

Then, the turbines come into view. Dozens of them, dotted across the landscape.

This is the Viking wind farm, made up of 103 turbines from Danish manufacturer Vestas. Fifteen years in the making, the project was completed by SSE Renewables in late 2024 and now generates electricity that’s sent to the UK mainland via a 260-kilometre, high-voltage subsea cable installed by SSEN.

Shetland’s famously windy conditions are perfect for wind power, including off the coast. Two ScotWind offshore wind farms are planned to the southeast of Shetland, one by ESB, Ireland’s largest power company, and another by Ocean Winds, a joint venture between France’s Engie and EDP Renewables of Portugal.

Work is under way at Lerwick harbour to support offshore wind, as well as to offer oil and gas rig decommissioning. Dredging at the port’s Dales Voe facility will create what would be the UK’s deepest port, capable of handling the laydown and assembly areas needed for offshore wind farms.

Further north from Viking is the old oil terminal at Sullom Voe, now being turned by a unit of energy company EnQuest called Veri Energy into a facility that would harness wind power to make green hydrogen as well as a range of synthetic fuels to help decarbonise transport and aviation in the UK. Carbon capture is also in the mix.

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Taken together, these developments signal that Shetland is on the cusp of a new economic chapter since the discovery of oil and gas in the North Sea in the 1970s.

Yet there is unease in the community. Claire Ferguson is team leader for climate change strategy at Shetland Islands Council and spoke this week at a session on Shetland at the All-Energy Exhibition & Conference, an annual industry gathering in Glasgow.

“We feel the wind every day but we aren’t feeling the energy benefits,” she told me, pointing out that Shetland has one of the highest rates of fuel poverty in the UK. Meanwhile, none of the power generated by Viking is available locally, although late this year SSEN expects to connect Shetland's network directly to the national grid, to which Viking already contributes.

The issue is not so much a lack of community benefits flowing from this new wave of renewable energy projects. The Viking Community Fund hands out around £2.2m a year for community and charitable projects. One recent award went to the Fair Isle Marine Research Organisation for a sand eel survey. SSE says it expects to have invested a total of £72m in local projects between 2024 and 2029.

Moreover, Shetlanders have long felt the benefit of far-reaching community benefits funded by the Shetland Charitable Trust (SCT), set up in 1976 as part of a landmark agreement between Shetland and the UK government to compensate islanders for Sullom Voe. So far, it has disbursed over £320 million to a range of local charities, organisations and individuals.

Rather, there are at least two issues not present in the days of Shetland’s hydrocarbons boom that help explain the current zeitgeist – and the challenge it presents.

One is the cost-of-living crisis, which has changed Shetlanders’ priorities. In Sullom Voe’s heyday, the SCT funded much-needed infrastructure that hadn’t previously existed like swimming pools and leisure centres. Now, those swimming pools are expensive to heat. Shetlanders no longer need quite so many of the things the SCT used to fund. It’s the household heating bill that matters now.

“The needs of Shetlanders have changed. One of the things we would really like to see as host communities of large-scale energy developments is that local communities benefit from clean, secure, affordable energy,” Ferguson said, suggesting that community benefits be redesigned “to help with the services run by local authorities that can really make a difference to community lives”.

Second, communities feel a lack of control over what’s happening around them. This is where it gets tricky, because it’s possible to point to examples of energy-related projects with community at their heart. Another of the Viking Community Fund’s recent awards was to the Scalloway Community Development Company for a district heating feasibility study, for example.

Yet as a recent study on Shetlanders’ attitudes to the energy transition by the University of Bath and Cardiff University revealed, people feel they have not been sufficiently consulted on energy projects, leading to perceptions of loss of control.

Control was one issue at the heart of the election campaign by Hannah Mary Goodlad, the SNP candidate who last week became her party’s first Shetland MSP. On the hustings, the former Equinor renewables specialist argued for a new version of the 1974 Shetland Energy Act that governed oil development.

This would see local planning and involvement devolved to Shetland “so that if energy projects happen here, we decide them - and on our terms”, as Goodlad put it in a Facebook campaign video.

Work is being done, meantime. Shetland Islands Council recently launched EmPowering Shetland, a collaborative platform including supply chain representatives that “helps investors understand our local priorities early on and shows our communities that we're taking the right approach”, according to Ferguson. Veri is also looking at how best to preserve around 380 jobs at Sullom Voe as its role changes.

The University of Strathclyde’s Centre for Energy Policy (CEP) is researching how projects such as synthetic fuels and the Dales Voe project can be done in a way that produces local economic benefits.

“How do we make sure that communities and local supply chains genuinely gain from the transition rather than simply hosting it?” asks Karen Turner, CEP director. “That’s the key question.”