Not the job of the trust (John Tulloch)

It has been claimed elsewhere that oil central heating in Shetland costs 4.5p per unit (kWh).

In Argyll it costs about 3.3p per unit (kerosene, 27.8p per litre), which raises an important question over how much dearer oil is in Shetland where more heat is needed due to the harsh climate. Little wonder fuel poverty is rife.

Last Friday you reported that Shetland Heat, Energy and Power (Sheap’s) planned new heat pump system for recovering heat from the sea is intended to replace supplementary oil burning in the district heating system.

Sheap is a subsidiary of Shetland Charitable Trust, created to provide income for the trust.

The heat pump will cost £1.6 million, funded initially with a low interest loan from the Scottish government, to be repaid by some combination of Sheap customers and the charitable trust.

Presumably then, those stakeholders may look forward to a reduction in the price of heat and/or an increase in income for the trust?

Oddly, neither price reductions nor increased trust income were mentioned. Given Shetland’s shocking level of fuel poverty (over 40 per cent), surely Sheap would be boasting about any such benefits – if there were any?

Gaps exist in Sheap’s information, however, and from my own personal experience as a power station engineer it seems highly unlikely that this project is viable without major subsidy.

A (low interest) loan from the Scottish government is mentioned and energy minister Fergus Ewing is quoted as saying: “Heat is … responsible for nearly half of Scotland’s greenhouse gas emissions, so the imperative to take action is very clear.”

Ewing declares that “… the imperative to take action is very clear” yet he doesn’t mention any subsidy?

The “imperative to take action” may well be “very clear” to Mr Ewing but it is neither the job of the charitable trust to act nor, especially, to subsidise it.

Surely, as a subsidiary of the charitable trust in its current regime of spending cuts, Sheap would not spend £1.6 million on a financially unviable project that will become a drain on customers’ pockets and/or trust reserves?

The Sheap operations manager is quoted as saying: “The primary aim is not to increase the number of households joining the district heating scheme, but to offset some of the oil we burn with a renewable source.”

What, even if it puts up heating costs or reduces trust income?

Key questions need answers:
• What is the price of heating oil in Shetland?
• What subsidy is available to make SHEAP’s investment viable?
• What will be the effect on district heating charges?
• What will be the effect on charitable trust income?
• Is the trust’s priority to burn less oil or to make energy affordable?

John Tulloch


Add Your Comment
  • Robin Barclay

    • March 7th, 2016 12:42

    Is Shetland missing an opportunity for local use of some of the gas now coming on shore here? Surely gas-fired electricity generation should at least be costed (near to its landfall, not in Lerwick, since it is surely more practical to redistribute electricity on an existing network than implement a gas pipeline from Sullom to Lerwick). This might benefit the whole islands, not just Lerwick. Am I being naive, and why?

    • John Tulloch

      • March 7th, 2016 15:16

      Yes, indeed, Robin, a glorious opportunity is being missed.

      A gas-fired power station could be installed at Sullom however, while saving on gas delivery, the existing network would need considerable reinforcement to supply Lerwick and south/west of there.

      Whether Lerwick or Sullom is better would depend on cost/benefit analysis however the gas pipeline needed by a Lerwick-based plant could also supply gas to replace both oil burning and the ageing waste incinerator; and importantly, to facilitate the installation of direct gas supplies to public buildings and domestic premises in Lerwick and possibly, Brae, Scalloway and Sandwick, if viable.

      A small plant at, either, Lerwick or Sullom could despatch bottled and bulk supply gas (by road) to all locations not served directly, at the same price.

      According to UK government statistics (DECC), gas supplies to medium-scale industry average 2.7p/unit (kWh) – (see my letter on Sheap’s heat pump) – and Sullom/Lerwick are close to source so plenty of scope for profit for the charitable trust to invest in.

      Finally, gas could supply cheap motor fuel and the SIC alone must have hundreds of vehicles which would benefit from that.

      Forget the ‘Heath Robinson’ rubbish like “NINES”, gas is a ‘no-brainer’!

  • John Tulloch

    • March 9th, 2016 21:02

    I have the answer to one of the questions I asked in my letter, “What is the price of heating oil in Shetland?”

    ARGYLL PRICE – 30.1p/litre (incl. VAT); SHETLAND PRICE – 38p/litre (incl. VAT).

    Shetland oil costs 26 percent more than Argyll oil.



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