Sheap: On fire for 25 years

Over the past quarter of a century, Shetland Heat Energy and Power (Sheap) has carved out a reputation for its trailblazing approach.

Once dismissed as an oddity in a far-flung community, Sheap is now at the forefront of national energy strategy, sharing its expertise with government ministers, council leaders and policy-makers alike.

Executive director Derek Leask said that while Scotland was only just waking up to the advantages of district heating, Shetland was already “way ahead of the game”.

“Up until about five years ago, Sheap was just a quirky concept in a distant outpost and no one paid much attention to us,” he added.

“Now district heating is part of government policy.

“The time has come for Sheap and suddenly what we do has become very topical.

“We play a fairly big part in the national conversations that are going on and we’re already sharing our knowledge and expertise with others who are just starting out in developing their own heat networks.”

A major aspect of Sheap’s success has been its competitive pricing, which has barely increased over the decades.

Whereas electricity costs have rocketed to around 30p/kWh, district heating has remained low, currently clocking in at 7.5p/kWh.

Although it has always been cheaper, the sheer scale of the difference over recent years has started to really hit home with customers

“Now that electricity has gone through the roof, everyone can see what is going on in the world and realising that it’s only going to become more and more expensive, so a lot folk are really wishing they were on district heating,” Mr Leask said.

“The beauty of district heating is that it’s community-led. It’s locally owned so we have control over the production and the pricing and we’re not at the mercy of global events that affect electricity costs.”

Taking inspiration from the Danish pioneers of district heating, Sheap ensures all the revenue it generates is retained locally.

The Sheap team. Photo: Brian Gray

The money either supports system improvements or goes back to Sheap’s owners, the Shetland Charitable Trust, to support worthy causes.

“So it’s a real winner for Shetland,” said Mr Leask. “None of the revenue generated by Sheap leaves Shetland.

“There’s no private shareholders taking huge dividends, so it’s very different to how energy suppliers traditionally work.”

One of the recent system improvements, which came about following meetings with Danish experts, involves thermal imaging drone surveys.

Working with Shetland Flyer, aerial surveys are carried out on a cold winter’s night to identify “hot spots” on the network where heat is being lost through ground water ingress into the outer pipe, which are then repaired before any leaks occur.

It means the network is far more efficient than it was before, retaining much more heat for people’s homes and businesses.

The network has also doubled in size and now extends to over 40km of underground pipes.

These improvements have allowed more and more people to benefit from cheaper heating as they join.

Mr Leask said three or four houses were currently being added every month and there was always a considerable waiting list..

There are likely to be significant additions to the network when Hjaltland Housing Association’s North Staneyhill development gets under way.

The SIC’s Knab redevelopment is also likely to be supplied with district heating.

Currently, the system is mainly powered using waste heat from the council-run incinerator, the Energy Recovery Plant (ERP), as well as heat recovered from Lerwick Power Station, though to a lesser degree.

A recent report by Zero Waste Scotland showed the ERP was the most efficient incinerator in Scotland.

Mr Leask said such efficiency stood the incinerator in good stead for a good future – and was likely to remain online long after others had been shut down.

However, Mr Leask also said the future of district heating did not rely exclusively on the incinerator – as other heat sources could be added to the network.

With a number of new industrial developments shaping up for Shetland, including plants potentially producing hydrogen, ammonia and bioethanol, Mr Leask said there would be opportunities for the waste heat from such processes to fuel district heating.

It means that as Shetland’s new economic opportunities take off, district heating can grow alongside them – and could move beyond Lerwick too.

Mr Leask said Brae, in particular, was in a “prime spot” for a heat network.

With last week’s news that the Scottish government had agreed to part-fund the new Brae education campus, Mr Leask said it would provide the “ideal opportunity” to kickstart work on a new district heating scheme.

He suggested the heat could come from turbines, a sea heat pump and a thermal store.

“The whole idea of district heating is that it should be community-based and community-led,” he said.

“It would work far better if the [Delting] community council were to set up a company to develop a heat network and Sheap could offer some advice to get it started

“There’s definitely scope for a heat network in Brae.”


Shetland Heat Energy and Power (Sheap) and the Energy Recovery Plant (ERP) are separate entities. Sheap is fully owned by the Shetland Charitable Trust whereas the ERP is owned and operated by the council.

Photo: Brian Gray

The ERP is considered the most efficient waste incineration plant in Scotland.

A report compiled by Zero Waste Scotland in 2021 identified that the Lerwick plant has approximately a third less emissions and is much more efficient than the next best in Scotland.

This is mainly because the Lerwick plant produces only heat which is much more efficient than trying to produce electricity, which many other plants do.

Additionally, all of this heat is used by a network which improves its efficiency considerably.

After recent upgrades the ERP is now around 90 per cent efficient.

This makes it the best performing plant in the country and is the reason why Sheap is pleased to have it as a main source of waste heat.

Sheap buys the waste heat from the plant for use in its network.

The plant is not in existence to produce heat for Sheap. It is there primarily to meet the waste management requirements of Shetland and Orkney.

Being able to send its waste heat to a network helps its efficiency andimproves its environmental credentials.

The emissions that are released in waste incineration stay with the plant and the council.

There is no emissions in the wasted heat.

In energy performance certificates (EPCs) for homes, and standard assessment procedures (SAP) for new build properties, district heating emissions are based on the electricity used to pump hot water around the town, oil burn for boilers when the ERP is in shutdown mode and a marginal portion for taking the waste heat from the ERP and power station.

This gives an emissions factor of 0.0567 kg CO2 per kWh. The standard grid electricity emissions factor is 0.136 kg CO2 per kWh.

This is nearly three times more than Sheap.

Sheap itself has a working strategy and ambition to reach net zero and become a zero emissions energy supplier.

The company is investigating renewable forms of electricity to operate the network pumps, pursuing alternative energy sources to enable operations during ERP shutdown without oil boilers and has recently invested in an electric van to decarbonise transportation.

Although the emissions at the ERP are the responsibility of the council Sheap is working with companies on potential projects that may help the council decarbonise the recovery plant and use the emissions in alternative industrial processes.

This would be good for the environment and good for Shetland.

In the meantime customers can be assured that Sheap is providing the lowest emission network based energy currently available in Shetland.


The first couple to move into Sandveien more than 50 years ago have become the first in the Lerwick development to have district heating installed.

Colva and Bertie Tait. Photo: Brian Gray

Colva and Bertie Tait say their bills have fallen to a fraction of what they were with storage heaters – and have encouraged others to make the switch too.

The couple had their district heating installation funded through Warmer Homes Scotland, which is the Scottish government’s national fuel poverty scheme.

Managed by Warmworks, the scheme has fully funded the work right through from the initial assessment through to the plumbing and installation.

Mrs Tait, 84, said her family had been very happy in Sandveien, ever since they moved in on 11th April 1970.

They bought their home from the council in 2008.

But with energy costs rocketing over the past two years, the couple were finding it increasingly difficult to cope.

Mrs Tait said their bills kept on going up and it was becoming a “nightmare”.

“We had one saying we owed £700,” she added.

“So we thought it was time for a change.”

The couple contacted Warmworks which carried out a survey at their home and identified the Shetland Heat Energy and Power district heating scheme as the best solution to their needs.

Work on the external connections began in June, with Hughes Heating Services (Shetland) Ltd completing the plumbing, including underfloor heating.

The new system has been up and running since last month.

Mrs Tait said it had already made a huge difference to their bills – and their home was lovely and warm as well.

“It takes no time at all before it heats up the room,” she said.

“We’re very happy with it.”

Having seen how easy it was for Mr and Mrs Tait to make the switch, several of their Sandveien neighbours have also begun the process.

While many Sandveien properties are rented from the council, those that are privately owned could be contenders for district heating.

Warmworks Scotland division managing director, Nicola McLeod, said:“Warmworks has supported hundreds of homes across Shetland to improve their energy efficiency and better manage their energy bills since the Warmer Homes Scotland scheme was launched in 2015.

“Under the scheme, a range of heating and insulation measures are available that are aimed at helping customers to stay affordably warm.

“With winter right around the corner, we’d encourage people across Shetland to check if they qualify for help under the Warmer Homes Scotland scheme by contacting Home Energy Scotland on 0808 808 2282.”

To find out more about Warmworks visit


Over 30 years ago the council had six very basic incinerators where rubbish would be packed in and then set on fire until it burnt out.

Those old enough will remember the black smoke billowing from Rova Head which could only be reduced by adding oil to the waste as it burned.

The heat was simply expelled into the atmosphere.

In the early 1990s it was recognised that this could not meet impending EU directives that were increasingly likely to be a statutory obligation.

Orkney had the same set up as Shetland and faced the same challenge.

In 1993, the SIC commissioned a consultant to look at the options.

Reducing landfill was critical to decreasing emissions, saving costs and preventing waste being scattered around by the wind and vast flocks of scavenging gulls.

A much more modern incineration plant with systems in place to extract, clean and scrub the majority of toxins and emissions was required.

The early objective was to divert the waste from landfill and primitive incineration practice into a newly designed modern plant that would be significantly more efficient, cleaner and better for the environment.

At this point discussions then arose on the possibility of making use of the residual heat that would be produced in the process by generating power or creating thermal energy.

This was an unknown field in Scotland but Shetland had many good connections in Scandinavia where district heating and combined heat and power (CHP) systems used the wasted energy from incineration plants for local use.

An energy plant producing electricity was looked at but government subsidies for this technology were not available to Shetland at the time.

Electricity generation would also be a very inefficient use of the energy produced by incineration.

District heating was then suggested as an option as using the wasted heat from the process directly for this purpose would give an efficiency of over 80 per cent compared to under 20 per cent for electricity.

Little was known about district heating by councillors or officials.

It was thought that by capturing the wasted heat from an efficient waste incineration facility an energy supply could be established that would be under local control.

Heating costs were a major concern in Shetland at that time and it was thought that a project of this nature could help address that.

It was hoped that an efficient and modern waste incineration plant could also attract waste from offshore operators and create jobs.

Photo: Brian Gray

Further investigation was required.

A small delegation of SIC civil engineers, including myself, and an environmental officer along with a representative from the Hydro (Lerwick Power Station) was sent to Denmark to examine how district heating could be of benefit to Shetland.

In Denmark, at the time, around 60 per cent of all heating and hot water was supplied via district heating.

The delegation was impressed with how waste heat from electric power stations (often under 50 per cent efficient), waste heat from industry and from waste incineration could be collected and distributed via insulated pipes with relatively little heat loss.

For the Hydro, the benefits would be a possible income for its waste heat and also a reduction of electricity demand from properties connecting to the scheme as the Lerwick station was expensive to run.

Having fewer properties on electrical heating would reduce its costs.

SSE was initially keen and very much part of the project.

However, shortly afterwards plans developed for Viking Energy and thoughts moved to replacing or closing the Lerwick Power Station.

The original connection was not made.

Sheap eventually did connect into the LPS a few years ago and now successfully extracts waste heat for use in its heat network.

Following the Scandinavian visit, Danish engineers were commissioned to examine the possibility of developing a district heating scheme in Lerwick.

There were challenges in that there was very little regulation covering heat networks as Scotland had not developed this sector and there was very little legislative experience.

Likewise, heating engineers had very little knowledge of district heating.

Despite its extensive use in Scandinavia it was poorly understood in this country.

A plan was eventually established that an initial scheme using the residual heat from the newly built incinerator could be developed and eventually, as demand built up, waste heat from the power station could be added.

A resulting scheme that could ultimately supply around 20MW was proposed.

Orkney had not developed a solution for limiting landfill and modernising its waste incineration process so it was happy to reach agreement with Shetland to have its waste shipped and incinerated at the new plant in Lerwick.

The residual heat from the incineration of these combined waste streams could be diverted for use by the district heating scheme and provide enough energy to develop a heat network to serve Lerwick.

The Orkney and Shetland waste plan was approved by the Scottish Environmental Protection Agency (Sepa) and plans for design and construction began in earnest.

The question of finance had to be addressed.

For EU funding the SIC would need an external partner.

The Shetland Charitable Trust (SCT) was approached and at the time agreed to take on ownership and responsibility for operation of the district heating company.

This was set up and named Shetland Heat Energy and Power.

The council would construct, own and operate the incineration plant.

This allowed access to the European Regional Development Fund to support the installation of the heat network and for additional European funding to help the SIC with construction of the incineration plant.

SCT owned the network and provided management services and staff to Sheap until it was made a fully independent subsidiary company in 2016.

In the UK at the time, there were very few district heating networks.

Visits were made to such schemes that existed which were in Nottingham (a former coal board 1970s project) and Sheffield which had a scheme backed up by the UK government built in the 1980s.

The purpose of the visits was to find out problems faced by UK companies operating in an unregulated energy industry.

A visit was also made to Norwich which had some small housing schemes which had heating supplied from a centralised plant.

The SIC issued a tender for the ERP.

The output from the waste heat would provide 6.8MW of heat from consumption of 26,000 tonnes of waste.

A flue gas abatement system was to be incorporated to meet the stringent EU demands with automatic shutdown if not achieved.

A tender was accepted in January 1997 with an intended operational date in late 1998.

This only gave the SCT under a year to get a phase one heat network scheme tendered.

Phase one was a scheme that ran to most of the largest single demand points such as the Clickimin, the Gilbert Bain Hospital, Bells Brae Primary School and Islesburgh amongst others.

It was to terminate at North Ness which was to be redeveloped with a long term aim of a ring mains when the new museum was built.

An allowance was made for possible extensions if there was sufficient demand from a particular area.

No customers were guaranteed, even from the SIC, so all customers had to be won in a competitive market.

The one advantage it would have was that it would not have to compete with mains gas which was the cheapest form of heating in mainland UK.

A tender was accepted to commence works in spring 1998.

There were many negative letters in the press asking why there were so few schemes in the UK; that the price of oil will remain low for decades (it did fall to under $20 a barrel during the construction); it would not work in the UK and that it would be a white elephant.

These grumbles were provoked by the inconvenience caused in digging up the roads to lay a network of pipes that eventually grew to be 40 km in length.

Disruptive at the time this is now largely forgotten and Lerwick is one of the very few towns in Europe to have retrospectively installed a heat network of this size. Quite an accomplishment.

Seminars were held with the local plumbers to convince them that the technology would work.

Some were sceptical but once the scheme was up and running they became a crucial part of the promotion with most of the Lerwick based plumbers connecting to the scheme.

A promotional shop was set up in the Toll Clock Shopping Centre in association with the SIC Energy Unit.

It was formerly the location of a pet shop so was affectionately nicknamed the Pet Shop Boys.

During construction it was agreed that the tenants of any SIC houses to be refurbished would have a choice of district heating, storage heaters or solid fuel.

Even though the scheme was yet to prove itself around 50 per cent opted for district heating which justified extending into a particular street.

At the same time there was a high demand from the Montfield area where many of the residents had positive experience of the technology in Scandinavia and their heating systems were at the age where they were needing replaced.

Despite the odds the scheme was ready to go online just prior to the ERP becoming operational with the first house in Leslie Road being heated during November 1998.

Since that date 1,200 properties, homes and business have been connected and Sheap supplies around 25 per cent of the energy used in heating and hot water in Shetland each year.

During this time the SIC has earned over £20 million to supplement the costs of operating the incinerator from the sale of its waste heat to Sheap which otherwise would have to be vented off into the atmosphere.

Sheap eventually did connect to the Lerwick Power Station and the waste heat that was previously dissipated in the sea is now used in heating buildings in Lerwick.

With heat networks and district heating now playing such an important role in government carbon reduction policy it’s fascinating to know how Shetland was an original leading pioneer in this field.


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