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Funding boost for Shetland energy scheme

13 May 2014

An innovative commercial heating scheme, which will result in lower operating costs for community facilities across Shetland, has received a significant funding boost from Scottish Government agencies.

A new wood pelleting plant at Gremista, run by North Fish (Shetland) Ltd is now supplying energy to the Lerwick District Heating Scheme, reducing the systems need to use more expensive heating oil. Later this year, the plant itself is also to go greener by being powered by a new wind turbine project at North Hoo. The result is more residents and businesses will be able to take advantage of hot water created using renewable sources for heating, at a significantly lower cost.

Aspects of the project are being supported through the Renewable Energy Investment Fund (REIF) and Highlands and Islands Enterprise (HIE).

The Lerwick District Heating Scheme (LDHS) is operated by Shetland Heat Energy and Power (SHEAP), part of Shetland Charitable Trust. LDHS is a series of hot water pipes that run through Lerwick and provide hot water for heating to houses and businesses. It heats the hot water by burning waste from the Shetland Islands Council incinerator (Energy Recovery Plant) in Gremista, heating two thermal stores.

The Energy Recovery Plant cannot always supply enough hot water to LDHS to meet demand, particularly in the winter. When this happens the thermal stores are heated using more expensive heating oil.

The new wood burning, drying and pelletising plant at Gremista, near Lerwick was developed by local business North Fish. The 500kw wind turbine project which will soon power it, is being set up at North Hoo Field, above Gremista, with the support of a £700,000 loan through REIF.

The turbine will provide green power enabling the generation of heat for supply to the LDHS.

Andrew Smith, Head of REIF, which is delivered by the Scottish Investment Bank, said: “North Fish’s innovative project is an excellent example of how renewable energy can be used to support a community heating project, and at the same time create jobs and economic opportunities. A key part of REIF’s remit is supporting initiatives such as this - and this is exactly the type of project we need to see more of in Scotland as we work towards becoming a truly low carbon economy.”

HIE have supported North Fish Ltd with the development of the plant with a £39,039 grant towards feasibility studies and £40,000 towards the purchase of a wood pelleting machine.

David Priest, Development Manager at Highlands and Islands Enterprise, said: “This is an ambitious and far sighted scheme that enables a genuine low carbon cheaper heating alternative for large users of energy. The project has been undertaken at significant risk and meant North Fish having to completely restructure their operations, but it now will enable the business to grow and provide low carbon solutions to other sites in Shetland and beyond.”

The Gremista plant also produces wood pellets, which are used as a sustainable fuel, supplying biomass plants at community facilities at four sites in Shetland - Brae, Aith, Yell and soon Whalsay. Biomass boilers are water heating boilers that burn wood pellets to run which is much cheaper than heating oil. It is also considered low carbon as wood is not a fossil fuel.

Angus Grains from North Fish said “North Fish are delighted to be able to secure funding from both HIE and REIF.

“North Fish have invested over £1million in this phase of the project, which is now nearing completion with the turbine being built in the next couple of months.

“The turbine will provide all our manufacturing power requirements and is designed to be able to export any surplus energy into the local grid or provide hot water for export into the Lerwick district heating network.

“Our customers are currently benefitting from the lowest heating cost available, and have also minimised their carbon emissions.

“We are currently planning expansion with new heat networks at sites in Whalsay and Scalloway. On completion of this next phase, we will have 2MW of renewable heat capacity in operation, with the expectation of displacing almost one million litres of oil annually.”

Burning wood from a recognised sustainable source is considered low carbon under the UK Renewable Heat Incentive (RHI). The purchase of a wood pelleting machine will also result in North Fish creating a full time, skilled job and enable heating services to be provided to other community facilities across Shetland.

  • Renewable Energy Investment Fund

    The Renewable Energy Investment Fund was launched in October 2012. Its aim is to promote the use of energy from specific renewable sources and drive further investment into key areas of Scotland’s renewables industry. With £103 million of ring fenced funding available to provide commercially priced loans, equity investments and guarantees, REIF will consider projects that support the delivery of energy from a renewable source or represent an innovative renewable energy technology. Areas of anticipated demand for REIF include projects that will: accelerate the growth of the marine renewable energy sector in Scotland, increase community ownership of renewable energy projects in Scotland or support district heating networks that utilise renewable heat technologies. The underlying goal of REIF is to grow the renewables industry in Scotland and all projects will demonstrate potential economic benefits. REIF is delivered by the Scottish Investment Bank – the investment arm of Scottish Enterprise – on behalf of the Scottish Government and its Enterprise Agencies.

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