Shetland Energy Challenge

The Shetland Islands comprise more than a hundred islands, with just fifteen of them inhabited. The islands span one hundred miles (145km) between Fair Isle and Out Stack, the northernmost point of Britain. Around 23,000 people live on the islands.



Shetland Project MapThe Shetland Islands are faced with a significant energy supply challenge.

They are located some 130 miles to the north of the British mainland and are not connected to the Great Britain electricity system, and therefore rely on local sources of generation.

Demand for electricity on the islands ranges from a minimum demand of around 11MW, to a peak of about 48MW mostly centred in Lerwick.

There is no gas supply to properties on the islands, and heating needs are met by oil and electricity.

The electricity supply on the islands is met by four sources:

  • Lerwick Power Station (LPS), a 67MW diesel-fired station commissioned in 1953
  • Sullom Voe Terminal (SVT) Power Station, which has an installed capacity of 100MW but currently exports, at most, 22MW to the Shetland system
  • Burradale Wind Farm, a 3.68MW privately-owned wind farm and
  • A number of small-scale community-based wind generators

Shetland has some of the richest renewable resources in Europe. Burradale wind farm is one of the most effective wind farms in the world with average output capacity of around 50%. Most of European wind power capacity is closer to 20%. However, this renewable potential cannot be fully utilised at the moment due to restrictions of the electricity infrastructure, and the need to balance the demand for electricity with the supply from the intermittent wind sources.

At present, electricity supply to customers has to be met instantaneously by a response in electricity generation. This is difficult in an isolated network, where the Lerwick Power Station (LPS) is responsible for the majority of Shetland’s supply. This approach is inefficient when compared to integrated systems, and the station is now reaching the end of its operational life. Its necessary replacement is, in part, leading to the wider review of the current energy infrastructure and how this can be enhanced in the future.

You can find out more about life in Shetland by clicking here.


Project Benefits

NINES is expected to significantly benefit the entire Shetland’s community, by helping to ensure the inhabitants have a reliable and affordable electricity supply. By trialling innovative energy solutions, Shetland’s community will benefit from:

  • Secure and reliable supply – meaning less flickering lights or sudden outages
  • More comfortable and controllable heating via use of “smart” space & water heaters
  • A cleaner environment due to wider use of renewable technologies
  • Lowest possible electricity costs in the future

NINES plays an important role in ensuring secure energy supplies for generations to come in the most efficient and least costly way. The lessons learned here will also be used to inform wider national and international projects to help in the transition to a low carbon future. The role of “smart grids” in achieving this has been recognised by Government, for example in the 2010 Low Carbon Transition Plan and 2011 Carbon Plan.

NINES is also introducing an advanced style of storage heating to provide improved comfort, and value for money, and you can read some initial Customer Feedback on the new products we have trialled so far.


Our Approach

NINES will deploy new electrical, electronic, communication and computing technologies to manage energy in a smarter way. Our project will learn from these trials to ensure that the knowledge gained will be used to support Shetland’s sustainable future.



NINES is expected to provide a step-change improvement to the whole energy system in Shetland – providing cleaner, more efficient electricity production and a better quality of supply, all at the least possible cost for customers. This improvement will be achieved by implementing new technology solutions that will fundamentally change the way the current energy infrastructure is managed – a true “smart grid”.


One of the most important outcomes from the NINES programme will be the ability to learn from the trials, and apply the lessons learned to the development of final solutions for the Shetland energy system and other future projects.

The aim is to continuously capture learning and disseminate knowledge gained through the trials and smart grid technology implementation.  This will include a range of events on how our project is progressing. This website will also communicate the progress and lessons learned during our trials, as well as seeking industry views and feedback on published materials.

Network Demand Management

Targeted improvements are:

  • Decrease the overall requirement for generation from Lerwick Power Station thus lowering fuel, operation and maintenances costs
  • Reduce 2010 energy peak demand by 20MW, therefore saving on plant replacement costs
  • Facilitate and increase renewable energy connections, thus reducing CO2 emissions and air pollution
  • Efficient utilisation of new energy storage technologies to ensure renewable energy can be exported when it is produced and manage short term fluctuations in demand for electricity that affect network efficiency and quality of supply

Fundamental to the optimisation of the electricity network and the contributing technologies will be modelling work undertaken by the University of Strathclyde. This will provide a clear picture of Shetland’s energy system that will need to answer such questions as:

  • How can a distribution system operate securely with a high penetration of renewable generation?
  • What is the economic impact on industry participants?
  • What is the impact of a low carbon network on domestic and industrial customers?


The creation of a smart grid in Shetland requires innovative thinking as to how energy will be produced, distributed and used, and how new and developing technologies can be used to deliver change. The innovations trialled in the project include:

  • A large battery at Lerwick Power Station, which will store or discharge electrical energy will allow greater control of generation in response to variations in demand, and facilitate the best use of renewable generation. For instance, when a lot of energy is being generated by wind turbines at a time when demand for electricity is low, the battery can be charged to store the energy for later use. This stored energy can then be used to provide electricity in a more efficient manner.
  • Advanced domestic space and water heaters, will also be used to store energy in the form of heat when a lot of renewable energy is being generated.
  • 4MW electrical boiler with a 130MWh hot water store for non domestic demand side management
  • An Active Network Management system allowing the management of renewable energy and energy storage devices thus making Shetland’s energy system more secure.
    Connection of renewable generation through ‘managed connections’, contributing to an improvement of air quality and reduction of CO2 emissions.
  • Demand Side Management, which encourages customers to shift their energy demand, will improve Shetland’s load profile reducing peak energy demand providing greater capacity on the network and reducing the need for network reinforcements.


Long term sustainability for Shetland and a low carbon future lies at the heart of our project. The new technologies will need to be integrated into Shetland’s energy system and managed to ensure day to day operation of the smart grid system.

We therefore need to make sure that the new technology is reliable and provides the flexibility in operation that will be required. Therefore, a detailed understanding of the network’s performance and identification of which solutions best address the different issues as they arise will need to be developed. Understanding of how the technologies operate together is critical.

Successful integration also requires customer acceptance of the new solutions, including demand side management and connection arrangements for new generation.


One of the most important outcomes from the NINES programme will be the ability to learn from the trials, and apply the lessons learned to the development of final solutions for the Shetland energy system and other future projects.

The aim is to continuously capture learning and disseminate knowledge gained through the trials and smart grid technology implementation. This will include a range of events on how our project is progressing. This website will also communicate the progress and lessons learned during our trials, as well as seeking industry views and feedback on published materials.


Regulatory information

In 2010 SSE submitted the NINES proposal to Ofgem’s Low Carbon Networks Fund in order to address the network challenges on Shetland. Ofgem recognised the project to be of extreme importance to the Shetland Islands and proposed an alternative funding mechanism due to ‘reservations about its applicability to mainland UK distribution networks in the near term’. NINES project is thus funded via special electricity distribution licence conditions.

Documents below provide the background to the NINES project funding bid and Ofgem’s funding decision:

Proposals for the development of the Integrated Plan for Shetland

Ofgem consultation on Shetland Northern Isles New Energy Solutions (NINES) Project

Ofgem decision on NINES funding mechanisms