Case study: Scottish Government/ DECC Scottish islands project

 

Project team

Baringa Consultants and TNEI worked together to deliver this project to DECC and Scottish Government.  The study was overseen by a steering group comprising representatives from DECC, the Scottish Government, the Islands Councils, Highlands and Islands Enterprise (HIE), NGET, SHE-T and Ofgem.

Objective  

The aim of this project was to understand why Scottish Islands renewables projects have been slow to develop.  It was found that for Orkney, Shetland and Western Isles lack of significant grid infrastructure was the key issues, and therefore TNEI’s grid expertise was essential for this project.

Scope

The work comprised four main phases:

  • Evidence gathering and stakeholder interviews – The interviews explored the key drivers for cost/revenue differences, any perceived barriers to deployment, the associated socio economic benefits as well as any potential mitigating actions or lessons learned.
  • Levelised cost of energy modelling – To assess where Scottish Island projects sit within the merit order of other low carbon alternatives given that their relative rank drives potential returns and economic viability for these projects and determines the level of support they require.
  • Analysis of socio-economic and wider benefits – A bottom-up view of project specific data was compared and contrasted with top-down analyses in order to derive the number of direct/indirect employment opportunities, security of supply benefits and learning benefits.
  • Cost/benefit analysis and policy options – comparing the relative costs and benefits of Scottish Island projects against alternative sources of generation. The study concluded with an outline of potential policy options to address the key barriers to deployment.