Why people on the Shetland Islands will pay double for their energy

Shetland Islands Council says all but those earning £104,000 a year will experience fuel poverty. Credit: PA

As many as 96% of people living in Shetland could be pushed into fuel poverty by next year, the local authority has warned.

Rising fuel prices are expected to be felt across the country in the coming months, but the picture on one of Scotland’s islands is stark.

Shetland Islands Council say all but those earning £104,000 a year will be in fuel poverty, with average energy costs projected to rise to £10,300 per household annually by April – more than double the projection for the UK.

Why are prices so much higher on Shetland?

With almost daily predictions on the rising price of energy and price caps coming from different organisations it can be hard to keep pace with the market.

However, predictions for the residents of Shetland all point one way - up.

While price caps are in place, and are designed to protect consumers, prices may vary for a number of reasons.

The Shetland archipelago is the northernmost region of the UK. Credit: PA

The costs for a household will be higher if consumption is higher due to a cool and windy climate or poor insulation, they don’t have access to mains gas, or they have to use electricity or unregulated fuel like heating oil for heating.

These factors are all the case for Shetland, their combined impact means estimated Shetland household energy bills are around double any average UK figure.

The graph shows the actual price cap, up to August, and the projected price cap from October for an average UK and Shetland Household. Credit: Shetland Council.

How hard are projected figures going to hit residents?

The grim reality facing Shetland residents is that crushing energy bills are going to wreak havoc on the island.

In predictions released on Monday, the council claims 96% of people will be spending 10% of their household income on energy by April, while 75% will be in extreme fuel poverty – meaning at least 20% of household income is spent on energy.

The only people who will be able to avoid extreme fuel poverty are islanders earning £52,000 annually per household – compared to just £26,000 in the rest of the UK.

The graph provides information on estimates of fuel poverty in Shetland, from August 2021 through to April 2023. Credit: Shetland Council.

Some 40% of households on the islands could spend 40% of their household income on energy.

The estimated total spend on energy in Shetland last winter was just over £18 million – this year’s projection is more than £56 million.

Figures are so bleak that the Scottish government has declared the situation a public emergency.

How much will household bills be each month in Shetland?

When comparing projected figures between October 2022 and January 2023, bills take another significant jump.

The typical price for a heating bill for the rest of the UK will be £331.85 in October 2022 before rising to £480 in January 2023.

Shetland Islands Council leader Emma Macdonald wrote to Chancellor Nadhim Zahawi about the bleak outlook for the islands.

“Our islands have been at the heart of oil and gas activity for over 40 years, yet our people have not seen the benefits of that in terms of a lower cost of fuel,” she said in a statement.

“Shetland has contributed, and will continue to contribute, significantly to UK energy exports, and yet people in our communities will struggle to heat their homes in the coming year."

Councillor Emma Macdonald. Credit: Shetland Council.

Ms Macdonald added: “This is particularly ironic, given the continued development of offshore and onshore renewable energy production around Shetland.

“We are calling for UK government support to enable host communities to secure long-term community benefit arrangements, which could include access to low-cost energy for islanders.

“But we also need immediate government help to address rising energy costs, which will have such a damaging impact on those who live in Shetland.”

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Shetland MSP Beatrice Wishart said she had been told by a business owner on the islands that they would make substantial losses if energy prices rise to projected levels.

“You shouldn’t have to be a millionaire to stay warm this winter,” she added.

“The Conservatives and the SNP have been caught like deer in the headlights. They must act now to spare families from soaring energy bills by cancelling October’s price cap increase.

“Liberal Democrats have set out plans to block the energy price rise before it happens but we cannot wait weeks for a new Conservative prime minister to act. The government must step in now to help families and pensioners in the isles and beyond by cancelling the planned rise in energy bills.

“Nicola Sturgeon must get her act together too. She needs to put every penny of the Scottish government’s budget (towards) helping hard hit households and kickstart an emergency insulation programme to bring down bills.”

A Scottish government spokesman said the situation is being treated as a public emergency and urged the UK government to freeze the cap for all households, and to support energy companies to deliver.

He added: “We know that this is an incredibly unsettling time for everyone and it is imperative that those worried about or struggling with heating their homes access the information and support they need to reduce their energy bills.

“The Scottish government has allocated almost £3 billion this financial year to help households face the increased cost of living.

“This includes the provision of services and financial support not available elsewhere in the UK such as the Scottish Child Payment.

“It also includes £10 million for the Fuel Insecurity Fund, which helps households on any fuel that are at risk of severely rationing their energy use or self-disconnecting entirely.

“The fund provides direct support for households via trusted third sector partners the Fuel Bank Foundation, Advice Direct Scotland and the Scottish Federation of Housing Associations.”

A general view of Shetland's Sumburgh airport. Credit: PA

A spokesman for the UK government said: “We know the pressures people in Shetland and across the UK are facing with rising costs, which is why we have continually taken action to help households by phasing in £37 billion worth of support.

“This includes a £400 discount on energy bills over winter and eight million of the most vulnerable households will see £1,200 extra support.

“We also protect households and businesses in the north of Scotland, including Shetland, by providing around £90 million every year to reduce electricity distribution charges in that region.

“This is on top of the extra £82 million we provided to the Scottish government to help vulnerable families across Scotland at their discretion.”