Cost of living crisis means higher energy bills for rural Scotland

While the abundance of natural resources in places such as the Highlands and Islands, Orkney and Shetland, is harnessed for renewable energy, stark figures show residents have to fork out more to heat their homes.

The average household bill in Shetland in October 2022 was £5578 - more than double the UK average of £2500, according to evidence submitted to the House of Commons Scottish Affairs Committee by Shetland Islands Council.

Latest available figures show a third – 33% - of households in remote and rural areas in Scotland are in extreme fuel poverty.

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That statistic has not been updated since 2019 due to Covid and therefore does not reflect the current cost-of-living crisis.

But the Scottish Affairs Committee inquiry into the impact of the cost of living crisis on rural communities also heard this week that higher energy costs were “without a doubt” having a disproportionately large impact on people living in these areas.

Di Alexander, chairman of the Highlands and Islands Housing Association Affordable Warmth Group, said: “Ordinary’ fuel poverty is when you have to spend 10% or more of your income to try and keep your home warm - and extreme fuel poverty is double that 20%.

“One third of all households living in remote rural Scotland are in extreme fuel poverty. That is by far the highest figure in Scotland.

“In the Highlands and Islands those figures are even higher, particularly now given the massive price increases that have taken place in the last year.”

He added: “The biggest single underlying reason why fuel poverty and extreme fuel poverty is so much higher in places like Highlands and Islands is because it's mostly off gas.

“Mains gas is by far the cheapest form of energy, and in particular energy for heating, that there is in Scotland.”

Other factors involved in fuel poverty in remote and rural areas include a higher proportion of households with poorer insulation, more detached houses, which are lived in by older people and colder weather conditions.

Alexander, who chaired the Scottish Government’s Rural Fuel Poverty Task Force in 2016, said reducing energy costs would be the best way to tackle the issue.

“It is energy prices, which are Westminster's responsibility, which are the biggest single cause of fuel poverty levels whatever you do,” he said.

“Off gas households should not have to pay more than their dual fuel counterparts elsewhere in the UK.

“So there needs to be an equalisation - and one of the ways in which that could be done is by recognising the huge contribution that places like the Highlands and Islands make in terms of the generation and export of clean green, renewable electricity.”

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Dr Keith Baker, research fellow in fuel poverty and energy policy at Glasgow Caledonian University, said he had carried out research in areas such as Lochalsh and Skye, Orkney, Lochaber and the Isle of Bute which showed that householders were spending significantly more on their energy costs than the official statistics were showing.

“Behaviours are often more complex – one thing which we think we know but haven’t managed to prove yet is that people in rural communities will quite often leave their heating on all day,” he said.

“They are close knit and if someone comes and knocks at your door, you don’t want to be seen as being poor.

“You’ve also got crofters going in and out the house, people tend to have more animals so doors get opened and closed more often. It’s not like living in a cosy tenement – these are all factors.”

Baker also warned the cost of living crisis was now resulting in fuel poverty in areas which had previously been relatively unaffected.

“One interesting thing with the cost of living crisis is that Shetland is now on our radar – reports of Shetlanders not being able to afford their energy bills, that’s new in the past two years,” he said.

“Previously we discounted Shetland as at the time, the cost of living was high, incomes were high – they have gone from being really quite energy rich to ‘oh my god we are screwed’.”

While the price per unit of electricity might remain the same as in the mainland, one of the issues affecting those living in colder climates further north is the need to use more energy.

Daniel Gear of Voar Energy, a Shetland-based company which specialises in low carbon developments, said: “We are in the middle of the North Sea surrounded by 150 to 150 miles of sea in every direction.

“What that means is we’re not part of the National Grid and the way electricity works is it comes from power stations that burn diesel.

“Where the difference really comes is in our climate. We’re one of the windiest places in the world and that can result in houses rapidly cooling because some houses aren’t well insulated.

“So that’s the first challenge. You’re using more energy just to keep yourself warm.”

When it comes to the issue of renewables, Gear explained there is still some way to go before the full potential of this can be realised.

He said: “Part of it is about cost – not everybody has the capital to spend £30,000 on installing a wind turbine generator which they can only use some of the power from when it’s producing.

“The local grid is pretty much at its capacity for the number of variable renewable sources you can have to maintain a stable grid.

“It’s kind of a catch-22 because there’s a limit on how many renewables you can build into the system.”

It is an issue which will take time to solve although in November, the first part of a £660 million undersea, high voltage cable was completed which should help connect the islands to the National Grid when it is completed in 2024.

SSEN Transmission said this would be a step to helping unlock the islands’ potential for future renewable energy generation.