Council Confirms Commitment to Wick Heating Scheme

14th February 2009

The Highland Council has advised customers of its Wick district heating system that their supply of heat and hot water will continue as it investigates the best way forward for delivering heat to their homes in the future.

Letters were hand delivered to 247 homes immediately following a special meeting of the Council on Thursday 12th February 2009 when councillors concluded that the technology installed at the Caithness Heat and Power plant to produce heat and hot water and electricity was unlikely to deliver what it set out to achieve. As a result, the gasification plant, which helps produce electricity, is to be decommissioned.

Customers of the district heating system will continue to receive heat and hot water via a temporary oil-fired boiler until new arrangements are confirmed.

Council officials have been asked to develop technical assessments and associated business cases on options for a new district heating system, including using biomass and identifying a potential new partner to provide this. They will report back to the full council by the end of March/early April.

Convener Sandy Park said: "It is a major disappointment to us that we now have to face the reality that the technology originally chosen for the project is not capable of reliably and economically fulfilling its objectives. Since taking over the project, the Council has invested significant funds and a great deal of staff time to find a way to make the electricity generation component work, including a major operational trial in November of last year.

"But it is clearly not fit for purpose, and we will now close down this part of the project and focus upon identifying how best to provide heating to these homes. There will be a full and independent audit of this project, and the findings will be reported to the Council and the public."

CHaP was set up in December 2004 to own and manage a wood-fired combined heat and power system, on land neighbouring Pulteneytown Distillery at Wick. The project aimed to provide heat and hot water to 500 local homes at Pulteneytown via a district heating system and also generate income from the sale of electricity to the National Grid via a gasification plant. In further phases it was envisaged that the plant would provide heat and hot water to a wider community.

Initially, the company was a community-owned enterprise which had three directors - representing the neighbouring distillery, Pulteneytown People's Project and the Council. In August 2008, CHaP became a single member company, that single member being The Highland Council. Having been a major funder of the company since it was set up, the Council took over the running of the company in an attempt to ensure a sustainable future for the operation.

At this time, the Council introduced improved governance arrangements; set up a senior operational support team to support and manage the company; and addressed a number of health and safety issues. Arrangements have also been introduced to address the heating customer debt position inherited by the Board.

Actions taken by the new company were aimed at determining the technical, operational and economic viability of the project, while maintaining the company's obligations to its district heating scheme customers. The most significant action was to commission a full load gasification trial to confirm the gasifer's capability to generate enough gas to run the engine up to 1,500 kW of electrical output. The trial encountered a number of technical problems and because of these it failed to achieve any of its key objectives. The failure of the trial also raised new questions about the design and construction of the gasifer.

At recent meetings, the CHaP board have concluded that - given the problematic nature of the project, the failure of the gasification trial and the significant risks and uncertainties surrounding the plant's operational viability - it would not be possible to achieve the company's electricity generation objectives without further significant high risk investment. The company, therefore, decided to decommission the gasification plant and cap the losses in this part of the project.

At a special meeting of the Council on Thursday 12 February, the Council agreed to decommission the gasification equipment. It was also decided that officials continue investigations into identifying the best way forward for the district heating system. This will include discussions with a private supplier/s.