Around 100 households in the islands are to trial the new scheme after the Rousay, Egilsay and Wyre Development Trust (REWDT) received £1.2 million for its Heat Smart Orkney project from the Scottish Government’s Local Energy Challenge Fund.

The project will use the excess electricity that cannot feed into the grid and divert it to newly-installed heating devices in domestic properties.

Michelle Koster, of Rousay, Egilsay and Wyre Development Trust, said: “We are delighted to have received this funding award from the Local Energy Challenge Fund.

“Orkney has the highest levels of fuel poverty in Scotland and the electricity grid regularly has to be curtailed, meaning the community-owned turbine in Rousay is turned off.

“Providing the ability to divert otherwise curtailed energy into secondary heating devices installed in homes seems an obvious solution.

“Rousay, Egilsay and Wyre Development Trust has worked in partnership with Community Energy Scotland to develop this project and we hope to invite other generators, also affected by curtailment, to benefit from the diversion of their electricity in a similar way.”

Interested householders will be invited to receive a home assessment followed by installation of energy efficient heating devices which are linked via the internet to a cloud control centre.

As the turbine receives a curtailment signal, the cloud control centre will switch on the heating devices. The additional electricity used by the devices will be metered and a rebate paid to the householder from the additional income received by the turbine.

The funding boost came as the Scottish Government awarded more than £10m to support nine large-scale, low carbon energy projects across the country via the Local Energy Challenge Fund.

Launched in August 2014, the scheme supports projects which aim to develop local energy systems, demonstrating the benefit of localised, low-carbon energy economies.

Laura Campbell, Challenge Fund project manager, said: “Local Energy Scotland is delighted to be able to provide support through the Scottish Government’s Local Energy Challenge Fund to these innovative and aspirational projects.

“We are looking forward to working with the project teams over the next couple of years to see these ground-breaking ideas become a reality.

“Community energy represents tremendous potential to empower people to make the most of their local resources. By supporting local energy development we can help tackle some of our most pressing energy issues including fuel poverty, increasing costs and security of supply.

“It’s exciting to think that these projects have the potential to shape the future of Scotland’s local energy economies and act as demonstrators for other communities.”

The Local Energy Challenge Fund panel also intends to provide support to the following projects:

The Local Energy Challenge Fund is part of the Scottish Government’s Community and Renewable Energy Scheme (CARES). It is managed by Local Energy Scotland, a consortium led by the Energy Saving Trust and including Changeworks, the Energy Agency, SCARF and the Wise Group, with support from Ricardo-AEA.

For more information visit: www.localenergyscotland.org/challenge.