The funding will support preparatory works, dredging and deepening areas adjacent to the quayside and approaches at Dales Voe in Lerwick Harbour to -16 metres.

The investment forms part of wider strategic investment by the Scottish Government of up to £500m over five years to develop  Scotland’s ports and offshore wind supply chain.

Lerwick Port Authority is leading the development of an Ultra-Deep-Water Quay at Dales Voe as part of a long-term strategy to enhance Shetland’s capacity for offshore energy, decommissioning, and renewables infrastructure. The project will broaden the port’s capabilities to support a wider range of energy and decommissioning initiatives.

Contractor Boskalis Westminster Ltd has completed the soft dredge first phase and a second hard dredge phase is now underway.

HIE Shetland area manager, Katrina Wiseman, said: “Our investment in this project underlines HIE’s commitment to ensuring Shetland and the wider Highlands and Islands remain at the forefront of the renewable energy transition. The development of an ultra-deep-water quay at Dales Voe will significantly strengthen the region’s infrastructure, supporting the next generation of offshore energy and decommissioning activity.

“Further development of enabling infrastructure, coupled with Shetland’s strategic location, infrastructure, skilled workforce and experience, ensure the islands continue to be an attractive location for inward investment and the creation of high-quality jobs.”

Lerwick Port Authority chief executive, Captain Calum Grains, added: “This dredging project is a significant investment in the future capability of Lerwick Harbour and the wider Shetland economy. The support from Highlands and Islands Enterprise has been instrumental in enabling us to deliver infrastructure that will serve the energy industry for decades to come. It gives confidence in the harbour’s role as a gateway for growth, and we are proud to be working together to realise that potential.”

Energy secretary Gillian Martin said: “Accelerating Scotland’s offshore wind capabilities is crucial and investments like this help enhance our capacity for offshore energy, decommissioning, and renewables infrastructure, whilst supporting Scotland’s net zero ambitions.

“This investment will help unlock enormous economic opportunities for Shetland and Scotland as a whole and is another example of how, together with our partners, we are delivering on our collective priorities of growing the economy and protecting the planet.”

The quay at Dales Voe is already a ‘deep-water’ facility that has played a key role in major oil and gas decommissioning projects, including the Ninian Northern production topsides and jacket which hosted Scotland’s heaviest ever load-in using the world’s largest construction vessel, Pioneering Spirit.

Its sheltered access, deep natural channels and strategic location have led to its selection as the UK’s prime site for an ultra-deep-water decommissioning facility, supporting future offshore wind and low-carbon energy developments.

The dredging works are part of a broader, multi-phase project providing infrastructure enhancements across the harbour including at adjacent quaysides, to the benefit of various sectors and all designed to future-proof Lerwick’s maritime capabilities.

The Ultra-Deep-Water Quay will increase the opportunity to secure more of the growing decommissioning sector and the developing offshore renewable sector, providing the UK with a capability to match that found overseas.

It would allow large floating structures to be transferred to the quayside, supporting preparation for installation and maintenance.