Against the backdrop of COP29 in Azerbaijan, the evening underscored the Scottish Government’s commitment to Net Zero, whilst highlighting a series of complex challenges faced by the industry. A key focus was the opportunity set created by government-funded organisations such as the National Wealth Fund and Scottish National Investment Bank, with senior directors from both in attendance.

Addressing critical infrastructure gaps to achieving a green transition

Central to the discussion was the need for accelerated deployment of electricity grid infrastructure. Scotland’s decarbonisation ambitions hinge on a resilient grid. Existing limitations, particularly between Scotland and England, are critical hurdles for the connection of future renewable energy projects. Grid resilience can be bolstered through utility-scale battery deployment and pumped hydroelectric storage. The continued deployment of such storage technologies would go some way to address the connection bottlenecks. However, it was broadly felt that a material uptick in grid investment is critical to delivering renewable targets.

An allied concern raised was Scotland's reliance on traditional, gas-fired power plants for baseload power. Such gas-fired power plants are becoming increasingly incompatible with decarbonisation goals. The roundtable discussed the viability of Small Modular Reactors (“SMRs”) as a viable replacement. The deployment of nuclear SMRs for utility-scale power generation is at an early stage. Proponents discussed the ability of SMRs to provide low-carbon baseload power output whilst having a potentially shorter development and approval process compared to conventional nuclear.

Adding to the infrastructure challenge is the need for a skilled workforce, especially in coastal areas. Ports were identified as pivotal hubs for Scotland’s future green energy projects, particularly for offshore wind energy. A shortage of trained personnel within the catchment area of Scotland’s ports reflects a tangible challenge to building and maintaining complex infrastructure. Investments in training programs and skill-building initiatives will be essential to develop a sustainable workforce and retain supply chains within the UK.

The discussion also highlighted planning regulations as a key obstacle to scale deployment of green infrastructure. A comprehensive and clear policy framework that aligns planning regulations with renewables targets should be seen as a necessary condition for success. This would allow Scotland to foster early-stage markets and retain supply chains for emerging technologies such as tidal generation and floating offshore wind. Without a competitive planning framework, Scotland risks losing out on internationally mobile capital to markets with liberalised planning regimes.

Embracing Technological and Financial Innovations to Accelerate Green Infrastructure

The roundtable touched on various technological and financial innovations that could serve as catalysts for green infrastructure deployment in Scotland. Floating wind and tidal energy were identified as key focus areas where Scotland could lead on a global scale. The rapid adoption of relatively nascent but scalable technologies would help Scotland retain its crown as a world leader in renewable power generation and innovation. Roundtable participants underscored the need for risk-taking capital to accelerate this process. The role of the Scottish National Investment Bank and the National Wealth Fund were highlighted as key pools of such capital.

The development of innovative financing models was another key theme discussed. Specifically, state-led guarantee facilities were put forward as a credible lever to de-risk investments. These can be particularly relevant for scalable, early-stage projects that might otherwise struggle to gain traction with traditional project finance lenders. Financing such projects at the level of the corporate, rather than at project level (as in a typical project finance facility) is gradually gaining acceptance. This offers early-stage projects greater access to capital, whilst offering additional security to the lender.

Another suggestion was to incentivise oil majors to diversify into green energy, unlocking their expertise and resources to support the green transition. Innovative policy approaches are essential here, as they would provide the incentive for such private-sector capital to pursue new, scalable energy solutions and mitigate the financial risks of adoption.

Some participants also called for greater openness to a variety of renewable energy sources, including geothermal and tidal turbines. Locally operated energy sources could also provide communities with economical decarbonised power. Participants stressed the need to go beyond financial metrics when evaluating project success, advocating for a focus on broader societal advantages which would create long-term benefits for both the economy and society.

The Role of Government-Backed Funders in Accelerating Green Infrastructure

The event also examined the role of government-backed institutions, such as the National Wealth Fund (“NWF”) and the Scottish National Investment Bank (“SNIB”), in accelerating Scotland's green infrastructure. The consensus was clear: these organisations have a crucial role to play in enabling transformative projects that require significant upfront capital investments. By stepping in to de-risk projects, government-backed funders can attract private sector interest (‘crowding-in’), and scale up investments in essential infrastructure.

One approach discussed was for these institutions to take on initial, higher-risk investments in critical infrastructure projects. A flagship example of this was the recent co-investment between NWF and SNIB into Scotland’s Ardersier Port. Both funders invested alongside private capital to develop the port into a future hub for the offshore wind sector. There is flexibility to then divest and recycle government capital once the risk profile has normalised for commercial investors. Such strategic investments can act as catalysts, creating a pipeline of sustainable projects and encouraging private investors to follow suit.

Participants suggested that government funders should also focus on gap funding for innovative technologies that fall outside the risk tolerance of traditional private equity or banking institutions. These strategic investments would be aimed not only at profitable returns but also at advancing Scotland’s green transition. Moreover, government entities should be clear about the problems they aim to solve, offering additional support that complements private investment efforts rather than competing with such.

The discussion extended to the necessity for government-backed funders to support struggling projects with innovative technologies, helping them weather early-stage financial challenges. There was also a suggestion that such entities could adopt a different return expectation compared to commercial entities, allowing for a broader spectrum of investment opportunities.

Closing Remarks

The event concluded with participants sharing their appreciation for the opportunity to engage in these crucial conversations. Several attendees highlighted the importance of a collaborative environment where industry stakeholders can align on goals and strategies for the future of Scotland’s green infrastructure. There was consensus that while the road to a fully sustainable Scotland may be long and complex, it is achievable with coordinated effort, smart investments, and innovative thinking.

The roundtable highlighted both the immense potential and the considerable challenges facing Scotland’s green infrastructure sector. Grid enhancements, workforce development, diversified renewable technologies, and supportive financing structures emerged as key components in Scotland’s path forward. By addressing these critical areas and fostering an environment that encourages innovation and risk-taking, Scotland stands poised to retain its position as a leader in the global green energy transition.