Scotland Clean Energy Opportunity: From Vision to Reality

Achieving a net-zero economy is a highly challenging endeavor—and the task becomes even more complicated when targeting it for 2045, as Scotland has pledged to do. Yet while many nations would find such an ambitious goal unattainable, Scotland might have a realistic chance to succeed. With its extensive renewable energy potential, the country could become a green industrialization leader and a key energy exporter to the rest of Great Britain (GB) and Europe.

Exploring Scotland’s potential to become a net-zero economy by 2045 while supporting the rest of GB and other European states attempting similar pursuits is the focus of a recent Guidehouse study, “Scotland Whole System Vision.” Through our cross-vector modeling, we concluded that Scotland could be a key player in the future global energy market due to its competitive power and hydrogen production and its proximity to one of the world’s largest net-energy importer markets. Scottish exports to the rest of GB and Europe could reach an estimated £15 billion in energy commodities annually by 2045. Transforming vision into reality to realize these benefits for Scotland and GB will require overcoming the following challenges.

Deploying large-scale regulated investments

Significant investments in both electricity and hydrogen transmission infrastructure will be needed as early as possible to increase developer confidence and avoid energy generation investment delays. The GB’s National Electricity System Operator (NESO) recently recommended an additional £58 billion of direct investment in its electricity networks over the next decade.¹ Although there will be efficiencies between transporting electrons and molecules, billions of pounds will still be required to transform GB’s energy transmission networks to a net zero future. Deploying this volume of regulated investments will require difficult regulatory and political decisions. GB consumers, who are still enduring the impact of a severe energy crisis, might not feel inclined to pay for an infrastructure that will ultimately benefit mainly developers and the broader market of European consumers. That’s why it is essential to ensure that Scottish and GB residential and industrial consumers alike directly benefit from these investments.

Overcoming individual agendas

To turn this vision into reality, Scotland's energy sector must move beyond occasional engagement and toward genuine cooperation among all stakeholders. Beyond industry forums and events, everyone affected across the value chain should make greater efforts to engage and work with each other. Regulatory incentives for more direct collaboration among those with diverging agendas such as electricity and gas networks will be necessary to achieve this. 

Planning for the long-term

We are now less than five years away from the target of a net-zero power system and 25 years from the target of a net-zero economy—but with high-voltage and high-pressure energy infrastructure having a lifespan of 30 to 40 years, none of these targets can be considered truly long-term. This highlights the potential benefits of reconciling short- and long-term policy and regulation planning. Optimizing the system over decades rather than just the next regulatory period can help produce long-term cost savings. 

Scaling up the hydrogen market

Establishing appropriate policies and regulatory and market frameworks for the hydrogen market will be needed to scale and promote it in Scotland. Hydrogen pipelines or other competitive means to transport the gas are critical to supporting a large-scale liquid market, as are market mechanisms promoting power-to-X technologies that use renewable electricity to create carbon-neutral energy carriers such as hydrogen, synthetic natural gas, and chemicals.²  

Appropriate commercial models and lease criteria are also needed to promote offshore wind system integration. According to modeling results, offshore wind is set to produce 72-77% of Scotland’s power in 2045. Potential solutions could include establishing power-to-X criteria in offshore wind leases (such as the ones seen in recent European tenders) and a sliding scale incentive in constraint payments.³ This will not only promote large-scale hydrogen production development but also reduce system operability costs, network charges, and renewable levies—potentially resulting in lower consumer energy bills.

The promise of a shifting value chain

Scotland has a unique renewable production advantage due to its favorable weather conditions and available space. It now needs to decide what to do with it and how. The country could export power and hydrogen to other European countries—a highly scalable and geo-strategically important option. It could also capitalize on its excess domestic energy potential to attract industrial investments, create jobs, and influence the local economy. The European industrial landscape was historically centered on coal-rich regions, but could the emerging dynamics of an enduring clean energy landscape result in shifting value chains?

This study was made possible thanks to joint funding provided by National Gas Transmission and Scotland Gas Networks. We would also like to extend our gratitude to NESO, the Scottish Government, Scottish Power Energy Networks, and Scottish and Southern Electricity Networks for their voluntary collaboration and valuable input.