Nearly two-thirds (64%) of businesses are actively investing in capabilities, skills and facilities to seize new opportunities in clean energy, but 60% say the market is still not competitive enough to allow Scottish businesses to compete and win renewable energy contracts. The ambition is there – what’s missing is a clear and robust regulatory framework that allows it to scale.
So what changes are needed to unlock private investment and enable Scotland’s renewable supply chain to grow at the pace required?
Navigating two systems
One of the most significant obstacles is the division of powers between Holyrood and Westminster.
The Scottish Government oversees planning and marine licensing, while the UK Government controls the key mechanisms that determine the real viability of projects – such as the allocation of the Contracts for Difference (CfDs), transmission regulation and electricity pricing. The regulations do not facilitate any consideration for each other or for projects, which will operate across both, meaning the timeline for build is often delayed. Scottish projects might therefore find themselves in a position of not being able to participate in CfD auctions as the process to obtain planning permission and other necessary consents are too slow. The UK Government is recognising this issue and proposing changes that would allow unconsented projects to participate in the auctions. However, this lack of legal certainty might discourage investment or businesses to engage with Scottish renewable projects in a meaningful way.
The Supply Chain Impact Statement found that more than a third of businesses struggle to navigate these shifting policy and regulatory conditions. Therefore, a cohesive approach is needed. Open communication between the Scottish and UK government is key to create stable solutions which will consolidate regulations across both jurisdictions that investors and businesses can rely on long term. If both governments could align consent decisions with market incentives – for example, by setting joint timelines for planning consents, CfD rounds and grid access – Scotland’s projects could move more smoothly from approval to construction.
Transmission charging disparities
The Transmission Network Use of System (TNUoS) charging regime continues to place Scottish projects at a particular disadvantage.
Under current legislation, charges to generators reflect distance from demand centres – meaning Scottish generators, particularly offshore wind farms, face higher network charges than their southern counterparts. Aurora Energy Research forecasts show these discrepancies can increase CfD bid prices by £17/MWh, and by up to £27/MWh when such losses are included. That is enough to make otherwise viable projects uncompetitive in the CfD process.
Higher charges increase the cost of capital and weaken confidence in Scottish projects. Scottish projects are therefore more difficult to justify to investors and suppliers – not because projects lack merit, but because the current framework places them at an instant pricing disadvantage.
With the right reforms, Scotland’s supply chain will see a steady pipeline of work. While Ofgem has already implemented temporary caps on TNUoS charges, a more permanent solution is essential. A move to a zonal model, where costs are spread more evenly by reducing prices in a 'Scottish zone' for example, would remove the built-in penalty for building in Scotland and create a more level playing field. This would give more Scottish projects a fairer chance of success in CfD rounds, unlocking investment that might otherwise go elsewhere in the UK.
Consenting delays and the case for reform
Scotland’s consenting framework for major energy projects, still governed by the Electricity Act 1989, can take up to four years from application to decision. With no statutory timelines, automatic public inquiries triggered by objections, and under-resourced consultees, the process creates uncertainty.
For developers, it means projects are delayed before construction even begins. For the supply chain, it means contracts arrive late and Scottish firms risk losing out to competitors elsewhere in the UK and Europe. It also actively discourages smaller, regional businesses from participating in the sector as the risks are too high, meaning that they key suppliers are often international companies that can easily divert their attention to other markets.
The forthcoming Planning and Infrastructure Bill, currently going through the report stage, offers modernisation for the UK's planning regime. It would require developers in Scotland to participate in certain consultation steps before applying for infrastructure projects, introduce an “acceptance stage” which checks the application meets the statutory requirements in order to weed out incomplete proposals, sets statutory time limits for decisions, and crucially, replace automatic public inquiries with a faster reporter-led review system. In practice, that means objections could still be heard, but without adding years of delay – a shift that would give developers and supply chain firms greater certainty on when projects will move from consent to construction. Each of the proposed reforms is aimed at streamlining and speeding up the planning process.
If delivered effectively, these reforms would align Scotland’s consenting regime with the pace of its renewable ambitions, giving developers clearer build schedules and creating the predictability the supply chain needs to grow. The difference would be measured not just in faster decisions, but in the confidence to invest, the ability to plan long term and the capacity to build a resilient, competitive industry.
Scotland’s supply chain is ready to deliver, but ambition alone is not enough. Without legal reform to unlock investment and speed up delivery, Scotland’s energy supply chain cannot scale and risks missing its renewable targets.
This article was published in Energy Voice - read the original article here.
