Infrastructure Strategy 2027-2037: consultation

Chapter 7 - Private Infrastructure Investment

The Scottish Government is promoting economic growth by unlocking privately funded infrastructure investment in Scotland. The public sector invests in enabling infrastructure to support private infrastructure and creates the conditions for greater private investment through legal and regulatory change.

Scotland is attracting private investment into infrastructure, notably decades of investment into onshore and offshore wind, and recent examples of investments into emerging technologies like battery storage. We recognise that more private capital is needed to support investment in our country’s infrastructure, and we are ensuring that Scotland is visible to financial markets and that conditions are ‘investor friendly’.

Creating the Right Conditions for Investment

The public sector creates the legal and policy conditions for private investment (e.g. housing, private heat networks, EV charging networks or community ownership), including reviewing existing regulations, to ensure that they do not act as unnecessary barriers to investment. Creating the right policy conditions is critical not only to remove barriers but to enhance Scotland’s attractiveness to investors. The wider policy environment, covering regulation, planning, fiscal sustainability and clarity on long-term priorities, shapes investor confidence and competitiveness. By aligning these conditions with our net zero and inclusive growth ambitions Scotland can position itself as a leading destination for global capital and innovation.

Energy and telecoms networks and energy generation are owned and operated privately. They are regulated at a UK level but are crucial infrastructure that underpin the Scottish economy and the Scottish Government’s ambitions for renewable energy, digital and net zero.

Housing is a mostly private infrastructure asset that is central to everybody’s life and wellbeing. While encouraging the creation and improvement of homes of all tenures, the Scottish Government is particularly focused on promoting private, including third-sector investment in affordable housing to support those most in need.

Most land is held privately and is subject to multiple national targets and ambitions, so any government policies for the development and maintenance of our natural infrastructure will require good co-working across all levels of government and the population.

Renewables Investment

Traditionally, the energy sector is mostly privately financed and owned, for example, the grid and renewable projects. Although the Scottish Government and public bodies do play a role in supporting the energy sector and supply chains, our main role is providing transparent processes for planning and consenting, setting long-term consistent policies and plans for the transition to net zero. We are working constructively with the UK Government on reserved policies such as the Regulatory Asset Base (RAB) used to calculate allowed revenues for the grid operator, and Contract for Difference (CfD) which is intended to stabilise revenue by guaranteeing a fixed price for generated electricity.

Transitioning our economy also means that the public sector needs to be willing to accept some of the early risks associated with new technologies even if in the longer term the assets become wholly privately owned and operated. The Scottish Government’s early investments into hydrogen projects and support from the Scottish National Investment Bank are illustrative of our commitment to support new markets.

The case study at Ardersier sets out the approach we have taken in working with the public sector partners and the private sector to invest in offshore wind in the Highlands.

Ardersier Port Case Study

The Scottish Government has committed to invest up to £500 million in a programme over five years to leverage an expected £1.5 billion of private investment in ports, manufacturing and fabrication – designing our investment approach to support sector needs. Investment in the Ardersier Port is part of this programme, one of the largest industrial regeneration projects in the Highlands in decades, it will re-establish the port as a major local employer, supporting and creating hundreds of jobs.

As a tax site within the Inverness and Cromarty Firth Green Freeport, Ardersier Port will offer a 450-acre site with quayside access and suitable infrastructure for marshalling, integration, manufacturing, and assembly of offshore wind components. It will be the largest dedicated offshore wind deployment port facility in Scotland, capable of hosting and supporting gigawatt scale projects.

Haventus, the energy transition facilities provider, and owner of the port, has secured a £100 million joint credit facility from the Scottish National Investment Bank and UK Government’s National Wealth Fund. Quantum Capital Group have invested £300 million in the project.

Housing

The public sector supports affordable housing delivery primarily through capital grants which leverage significant investment from partners, and it is developing additional approaches^[18] to unlock further private investment in housing.

We are supporting the implementation of the Housing Investment Taskforce recommendations to unlock new investment opportunities across all housing tenures.

The recent Housing (Scotland) Act 2025 introduces some of the most significant reforms to Scottish housing law in recent years improving housing affordability and security for tenants. The Act enables certain tenures like Build-to-Rent (BtR), Mid-Market Rent (MMR), and student accommodation to be exempt from rent controls. This is designed to provide long-term certainty to investors and encourage institutional investment and large-scale developments while also providing effective regulation. In addition, there is now multi-year funding certainty for the sector, with the Scottish Government having committed up to £4.9 billion over the next four years.

In addition to policy levers, the Scottish Government consistently acts as an enabler in the housing sector, from long-term funding commitments to innovative financing mechanisms, to partnership working to enable development.

Improving housing, in particular reducing emissions from our homes and buildings, requires significant private investment with government support, where appropriate. Tackling the embodied energy in the construction of housing and other built infrastructure is also a crucial consideration towards achieving net zero and circular economy targets where innovative domestic material such as cross-laminated timber, wood fibre, hemp insulation and recycled brick can make a significant contribution while supporting local economic growth and creating new jobs.

Developing enabling infrastructure in Partnership with Local Authorities

We remain committed to strong, collaborative partnerships with local authorities, who are essential to the planning and delivery of enabling infrastructure for private investment. This is closely linked to the place-based approach outlined in Chapter 6.

Montgomerie Park Case Study

Montgomerie Park was an area of land in Council ownership on the edge of Irvine allocated for residential development dating back to approximately 1989. It had faced issues around marketability. The Council invested in upfront infrastructure including new roads, access roundabout, sustainable urban drainage systems, and new schools, to attract investment in the area.

It was also part of a pilot supported by Scottish Government to prepare a Simplified Planning Zone (SPZ) to put in place upfront planning consent for new homes, de-risking the site by providing certainty. This was used as part of the marketing to attract private housebuilders. Homes have now been developed through the SPZ and further affordable housing development in the area has also progressed on the back of the placemaking approach.

Unlocking Natural Capital Markets

‘The Natural Capital Market Framework’^[19] sets out actions and provides guidance to foster responsible private investment to support Scotland’s transition to a net zero and climate-resilient economy. Carbon credits generated through the Woodland Carbon Code (WCC) and Peatland Code (PC) are the backbone of the UK’s voluntary carbon market, which is currently the main natural capital market in Scotland. The WCC and PC have been in operation for thirteen and seven years, respectively. They generate independently verified high-integrity carbon units from woodland creation and peatland restoration. The Scottish Government is also supporting the development of a new Ecosystem Restoration Code (ERC) for Scotland as a high-integrity market mechanism for attracting private investment into a broader range of habitat and land system contexts than woodland and peatland.

Models and Mechanisms for crowding in Private Funding

The Scottish Government is also actively exploring a range of models to crowd-in private investment—including government guarantees, equity stakes, and other mechanisms—to crowd in private funding in a way that safeguards value for money and protects the public purse from undue risk.

The Scottish Government recognises the need to balance investors’ need for a return on their investment that is commensurate with risk and value for money for the public purse. These challenges are not unique to Scotland, and we will continue to explore models including drawing on best practice from other countries.

We are considering existing and future use of Government or public sector guarantees and how these might be used to reduce risk for investors around large-scale infrastructure projects. Guarantees can lower borrowing costs and banks often offer lower interest rates making the project more viable. Guarantees also reassure investors that Government is committed to a project.

Winchburgh Case Study

The Scottish Government played a key role in unlocking a large-scale development through a tripartite agreement with Winchburgh Developments Ltd (WDL) and West Lothian Council (WLC). This agreement provided an innovative financing structure that effectively guaranteed the upfront funding needed for critical infrastructure, essential for enabling large-scale housing delivery.

In a first-of-its-kind funding mechanism, it supported WLC to forward fund new schools, to be paid back through developer contributions and underwritten by guarantees from the Scottish Government and WDL. This public-private partnership approach which led to effective risk sharing.

We are also seeking more co-investment from public and private pension funds into projects and businesses in Scotland, by working with the Scottish Local Government Pension Scheme and others. This has the potential to unlock long-term pension funds for productive investment in infrastructure and the proposed powers in the Pensions Schemes Bill will ensure Scottish Ministers maintain parity of powers with UK Ministers for our respective Local Government Pension Schemes.

Key Partners in Crowding in Private Funding

The Scottish National Investment Bank (SNIB) provides long-term, patient capital on commercial terms, investing in projects aligned with its strategic missions, Net Zero, Place, and People, where risks are beyond the appetite of private capital.

Since its launch SNIB has invested £991.4 million, crowding in £1.4 billion, in 48 projects and businesses. Scotland’s enterprise agencies complement this by supporting businesses and projects to become investment ready, helping to unlock opportunities and crowd in private sector funding.

The Scottish Government and its partners will collaborate with UK Public Financial Institutions, including UK Export Finance (UKEF) and the National Wealth Fund (NWF) to play our part in supporting everyone in the investment landscape to work well together. However, institutions with a UK wide remit need to be equally proactive in seeking investment opportunities in Scotland, utilising the local expertise of Scottish institutions, like SNIB and partnering where appropriate to maximise economic gains and unlock additional private investment.

Scottish Future’s Trust is Scotland’s public sector centre of commercial infrastructure expertise performing an active leadership role across all major public sector infrastructure programmes. By bringing specialist skills, resource and knowledge to other public sector organisations it supports the planning, funding, delivery, and management of successful construction projects. SFT continues to draw on best practice from around the world to identify opportunities for collaboration between public and private sectors to deliver world-leading infrastructure for Scotland.

Questions

13. Are there additional sectors or opportunities that should be considered for strategic investment to support economic growth and maximise opportunities for longer-term growth?

14. To make the most of the strategic opportunities in renewables, housing, and natural capital, what will the economy need from our infrastructure to grow and thrive up to 2037?