Investing in Renewables in 2025: Scott Hamilton dissects the current landscape
"Going for growth" may be the rallying cry of governments worldwide, but turning ambition into action requires more than rhetoric. In an era marked by domestic fiscal pressures and global trade tensions, the challenge lies in striking a delicate balance.
How do we secure sustainable investment while managing current commitments and planning for the future? As we navigate competing priorities at home and shifting dynamics abroad, the path to long-term, resilient growth demands strategic thinking, innovation and above all, collaboration.
Scottish Renewables’ upcoming Investing in Renewables event will hear from leading experts as we discuss the latest insights and trends for green finance in Scotland.
Scott Hamilton, of Green Man Consulting, has a wealth of experience working across Scotland’s energy spectrum with time spent working in both the renewable energy industry and oil and gas sectors. Scott also works closely with the event’s headline sponsor Leidos.
Here’s what Scott had to say on the current investment landscape.
‘Confidence is a preference for the habitual voyeur of what is known as…(non- recourse project finance’)
Ok, maybe the lyrics aren’t as catchy as Blur’s original, but it doesn’t feel like there’s an awful lot of confidence in renewable energy to go round at the moment. Between increasing interest rates, inflation and some ‘political uncertainty’, there’s much to bemoan for developers right now.
Is all lost for the renewable industry in Scotland? No – with a little bit of ‘yes’ for those who aren’t prepared to change their ways.
While the industry has had a few ups and downs over the 30 or so years it’s been around, the last five years were an unprecedented high. Political will, global media attention and economic tailwinds created a massive burst of action and investment on a scale which was entirely unprecedented. Indeed, in our own backyard, ScotWind blew the doors off with a capacity of 250% of what was initially announced. During this period, we perhaps became content while assuring ourselves that the way things were was the way things would always be.
Fiscal discipline was lost, scopes crept, and overreach happened. Many folks found themselves overleveraged in multiple markets and inevitably a few people started to dream about diesel outboard engines.
And so – the contraction.
In the fickle world of investment finance, risk is cost, and major infrastructure projects rarely have space for much in the way of additional costs. In the face of already rising interest rates, market risks and commodity pricing began to incrementally add a point or two above the base rate. Global uncertainty added a few more. A developer looking at a five-year development expenditure risk cycle and a 25-year operational period could realistically be making similar returns with far less risk by putting their cash in government bonds. The gears are grinding while shareholders and investors try to reckon today’s reality with the promises of yesterday.
Fiscal discipline with a robust technical plan and appropriate diligence can unlock final investment decisions for good and appropriately sited projects. While challenges remain across the planning system, the Contracts for Difference scheme and connecting to the grid, these are still expected to offer a pathway for developers to sell their electricity. The best solution to a lack of confidence is an upfront and honest approach to tackling the risk at hand and pricing the risk which can’t be mitigated. A truly independent advisor who knows your project inside out and whom your lender trusts can be the friend you didn’t know you needed to close that out.
Investing in Renewables is a must-attend for professionals from the renewable energy, finance and investment sectors. An unrivalled opportunity to gain insights and intelligence on how the renewable energy and financial sectors can work together to secure the project opportunities which will enable investment and growth for the next two decades and beyond.