Local Energy Systems International Research

The central aim of this study was to identify the niches that provide the best opportunity for Scottish businesses in the international market for Local Energy Systems (LES). In order to do this, the study sought to first assess the Scottish LES project landscape and company base and then to look at best practice international LES projects and potential markets. The study built on previous work that had defined a ‘typology framework’ for LES – a tool to allow SE to subdivide the sector and prioritise certain typologies (types of location where LES projects are implemented). The study therefore went on to add a layer of quantitative evidence to support SE’s decision regarding which typologies to initially prioritise by delivering figures, 10-year market forecasts etc. and providing the certainty required for SE to justify its choices going forwards.

The study was carried out via desk-based research. Some informal phone interviews and meetings with companies were also carried out.

236 Local Energy Systems projects were identified in Scotland of which 137 were only at feasibility stage but 47 were active projects defined as either ‘demonstrators’ or in ‘commercial operation’ and of those 14 were determined to be of special interest (in terms of Scottish content and level of innovation). 23 of the 47 were Island-based. 192 companies were identified in Scotland with LES Capabilities. 37% are consultants, 20% project developers and 43% technology developers. Companies across the board tend to claim applicability in all typologies. In terms of technology, the highest figures relate to renewables integration (29%), Energy storage (17%) and Heat (11%). Although this heat figure is still low considering the number of heat related projects identified. Only 6% of companies claim to work in hydrogen and also 6% in EVs. 8% in microgrids and 9% in DSM. There are very high numbers of Local Energy Systems projects being implemented across the world – we are losing any lead we once had. The most significant market opportunities are deemed to lie in the USA & Canada. However, Finland, Ireland, Japan, Chile and China, New Zealand, Denmark, Norway and Sweden are all markets of interest as well. The main types of goods or services that potentially could be exported from Scotland broadly fit into three categories of application: Smart Grid solutions, Renewable power to hydrogen & Renewable power to heat. The global market for LES solutions is estimated to be worth nearly £350bn by 2030, £673m in Scotland. The largest portion of that, nearly £150bn globally, falls into the large urban typology. This is followed by industrial parks/campuses at £101bn. Islands and large industrial tows represent the 2 smallest market shares.

The typology framework, whilst theoretically useful, is not workable in reality due to a lack of availability of data and difficulty fitting real locations into such a specific set of criteria. A simplified version was therefore suggested. If we are able to deploy projects at scale quickly and demonstrate their commercial viability, as well as supporting our companies to take advantage of opportunities, we can still become a global leader in LES. North America represents a significant market opportunity once we are able to organise and coordinate our offering in terms of project experience and company capability.