Special feature: Peak performance

For many, Scotland’s Highlands and Islands are still synonymous with tourism. It’s understandable of course, with walking and hiking, wildlife watching, and historical and cultural experiences on offer, the region recorded some 2.3 million overnight visits in 2023, contributing £762m to the local economy with jobs in tourism representing up to 43 per cent of the workforce in some areas and sustaining many local island economies and communities.

Alongside these attractions, however, is an increasingly diverse, pioneering and thriving economy, one powered by strategic investment, innovation, and sustainable development with major advances in sectors such as wind, wave, and tidal energy projects. 

The region’s natural geography and weather, high-quality food and drink that’s exported worldwide, plus digital and creative industries and leading educational and research facilities like UHI (University of the Highlands and Islands) all open flourishing prospects.

Stuart Black, chief executive of Highlands and Islands Enterprise (HIE) – the region’s economic and community development agency – believes the region now has an unprecedented opportunity to help Scotland achieve both energy security and a successful net zero transition.

Regional transformational opportunities (RTOs) are burgeoning across the Highlands and Islands and last month the scale of these were quantified for the first time in a report that highlighted 251 planned development projects in the pipeline.

Together, these represent a potential total investment value of up to £100.35bn and at the peak of construction and development could bring up to 16,000 construction jobs and 18,000 operational jobs by 2040.

The study was commissioned by HIE in partnership with the Highlands and Islands Regional Economic Partnership (HIREP) and was carried out by research specialists ekosgen. The scale of opportunity was described as “unprecedented” and it’s anticipated it could outstrip even the peak results of the oil and gas exploration era.

Renewable energy projects – including offshore and onshore wind, pumped storage hydro, green hydrogen and marine energy – account for around three-quarters of the total RTO investment value. Others relate to space, marine biotech, life sciences, natural capital and critical infrastructure developments such as electricity grid upgrades, and improvements to ports and harbours, in addition to research and the creation of innovation facilities.

These RTOs are largely driven by the private sector with some public sector co-investment and funding through Growth Deals. The report’s findings will be used to inform policies and planning in areas such as population attraction and retention, skills, housing and transport – while emphasising a collaborative and place-based approach to realising these opportunities.

At the launch of the report, Black said: “We’ve been aware for some time of projects at various stages of development across the region that could transform our economy and communities and significantly enhance Scotland’s economy. 

“This report quantifies the impacts of those in a way we’ve not been able to do so far. The Highlands and Islands will be the engine room for growth for the Scottish economy in the years ahead.”

Scotland’s Deputy First Minister Kate Forbes said the report set out the true scale of the opportunities and added: “The challenge now is to capitalise on this promise. I look forward to working alongside our public and private sector partners to deliver on this enormous potential, creating thousands of top-quality jobs for future generations.”

Raymond Bremner, chair of HIREP, said the research highlighted that the Highlands and Islands is “on the brink of a once-in-a-generation opportunity for economic transformation”.

It also heralds the next stage for HIE after a positive year for the agency. “We have 24 main measures the Scottish Government asks us to meet, and we’ve fulfilled 22 of them, achieving the vast majority of our targets,” says Black.

“We attracted significantly more income than we started the year with – just over £20m on capital – some from government but increasingly from other places as well.”  

That’s a trend that HIE is likely to see continue and highlights some milestone achievements. “Last year it was announced that Sumitomo Electric Ltd had broken ground on its new £350m subsea cable manufacturing plant at Port of Nigg on the Cromarty Firth. Construction is now well underway. It’s a very important project, not just for the Highlands and Islands but the whole of Scotland,” says Black.

And earlier this month it was announced HIE will invest £24.3m at Kishorn Port in the west Highlands to enhance its capacity and capabilities, with an expanded dry dock and land reclamation enabling the manufacture of floating offshore wind foundations.

The expanded facilities are forecast to attract projects with the potential to support up to 1,500 jobs. The port houses one of the largest openings of any dry dock facility in Europe, making it a unique and valuable asset.

Kishorn Port in the West Highlands (Photo: HIE)

HIE’s contribution, says Black, forms part of the Scottish Government’s commitment to strategically invest up to £500m over five years to anchor the nation’s offshore wind supply chain.

Closely involved in these – and many other major developments at HIE – has been Alistair Dodds CBE, HIE’s outgoing chair, who retires from the role in July. Dodds has served on the board for 11 years and was first appointed chair in 2020 then reappointed in 2023, in a second term which was due to last until April 2026. 

He decided though that it was important for HIE to have a new chair appointed in advance of the pre-election period for the Scottish Parliament elections to ensure they are in place to work with the next government.

As chair of HIE he speaks passionately about the importance of the agency’s role in developing communities as well as businesses, and in pursuing opportunities across every part of the Highlands and Islands.  

Investments in community-led projects such as Cnoc Soilleir, an innovative cultural centre in South Uist, exemplify the agency’s commitment not only to Gaelic, but to those living on the islands and some of the most remote, rural parts of the mainland, he says. 

Under his oversight, HIE has been central to developments that include the pioneering, renewable energy-themed Orkney Research and Innovation Campus (ORIC) in Stromness and the European Marine Science Park near Oban, as well as Inverness Campus, a world-class business location.

While the benefits of these projects extend across Scotland, the UK and far beyond, they ultimately rely on the participation of HIE’s local communities. “They depend on collaboration and partnership with our local authorities,” says Dodds. “And when seeking solutions, it helps immensely that we and these authorities can go to the Scottish Government together.”

Government is now, he adds, increasingly responding to the needs of the Highlands and Islands – for example in recognising the need for housing developments. “I believe that confidence is growing across the Highlands and Islands with businesses continuing to invest – and we are investing in them – despite all the current challenges such as increasing costs, transport, housing and childcare,” adds Dodds. 

Housing remains one of the main dilemmas facing the region and Black confirms that it is “probably the number one issue to be raised with us by businesses and communities at engagement events across the region, from Shetland to Argyll, and we’ve been trying to positively influ­ence Scottish Government policy.”

Both Black and Dodds though are focused on the huge investment and job creation opportunities highlighted in the recent report and while its authors underline some barriers to growth that need to be overcome, they also believe that with “an unwavering commitment to collaboration” the economic prospects for the Highlands and Islands are uniquely positive. 

“I’ve seen many developments in the Highlands and Islands, but this is the first time I’ve seen such major developments right across the piece,” says Dodds. “And both Stuart and I are committed to the collaboration and partner­ship needed to sustain that momentum and maximise community benefits.

“That means working with the region’s seven local authorities and organisations such as VisitScotland, Scottish Enterprise, Scottish Development International, South of Scotland Enterprise, and with the Scottish Government for the benefit of the Highlands and Islands.” 

I have seen many developments in the Highlands and Islands, but this is the first time I’ve seen such major developments right across the piece

The funding environment in which this is being accomplished, Black concedes, is a more challenging one than a decade ago. “We used to get significant amounts of European funding; we don’t have that now and are having to work harder to find additional sources of funding for the organisation – and as a small organisation we need to be very entrepreneurial to do that.” 

In terms of the region’s contribution to the Scottish economy, Black again stresses the crucial transition to renewable energy. “The Highlands and Islands are vital in powering the UK in terms of its energy supply. And while oil and gas revenue tended to be cyclical it has been in a slow decline since the 1980s while renewables are here forever. The tide will always come in and go out and the wind will aways blow.

“We are looking to continuous rounds of investment in renewable energy for the foreseeable future – and that’s very exciting for the economy and communities of the Highlands and Islands.” 

This article is in association with Highlands and Islands Enterprise.

www.hie.co.uk