As the UK gears up for an electrified future, the nation's power demand is projected to double by 2050. This surge will be driven by the electrification of transport and heating, alongside an ever-growing reliance on digital devices and data centres, especially with the burgeoning AI sector. Indeed, AI and its infrastructure alone could command 72 TWh by 2030 - a staggering twentyfold increase from 2020 levels, according to research from Loughborough University. Such an appetite would account for over a quarter of the UK's total electricity consumption recorded in 2021.

On the supply side, the challenge is clear. Connection queues have ballooned tenfold in recent years, leaving 739GW of capacity in limbo. This bottleneck has spurred action from both the government and the National Energy System Operator, aiming for a net zero grid by the decade's end. The north of Scotland is similarly afflicted, with projects stalled in their quest for grid connection. To combat this, a 'first ready, first connected' policy is being implemented, prioritising projects that meet land and planning criteria and contribute to the net zero target by 2030.

Aberdeen, the UK's energy epicentre, stands at the forefront of these developments. With GB Energy (GBE) headquartered in the city, an investment of £8.3 billion over the parliamentary term is set to bolster local and national projects. GBE's mandate includes leading projects from pre-development through to construction and operation, managing developments on public land, and identifying private land for future projects. Moreover, GBE is poised to partner with and support local authorities and community groups, facilitating the development of 8GW of energy across the UK.

The investment landscape is equally ambitious, with approximately £40 billion needed annually to achieve Climate Plan 2030 (CP30) targets. A recent report from law firm Irwin Mitchell has highlighted Aberdeen's critical role in this funding drive.

Aberdeen's energy sector workforce is world-renowned, with skills readily transferrable to the renewables sector. CP30 underscores the necessity of investing in this workforce, ensuring the city remains a hub of expertise and innovation.

In addition to renewable energy, projects like the Acorn CCS and hydrogen initiatives near Peterhead are crucial. While wind and solar will dominate, hydrogen and carbon capture and storage (CCS) will provide essential reliability and flexibility during variable generation periods. These sectors are not only pivotal for reducing emissions but are also expected to create jobs and stimulate investment in clean energy technologies.

While the market's immediate focus is on regulatory changes, those with a broader perspective will recognise the long-term opportunities. Life extension and repowering of existing assets will be critical as the region adapts to the evolving energy landscape. However, whether changes to the Energy Profits Levy (EPL) will allow for this remains to be seen.

For Aberdeen's real estate sector, these developments are highly significant. The influx of investment and projects will drive demand for commercial and residential properties, as energy companies expand operations and attract new talent to the city. The repurposing of existing assets for renewable energy initiatives and the construction of new facilities will reshape the local landscape, creating opportunities for real estate developers and investors. As Aberdeen continues to lead the charge in this energy revolution, the city's real estate market stands to benefit from the increased activity and innovation, ensuring a sustainable and prosperous future for the region and beyond.

Further information

Contact Dan Smith or Nick Green 

Scottish Property Outlook