Eddie McAvinchey, Scotland director at the National Wealth Fund, explains the role institutional investors can play in infrastructure and renewable energy and where he sees Scotland’s greatest investment opportunities.
As Scotland director at the National Wealth Fund (NWF), Eddie McAvinchey occupies a unique position in the UK’s public investment landscape. Having previously worked at the Scottish National Investment Bank (SNIB), he has seen first-hand how the two institutions can complement each other in delivering projects that private capital alone may struggle to finance.
In this interview with Private Markets Profile, McAvinchey discusses collaboration between the two development banks, the opportunities created by Scotland’s energy transition, and why attracting more UK institutional capital will be critical to unlocking long-term growth.
How does the National Wealth Fund work alongside the Scottish National Investment Bank?
McAvinchey: There are clear similarities between the two organisations because both governments have recognised that some policy objectives are difficult for private capital to achieve on its own. That creates a role for risk-taking public capital to work alongside private investment and unlock growth in strategically important sectors.
The difference lies in how we approach the market. The National Wealth Fund’s priorities are supporting the transition to clean energy and unlocking economic growth across all four nations of the UK. The Scottish National Investment Bank operates through missions focused on net zero, place and innovation.
Scale is another important distinction. SNIB has £2 billion to invest over 10 years, whereas the National Wealth Fund has £27.8 billion of capital. We also have a minimum investment size of £25 million, so many earlier-stage Scottish opportunities are naturally better suited to SNIB.
That said, it is not a case of one organisation or the other. The Port of Ardersier demonstrates how the two organisations can work together. Both of us identified ports and offshore wind supply chains as strategic priorities, so we each invested £50 million alongside Quantum Capital Group to support the redevelopment of the port.
It was exactly the type of project that commercial lenders would have struggled to finance because it was serving an emerging floating offshore wind market that had yet to establish customers. By working together, we demonstrated how public capital can take carefully considered risks to unlock private investment.
Since then, we’ve completed several joint transactions and expect that number to continue growing. Sometimes we both provide debt, sometimes one organisation provides equity while the other provides debt, and sometimes one of us invests before the other joins a later funding round. The important thing is that we remain complementary rather than competitive.
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Can economic growth and the transition to net zero reinforce one another?
McAvinchey: I don’t believe there needs to be a conflict between the two. The transition to clean energy represents one of the biggest economic opportunities available to the UK.
There is the obvious economic activity involved in constructing new infrastructure, but the longer-term opportunity comes from the jobs created throughout the supply chain and in operating those assets over many years.
Scotland is particularly well placed to benefit. Areas such as Inverness and Aberdeen have the potential to become major centres for floating offshore wind and the industries that support it. That means creating long-term employment while helping workers transfer existing skills from the oil and gas sector into the clean energy economy.
It’s important to be clear that investment in fossil fuel extraction sits outside the National Wealth Fund’s mandate, so we would not invest in related projects. However, we are very interested in supporting companies and projects that help those industries transition. Many of the engineering and technical skills developed in the North Sea are directly transferable to offshore wind and other clean energy sectors, and helping facilitate that transition is exactly the sort of role we want to play.
Which sectors offer the biggest opportunities for investment in Scotland?
McAvinchey: The NWF’s updated strategy identifies ten priority sectors, and almost all of them are relevant in Scotland.
Grid infrastructure is one of the biggest opportunities. Our three largest investments to date have helped accelerate grid upgrades and enabled operators to access new pools of capital.
Closely linked to that is energy storage, whether that’s battery storage or pumped storage hydro, which is particularly relevant in Scotland. We also continue to see ports as strategically important because they will underpin the expansion of offshore wind while supporting wider regional economic development.
Beyond those, we continue to focus on areas such as transport infrastructure, hydrogen and carbon capture and storage. Scotland has significant natural advantages across many of these sectors. The challenge is ensuring projects are able to secure the right mix of public and private capital to move from concept to delivery.
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How does the National Wealth Fund decide where to invest?
McAvinchey: We have a clearly defined mandate and only invest in sectors where we believe we can make a genuine difference.
A concept we use extensively is ‘additionality’. We are looking for situations where our involvement enables something that would otherwise struggle to happen.
That doesn’t necessarily mean taking the highest risks in the market. In fact, we’ve deliberately evolved our strategy towards more measured risk-taking. We want to deploy our capital effectively while also delivering a positive return for taxpayers.
Every investment is assessed on its own merits, and we expect each one to have a reasonable prospect of generating a positive return. Some investments will inevitably underperform, but success is measured across the portfolio rather than on individual transactions.
Equally important is ensuring that private investors share the risk. We often see investors who would like public capital to remove virtually all of the risk from a project. We don’t think that’s the best use of our capital.
Projects such as Ardersier worked because there was a capable management team, a committed private investor willing to share the risk, and a project that aligned closely with government policy. Those are exactly the characteristics we look for.
What is stopping more institutional investors backing UK infrastructure?
McAvinchey: There are enough projects and there is enough capital. The challenge is bringing the two together by developing a healthier appetite for risk among institutional investors.
We continue to see significant pools of institutional capital taking a relatively conservative approach. That’s understandable, but we would like to see more UK institutional investors participating alongside us in projects that are delivering long-term economic value.
A good example is our investment in Eelpower, an Equitix-led platform developing battery storage projects across the UK. We partnered with Aware Super, the Australian superannuation fund, but there was no UK institutional investor involved. Ideally, we’d like to see UK pension schemes participating in opportunities like that.
There are encouraging signs. Railpen, for example, has demonstrated a willingness to move further along the risk spectrum by taking construction risk in onshore wind. As UK pension pooling continues, larger schemes should have the scale to build specialist infrastructure teams similar to those we’ve seen in Canada and Australia.
The opportunity is there. We simply need more UK institutional investors to develop the confidence and expertise to invest in greenfield infrastructure rather than focusing solely on mature operational assets.
How important is place-based investment to the National Wealth Fund?
McAvinchey: It’s become a fundamental part of how we operate. My role is to do two things: advocate for the National Wealth Fund in Scotland, and advocate for Scotland within the National Wealth Fund. Having people on the ground who understand local markets is essential if we’re going to identify the right investment opportunities.
To date, we’ve committed around £10 billion across the UK, with approximately £2.5 billion invested in Scotland. That demonstrates the importance of Scotland within our overall portfolio.
We’re also expanding our place-based approach through strategic partnerships, including with the Glasgow City Region, where we’re working alongside local authorities to help bring forward projects and attract private investment.
One of the three pillars of our strategy is accelerating place-based investment across all four nations of the UK. Infrastructure shouldn’t simply deliver national policy objectives; it should create tangible benefits for local communities through jobs, regeneration and improved connectivity.
What barriers still need to be overcome in Scotland?
McAvinchey: Scotland has tremendous opportunities, but there are still some distinctive challenges.
One is TNUoS charging. Because electricity generated in the north of Scotland has to travel much further to reach centres of demand, developers face higher transmission costs than projects located closer to consumers. As those charges have increased, they’ve become a growing concern for offshore wind developers and will inevitably influence which projects progress.
The second issue is the ownership of infrastructure. In Scotland, sectors such as transport and water remain publicly owned. That creates a different investment landscape from England, where private ownership provides more opportunities for organisations like ours to invest directly.
We’re keen to support those sectors where we can, but public ownership and the existing fiscal framework inevitably influence where our capital can be deployed.
What would success look like over the next five years?
McAvinchey: Success would mean helping to bring forward projects that otherwise might not have happened. Scotland has a particularly strong pipeline in areas such as pumped storage hydro, energy storage and offshore wind infrastructure. If we’ve helped unlock some of those opportunities, then we’ll have made a meaningful contribution.
More broadly, success is about demonstrating that public capital can catalyse private investment and deliver lasting economic growth.
Infrastructure can sometimes feel remote from people’s everyday lives, but successful investment should be visible in stronger local economies, better transport, more resilient energy systems and high-quality jobs.
Ultimately, that’s what we’re trying to achieve: ensuring that public capital helps create places where businesses want to invest and communities can prosper.